Adopted Sections An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 19. EDUCATION Part II. Texas Education Agency Chapter 61. School Districts Subchapter B. Waivers and Exemptions 19 TAC sec.61.30 The Texas Education Agency adopts an amendment to sec.61.30, concerning waivers and exemptions, without changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 780). Senate Bill 351, 72nd Legislature, moved the authority for general waivers from the State Board of Education (SBOE) to the commissioner of education. The legislation, however, continued to place the authority to adopt rules concerning textbook waivers with the SBOE. Therefore, sec.61.30 must be amended to include these new statutory requirements. Justification for the amendment will be to implement changes in statutory requirements regarding the textbook waiver procedure, to give structure to the application review process, and to ensure that the existing textbook adoption process is not compromised. The amendment will function by changing the procedures for receiving a waiver by designating the commissioner of education as the party to whom applications will be submitted and giving the commissioner authority to grant all waivers. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Education Code, sec.11.273, which provides the SBOE with the authority to adopt rules relating to the granting of textbook waivers to school districts. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 19, 1992. TRD-9204112 Criss Cloudt Coordinator, Policy Planning and Evaluation Texas Education Agency Effective date: April 13, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-9701 TITLE 25. HEALTH SERVICES Part I. Texas Department of Health Chapter 145. Long Term Care Subchapter G. Licensing and Medical Certification Standards for Nursing Homes. 25 TAC sec.145.111 The Texas Department of Health (department) adopts under federal mandate an amendment to sec.145.111 concerning standards for nursing homes jointly developed by the department and the Texas Department of Human Services (TDHS) that apply to licensure and to medicaid certification. Specifically, sec.145.111 adopts by reference TDHS rules in 40 TAC sec.sec.19.1-19.2107 concerning long term care nursing facility requirements for licensure and medicaid certification. The amendment to sec.145.111 incorporates amendments to TDHS rules in sec.sec.19.1-19. 2107 published in the March 13, 1992, issue of the Texas Register (17 TexReg 1915). The amendments provide for conformity to federally mandated changes based on final rules published in the Federal Register, including minor related editorial changes for clarification. The amendment is adopted under federal mandate for the following reason. On November 5, 1991, the Omnibus Budget Reconciliation Act, Public Law 101-508, became law. It requires the United States Department of Health and Human Services (DHHS) to adopt regulations to implement certain provisions of the new law covering certification of nursing homes participating in the federal medicaid program. In response to the law, DHHS has adopted regulations in the Federal Register, Vol. 56, No. 187, p. 48826, to become effective on April 1, 1992. Long term care facilities (nursing homes) that participate in the medicaid are required by federal law to comply with the regulations. Since TDHS is the state medicaid agency for nursing homes and since the department is the state certifying agency for the medicaid program for nursing homes, both the TDHS and the department are required to adopt rules to implement the federal regulations by April 1, 1992. TDHS has already adopted its rules in the March 13, 1992, issue of the Texas Register. The department now needs to adopt the TDHS rules by reference since the rules are the same; and in order to have the rules in effect by the federally mandated date of April 1, 1992, the department is adopting the rules under federal mandate effective on that date. The amendment is adopted under the Federal Register, Vol. 56, No. 187, p. 48826, which establishes new federal medicaid regulations that the state medicaid agency (TDHS) and the state certifying agency (department) have to implement; the Human Resources Code, Chapter 32, which provides TDHS with authority to adopt rules to implement federal medicaid requirements; Human Resources Code, sec.222.0255, which provides the TDHS and the department with authority to jointly develop one set of standards for nursing homes that applies to licensure and certification for participation in the medical assistance program under the Human Resources Code, Chapter 32, and to adopt by rule the standards and any amendments to them; the Health and Safety Code, sec.242.037, which provides the Board of Health with authority to adopt rules concerning the licensing of long term care facilities; and Health and Safety Code, sec.12.001, which provides the Board of Health with authority to adopt rules to implement every duty imposed by law on the board, the department, and the commissioner of health. sec.145.111. Standards for Nursing Homes Jointly Developed by the Texas Department of Health and the Texas Department of Human Services that Apply to Licensure and to Medicaid Certification. (a) The Texas Department of Health adopts by reference the Texas Department of Human Services rules in 40 TAC, sec. sec.19.1-19.2107, concerning long term care nursing facility requirements for licensure and certification as amended April, 1992. (b) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 18, 1992. TRD-9203960 Robert A. MacLean, M.D. Deputy Commissioner for Professional Services Texas Department of Health Effective date: April 1, 1992 Proposal publication date: March 13, 1992 For further information, please call: (512) 458-7709 Chapter 151. Nurse Aides The Texas Department of Health (department) adopts under federal mandate amendment to existing sec.151.2, the repeal of existing sec.sec.151.3-151.12, and new sec.sec.151.3-151.12, concerning nurse aides. The amendment, repeals, and new sections were proposed for public comment in the January 31, 1992, issue of the Texas Register (16 TexReg 816). The amendment to existing sec.151.2, the repeal of existing sec.sec.151.3- 151.12, and new sec.sec.151.3-151.12 are adopted under federal mandate for the following reasons. The Omnibus Budget Reconciliation Act of 1987, Public Law 100-203, sec.sec.4201-4214, as amended and new federal regulations published at 56 Federal Register 48880 (September 26, 1991) require the state to implement state rules in accordance with the federal law and regulations. The new federal regulations become effective April 1, 1992. Normally a final rule is effective twenty days after it is filed with the Secretary of State; however, in order to comply with the deadlines and effective dates in the federal law and regulations, the department's revised rules also need to be adopted effective on April 1, 1992. This date can only be met if the rules are adopted under federal mandate. The following comments were received during the comment period concerning the proposed sections. Although the final rules are being adopted under federal mandate and a response to comments is not required, the department desires to address/explain the comments that were received. COMMENT: Concerning sec.151.2, a commenter requested that the definition of a facility-based program be re-worded for uniformity with the definition of a non- facility-based program. RESPONSE: The department agrees and has added a new definition. COMMENT: Concerning sec.151.2, a commenter requested that the words "or a registered dietitian, or" be added to the definition of a nurse aide, as they were included in the original definition. RESPONSE: The department agrees and has added the language. COMMENT: Concerning sec.151.3(g), a commenter suggested that the definition of neglect needs to encompass the use of scope and severity, as a nurse aide can lose his/her job over an isolated, minor incident under the current definition. RESPONSE: After extensive discussion, the department revised the definition of neglect in September 1991, and feels no further change is needed at this time. COMMENT: Concerning sec.151.4(e), a commenter requested that currently enrolled trainees be allowed to complete their training and testing, if the department withdraws approval of the program. RESPONSE: Section 151.9(f) provides for this request; therefore, no change has been made. COMMENT: Concerning sec.151.4(e)(1)(B), a commenter requested clarification of the extended and partially extended survey. RESPONSE: This language is taken from the Omnibus Budget Reconciliation Act, and the department has no authority to change the language in the Act. The definition of the extended and partially extended survey will be determined by the department's Bureau of Long-Term Care and the United States Health Care Financing Administration. COMMENT: Concerning sec.151.4(e)(2)(C), a commenter asked if the $5, 000 civil money penalty is based on an aggregate or individual fine. RESPONSE: This section of the rules is based on the federal act (Omnibus Budget Reconciliation Act) and regulations and cannot be revised by the department. It is the department's understanding that the Health Care Financing Administration has defined the $5,000 penalty as a single penalty of not less than $5,000. COMMENT: Concerning sec.151.5(c)(2), a commenter requested that the department clarify that the facility or NATCEP used for testing be one which has "volunteered to serve as an examination site." RESPONSE: The department agrees and has added the new language. COMMENT: Concerning sec.151.6(a), a commenter suggested that the words "during the time training is occurring" be added to clarify when a program must have an approved program director. RESPONSE: The department agrees and has added the new language at sec.151.4(h) and at sec.151.6(a). COMMENT: Concerning sec.151.7(e)-(h), a commenter requested that the hearings procedure for proposed disapproval of a program director and skills examiner be revised to reference the Administrative Procedure and the Texas Register Act, Texas Civil Statutes, Article 6252-13a. RESPONSE: The department agrees and has made the necessary changes. COMMENT: Concerning sec.151.9(e)-(j), a commenter requested that the hearings procedure for proposed withdrawal of approval of a program director or skills examiner be revised to reference the Administrative Procedure and the Texas Register Act. RESPONSE: The department agrees and has made the necessary changes by revising the language and reformatting the subsections. COMMENT: Concerning sec.151.10(b)(1), a commenter requested that the department delete the words "NATCEP for training and competency evaluation of nurse aides" for clarity. RESPONSE: The department agrees and has made the change. COMMENT: Concerning sec.151.10(c), a commenter requested that this subsection be deleted, as it is addressed in sec.151.3(a), (c) and (e). RESPONSE: The department agrees and has deleted the subsection. COMMENT: Concerning sec.151.11(c), a commenter recommended that the hearing procedure for nurse aides be revised to reference the Administrative Procedure and the Texas Register Act. RESPONSE: The department agrees and has made the necessary changes, including reformatting. COMMENT: Concerning sec.151.11(c)(1) a commenter suggested that the "department's Professional Licensing and Certification Division" be changed to the "department." RESPONSE: The department agrees and has made the change. In addition to changes made as a result of comments received, the department also made minor editorial changes throughout all sections to ensure uniformity of terms and to clarify certain provisions. The department's Ad hoc Committee on nurse aides in long term care facilities and the Texas Health Care Association generally supported the rules but offered comments and made recommendations for change. 25 TAC sec.151.2 The amendment is adopted under the Omnibus Budget Reconciliation Act, Public Law 100-203, sec.sec.4201-4214, as amended, which requires the Texas Board of Health through an agreement with the Texas Department of Human Services to adopt rules implementing a nurse aide registry and a training and competency evaluation program for nurse aides; and Health and Safety Code, sec.12.001, which provides the Texas Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, Texas Department of Health, and the commissioner of health. sec.151.2. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Act-The Omnibus Budget Reconciliation Act of 1987, (Act) Public Law 100-203, sec.sec.4201-4214, December 22, 1987 (amending the Social Security Act, sec.1819 and sec.1919), as amended and the federal regulations promulgated under Public Law 100-203, in Title 42, Code of Federal Regulations, Part 483 (Act). Competency evaluation program (CEP)-A skills examination and a written or oral examination approved by the department. Curriculum-The publication titled "Texas Curriculum for Nurse Aides in Long- Term Care Facilities" developed by the department. Direct supervision -Actual observation of students performing tasks in a nurse aide training and competency evaluation program (NATCEP). Examination-A competency evaluation program or the competency evaluation portion of a training and competency evaluation program. Facility-based program -A NATCEP offered by or in a facility. General supervision -The provision of necessary guidance and maintenance of ultimate responsibility for the NATCEP. Licensed health professional-A physician; physician assistant; nurse practitioner; physical, speech, or occupational therapist; physical or occupational therapy assistant; registered professional nurse; licensed vocational nurse; or certified social worker. Non-facility-based program -A NATCEP not offered by or in a facility. Nurse aide-An individual providing nursing or nursing-related services to residents in a facility under the supervision of a licensed nurse. This definition does not include an individual who is a licensed health professional or a registered dietitian or who volunteers such services without monetary compensation. A nurse aide is not authorized to provide nursing and/or nursing- related services for which a license, certification, or registration is required under state or federal law. Nurse aide training and competency evaluation program (NATCEP)-A program approved by the department to train and evaluate individuals to act as nurse aides. Program-A nurse aide training and competency evaluation program. Program director -An individual approved by the department in accordance with sec.151.6 of this title (relating to Program Director and Skills Examiner Requirements). Registry-A listing of all individuals who have satisfactorily completed a NATCEP or a CEP approved by the department or qualified by waiver or reciprocity. Skills examiner -An individual approved by the department in accordance with sec.151.6 of this title. Supplemental trainers -Qualified personnel who may participate in teaching a program in accordance with sec.151.6 of this title. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 19, 1992. TRD-9204019 Robert A. MacLean, M.D. Deputy Commissioner Texas Department of Health Effective date: April 1, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 834-6628 25 TAC sec.sec.151.3-151.12 The repeals are adopted under the and the Omnibus Budget Reconciliation Act of 1987, Public Law 100-203, sec.sec.4201-4214, as amended, which requires the Texas Board of Health through an agreement with the Texas Department of Human Services to adopt rules implementing a nurse aide registry and training and competency evaluation program for nurse aides; and Health and Safety Code, sec.12.001 which provides the Texas Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, Texas Department of Health, and the commissioner of health. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 19, 1992. TRD-9204020 Robert A. MacLean, M.D. Deputy Commissioner Texas Department of Health Effective date: April 1, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 834-6628 The new sections are adopted under the and the Omnibus Budget Reconciliation Act of 1987, Public Law 100-203, sec.sec.4201-4214, as amended, which requires the Texas Board of Health through an agreement with the Texas Department of Human Services to adopt rules implementing a nurse aide registry and training and competency evaluation program for nurse aides; and Health and Safety Code, sec.12.001 which provides the Texas Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, Texas Department of Health, and the commissioner of health. sec.151.3. Facility Requirements. (a) A facility must not use on a full-time basis any individual as a nurse aide in the facility for more than four months unless the individual: (1) is competent to provide nursing or nursing-related services; and (2) has met the following: (A) successfully completed a nurse aide training and competency evaluation program (NATCEP) or a competency evaluation program (CEP); or (B) been deemed or determined competent as provided in sec.151.10 of this title (relating to Waiver and Reciprocity Requirements). (b) A facility must not use on a temporary, per diem, leased, or any basis other than as a permanent employee any individual as a nurse aide in the facility unless the individual meets the requirements in subsection (a) of this section. (c) A facility must not use an individual who has worked less than four months as a nurse aide in the facility unless the individual: (1) is a full-time employee and is in a NATCEP; (2) has successfully completed a NATCEP or CEP; or (3) has been deemed or determined competent as provided in sec.151.10 of this title. (d) Private duty aides and sitters hired by residents or their families do not have to meet the requirements of this chapter or the Omibus Budget Reconciliation Act of 1987 (Act). Facilities are encouraged to develop their own policies regarding private duty aides and sitters. (e) Before allowing an individual to serve as a nurse aide, a facility must request and receive verification that the individual is on the registry unless the individual: (1) is a full-time employee and is in a NATCEP; or (2) can prove that he or she has recently successfully completed a NATCEP or a CEP and has not yet been included on the registry. Facilities must follow up to ensure such an individual actually is placed on the registry. (f) Before allowing an individual to serve as a nurse aide, a facility must seek information from each state registry established under the Act which the facility believes will include information on the individual. (g) A facility must not employ individuals who have had a finding entered into the registry concerning abuse, neglect, mistreatment of a resident, or misappropriation of a resident's property. sec.151.4. Nurse Aide Training and Competency Evaluation Program Requirements. (a) To train individuals who are not on the registry, a facility may offer a nurse aide training and competency evaluation program (NATCEP) or contract with another NATCEP. (b) A person or entity which desires to offer a NATCEP shall file an application for approval on official forms prescribed by the Texas Department of Health (department) which shall include, but not be limited to: (1) the name, phone number, location, and mailing address of the school or facility; (2) the category of the NATCEP designated as facility-based or non- facility- based; (3) the type of NATCEP designated as open or closed to public enrollment; (4) the name of the program director; (5) the total number of classroom and clinical hours and a schedule of the daily hours of the initial classroom and clinical program; (6) a list of facilities to be used for clinical training and letter(s) of agreement from the facilities signed by the chief executive officer or administrator of the facilities, if cooperative agreements are made between the NATCEP and the facility; (7) the location of the classroom course and a description of the classroom and skills training room(s) including adequate space, cleanliness, safety, lighting, and temperature controls; (8) a list of textbook(s), audio-visual materials, and other equipment to be used; (9) verification that the NATCEP shall follow the rules and the curriculum established by the department and shall agree to permit unannounced visits by the department or its designee; and (10) additional information and supporting documentation requested by the department. (c) If an entity or person desires to offer more than one NATCEP for which the required number of classroom hours or the location of the classroom course differs, the entity or person shall file a separate application for each of these separate NATCEPs. (d) A course which exceeds both the curriculum content and hours required by the department must: (1) teach the NATCEP curriculum in one distinct and separate segment of the longer course; and (2) submit a course outline which shows the placement of the NATCEP curriculum in the total course and provides the total weeks and hours of the NATCEP and of the total course. (e) A NATCEP offered by or in a facility shall not be approved by the department if: (1) within the previous two years, the facility: (A) has operated under a waiver under 42 United States Code (USC), sec.1395i- 3(b)(4)(C)(ii)(II) or sec.1396r(b)(4)(C)(ii) relating to the services of a registered nurse; (B) has been subject to an extended (or partial extended) survey under 42 USC, sec.1395i-3(g) or sec.1396r(g); (C) has been assessed a civil money penalty described in 42 Unites States Code, sec.1395i-3(h) or sec.1396r(h) of not less than $5,000; or (D) has been subject to: (i) denial of payment under 42 Unites States Code, sec.1395i-3(h) or sec.1396r(h); management under 42 Unites States Code, sec.1395i-3(h) or sec.1396r(h) ; (iii) termination of participation under 42 Unites States Code, sec.1395i- 3(h)(4) or sec.1396r(h)(1)(B)(i); or (iv) closure of the facility under 42 Unites States Code, sec.1396r(h)(2); or (2) pursuant to state or federal law, one of the following prohibitions occurred within the period from October 1, 1988, to September 30, 1990, and it is within two years of the action or assessment: (A) the facility had its participation terminated under the Social Security Act, Title XVIII, or under the state plan under the Social Security Act, Title XIX; (B) the facility was subject to a denial of payment under either title mentioned in subparagraph (A) of this paragraph; (C) the facility was assessed a civil money penalty not less than $5,000 for deficiencies in facility standards; (D) the facility operated under a temporary management appointed to oversee the operation of the facility and to ensure the health and safety of the facility's residents; or (E) pursuant to state action, the facility was closed or had its residents transferred. (f) Each NATCEP must teach a minimum of 75 clock hours of training, including at least: (1) 51 clock hours of classroom training defined as classroom and skills training which does not involve direct care of residents by trainees; and (2) 24 clock hours of clinical training defined as hands on care of residents by trainees under the direct supervision of a licensed nurse. (g) Each NATCEP must teach the curriculum established by the department including: (1) at least 16 introductory hours of training in the following areas prior to any direct contact with a resident: (A) communication and interpersonal skills; (B) infection control; (C) safety/emergency procedures including the Heimlich maneuver; (D) promoting residents' independence; and (E) respecting residents' rights; (2) personal care skills; (3) basic nursing skills; (4) mental health and social service needs; (5) care of cognitively impaired residents; (6) basic restorative services; and (7) residents' rights. (h) A NATCEP must have an approved program director who meets the requirements of sec.151.6(a) of this title (relating to Program Director and Skills Examiner Requirements) during the time training is occurring. (i) A NATCEP must ensure that trainees: (1) complete at least the first 16 hours of training (Section I of the curriculum) prior to any direct contact with a resident; (2) perform only those services for which they have been trained and found to be proficient by an instructor; (3) who are performing skills on individuals as part of a NATCEP are under the direct supervision of a licensed nurse; and (4) who are providing services to a resident are under the general supervision of a licensed nurse. (j) A NATCEP must notify the department of any substantive change in any information presented in an approved application including, but not limited to ownership, classroom location, clinical training site, program director, course content, or scheduled number of clock hours of the course. Such changes shall be approved by the department prior to the NATCEP's effective date of the change. If, due to special circumstances, a NATCEP cannot notify the department of a change prior to the effective date of the change, the department shall be notified immediately and shall approve the change if the change complies with the Act and this chapter. (k) Each NATCEP shall use a performance record developed by the department of major duties/skills taught. The record shall consist of, at a minimum, a listing of the duties/skills expected to be learned in the NATCEP, space to record when the trainee performs this duty/skill, spaces to note satisfactory or unsatisfactory performance, and the name of the instructor supervising the performance. At the completion of the NATCEP, the trainee and his/her employer (if applicable) will receive a copy of the record. (l) The NATCEP shall maintain records which shall be available to the department or its designees at any reasonable time and which shall include for each new session of the NATCEP at least the: (1) dates and times of all classroom and clinical hours; (2) full name and social security number of each trainee; (3) attendance record of each trainee; and (4) final course grade for the training portion of the NATCEP indicating pass or fail for each trainee. (m) At the request of an eligible trainee, the NATCEP shall issue a certificate of completion or a letter on letterhead stationery stating that the trainee has successfully completed the training portion of the NATCEP. The document shall include at least the date of completion, the total hours of training, the official NATCEP name and number on file with the department, and the signature of the program director. (n) Each NATCEP must meet the requirements of this chapter and include the competency evaluation program specified in sec.151.5(b) and (d)-(o) of this title (relating to Competency Evaluation Program Requirements). (o) A nurse aide who is employed by, or who has received an offer of employment from, a facility on the date on which the nurse aide begins a NATCEP may not be charged for any portion of the NATCEP (including any fees for textbooks or other required course materials). (p) If an individual does not fall under subsection (o) of this section, but becomes employed as a nurse aide by, or receives an offer of employment as a nurse aide from a facility not later than 12 months after completing a NATCEP, the state must provide for the reimbursement of costs incurred in completing the NATCEP on a pro rata basis during the period in which the individual is employed as a nurse aide. (q) Each trainee shall be clearly identified as a trainee during the clinical training. (r) The ratio of instructors to trainees in skills and clinical training must ensure that each trainee is provided safe and effective assistance and supervision. (s) Each NATCEP shall primarily provide educational and training opportunities for the trainee(s) rather than primarily provide nursing or nursing-related services to the facility, its residents, or clients. (t) The graduates' success rate on the examination will be monitored by the department and may be utilized as a criteria for withdrawing NATCEP approval. (u) No NATCEP shall be operated and no trainee shall be solicited or enrolled until the department has approved the NATCEP. (v) Approval of a NATCEP by the department is granted to cover only approval of the required curriculum and hours and should not be considered approval of additional content or hours. (w) An orientation required under federal or state law, other than the Act, given by a facility to a nurse aide employed in the facility shall be separate from and shall not constitute a part of a NATCEP. sec.151.5. Competency Evaluation Program Requirements. (a) All examinations shall be administered by the Texas Department of Health (department) or its designee to individuals who have successfully completed the training portion of a nurse aide training and competency evaluation program (NATCEP) or are eligible to take a free-standing competency evaluation program (CEP) under subsection (c)(1) of this section. (b) Requirements for the competency evaluation portion of a NATCEP are as follows. (1) A trainee is eligible to take the competency evaluation portion of a NATCEP if he or she has successfully completed the training portion of a NATCEP as determined by the program director. (2) An eligible trainee shall take the examination as part of the same NATCEP. If it is not possible to test with the same NATCEP, a nurse aide may take the examination at another approved facility or NATCEP which has volunteered to serve as an examination site. (3) An eligible trainee who does not test with the same NATCEP must obtain from the program director an original certificate or letter described in sec.151.4(m) of this title (relating to NATCEP Requirements) to present to the skills examiner prior to taking the examination. (c) Requirements for the free-standing CEP are as follows. (1) An individual is eligible to take a CEP if he or she completes the documentation required by the department and: (A) falls under sec.151.12 of this title (relating to Requirements for Retraining) ; (B) successfully completes the training portion of a NATCEP approved under the Act by or in another state; (C) successfully completes military training of 100 hours or more on or after July 1, 1989, equivalent to civilian nurse aide training; (D) successfully completes a state accredited registered nurse (RN) or licensed vocational nurse (LVN) program on or after July 1, 1989, and: (i) is not licensed as a RN or LVN; and (ii) has not held a license as a RN or LVN which has been revoked; (E) is currently enrolled in a state accredited school of nursing and has demonstrated competency in providing basic nursing skills in accordance with the school's curriculum; or (F) successfully completes a home health aide training and competency evaluation program in accordance with federal law and approved by the state. (2) An eligible individual shall take the CEP at an approved facility or NATCEP which has volunteered to serve as an examination site. (3) An eligible individual shall receive an original letter of approval to take a CEP signed by the department. This letter must be presented to the skills examiner prior to the examination. (d) The responsibilities of an approved facility or NATCEP serving as an examination site are to: (1) provide the facility where the skills examination and the location where the written or oral examination will be given; (2) offer the examination to its own trainees promptly after successful completion of the training portion if a NATCEP; (3) offer the examination to an eligible examinee who is employed by or has received an offer of employment from the facility, if the individual desires to be examined at the facility; (4) offer the examination to other eligible examinees whom the facility or NATCEP has voluntarily accepted for the examination; (5) schedule examinations and retests with the department's designee; and (6) assure that applications for examination are completed accurately. (e) The responsibilities of the examinee are to: (1) take the examination: (A) with the NATCEP where the examinee was trained; (B) at an approved facility from which the individual has received an offer of employment or is employed; or (C) at an approved facility or NATCEP which has volunteered to accept the examinee for examination; (2) verify the arrangements for examination with the examination site; (3) present the completed application for examination and documentation required under subsection (b)(3) or (c)(3) of this section to the skills examiner prior to the examination; (4) request a retest if the examinee fails the examination; and (5) meet other procedural requirements specified by the department or its designee. (f) The responsibilities of the department or its designees are to: (1) provide instructions and eligibility forms to applicants for a CEP and provide a letter of approval under subsection (c)(3) of this section; (2) assist an eligible examinee to find an approved facility or NATCEP to serve as an examination site; (3) schedule examinations and retests for the requesting approved facility or NATCEP; and (4) conduct and administer examinations and report results of examinations as required by the department. (g) The examination shall consist of: (1) the skills examination which includes a demonstration by the trainee of a minimum of five randomly selected skills drawn from a pool of skills which are generally performed by nurse aides and are listed on the performance record. This pool of skills includes all of the personal care skills listed in the curriculum; and (2) the written or oral examination which includes 50 multiple choice questions selected from a pool of test items which address each course requirement in the curriculum. The written examination questions are printed in a test booklet with a separate answer sheet. The oral examination is a tape-recorded presentation read from a prepared text in a neutral manner which includes additional questions to test reading comprehension. (h) At the nurse aide's option, the nurse aide may establish competency under this section by successful completion of: (1) a skills examination or an examination for a handicapped or disabled individual equivalent to the skills examination; and (2) a written examination in English, an oral examination in English or Spanish, or an examination for a handicapped or disabled individual equivalent to the written or oral examination. (i) Successful completion of the examination consists of: (1) achieving a passing grade on the skills examination as determined by the department; and (2) achieving a passing grade on the written or oral examination as determined by the department. (j) A person who fails the skills examination or the written or oral examination may retest twice on the failed examination. (1) The person shall be advised of the areas which he or she did not pass. (2) The person must request re-examination through the approved facility, NATCEP, or the department's designee. (3) The department is not required to set special re-examination schedules. (4) After failing the examination three times, the individual must complete the training portion of a NATCEP prior to retesting. (k) The state must advise in advance any individual who takes the examination that a record of the successful completion of the examination will be included on the nurse aide registry. (l) A record of successful completion of the examination must be included on the registry within 30 days of the date the examination was passed. (m) An examination shall not be offered by or in a facility if the facility falls within any of the provisions of sec.151.4(e) of this title. (n) A nurse aide who is employed by, or who has received an offer of employment from, a facility on the date on which the nurse aide begins a CEP may not be charged for any portion of the CEP. (o) If an individual does not fall under subsection (n) of this section, but becomes employed as a nurse aide by, or receives an offer of employment as a nurse aide from a facility not later than 12 months after completing a CEP, the state must provide for the reimbursement of costs incurred in completing the CEP on a pro rata basis during the period in which the individual is employed as a nurse aide. sec.151.6. Program Director and Skills Examiner Requirements. (a) Program director. The training of nurse aides must be performed by or under the general supervision of an approved program director. Each approved nurse aide training and competency evaluation program (NATCEP) must have an approved program director during the time training is occurring. (1) The program director must: (A) be licensed as a registered nurse in the State of Texas; (B) have a minimum of two years of nursing experience, at least one year of which must be in the provision of long-term care facility services; and (C) have completed a course in teaching adults or have experience in teaching adults or supervising nurse aides. (2) In a facility-based program, the director of nursing for the facility may be approved as the program director but is prohibited from performing the actual training. (3) A program director may supervise more than one NATCEP. (4) The responsibilities of the program director shall include, but not be limited to: (A) directing the NATCEP in compliance with the Act and this chapter; (B) teaching the NATCEP and/or supervising supplemental trainers; (C) assuring that NATCEP records are maintained; (D) determining if trainees have met the NATCEP requirements; (E) signing an application for examination for each trainee who has passed the training portion of the NATCEP and has completed the department's application; and (F) notifying the department of the date the program director ceases to be a program director for a specific NATCEP and the date the program director starts as a program director for another NATCEP. (5) A program director shall complete an application for approval. An applicant who meets the requirements of this subsection shall be approved as a program director. (b) Supplemental trainers. Other personnel from the health professions may supplement the training, including, but not limited to, registered nurses, licensed vocational nurses, pharmacists, dietitians, social workers, sanitarians, fire safety experts, nursing home administrators, gerontologists, psychologists, physical and occupational therapists, activities specialists, speech-language pathologists, audiologists, and resident rights experts. (1) A supplemental trainer must have at least one year of experience in his or her field of instruction. (2) A supplemental trainer may be listed on the NATCEP application but does not need approval from the department in order to instruct. (3) Each supplemental trainer shall be selected and supervised by the program director. (c) Skills examiner. The competency evaluation of a nurse aide must be conducted by an approved skills examiner. (1) A skills examiner must: (A) be licensed as a registered nurse in the State of Texas; (B) have completed a minimum of one year of professional experience in providing care for the elderly or chronically ill of any age; (C) have completed a skills training seminar conducted by the department or its designee; and (D) not be an employee of: (i) the facility where an examination is given by the skills examiner; (ii) the facility which gave the NATCEP to the person being examined by the skills examiner; or (iii) a facility with a contractual or corporate relationship to a facility described in clauses (i) or (ii) of this subparagraph. (2) A skills examiner shall be responsible for: (A) adhering to the department's standards for each skill examined; (B) conducting the examination in an objective manner according to the criteria established by the department; (C) validating the examination results on form(s) prescribed by the department; and (D) submitting prescribed forms and reports to the department or its designee. (3) A skills examiner shall complete an application for approval. An applicant who meets the requirements of this subsection shall be approved as a skills examiner. sec.151.7. Filing and Processing an Application for a Nurse Aide Training and Competency Evaluation Program, Program Director, or Skills Examiner. (a) An applicant must submit a request for approval on official forms prescribed by the department which: (1) are original documents signed by the applicant or authorized representative; (2) are typed or printed in ink with all pages clearly legible; and (3) are notarized as requested by the department. (b) The Texas Department of Health (department) shall consider whether the applicant complies with the Act and this chapter. (c) Incomplete or deficient applications may cause delays in the date of approval. (1) A notice of deficiency in the application will be mailed to an applicant within 15 days of the date of filing. (2) The applicant will be given an opportunity to correct any deficiencies. (d) Notice of approval or proposed disapproval of the application will be given to the applicant within 30 days of the receipt of a complete application. If the application is proposed to be disapproved due to noncompliance with the requirements of the Act or this chapter, the reason for disapproval shall be given in the notice. (e) An applicant for approval of a nurse aide training and competency evaluation program (NATCEP) or as a program director or skills examiner may request a hearing on a proposed disapproval in writing within 20 days of the date the notice is mailed or personally delivered to the applicant. The hearing shall be scheduled to commence within 30 days of the department's receipt of the applicant's request for a hearing and shall be in accordance with Chapter 1 of this title (relating to Texas Board of Health) and the Administrative Procedure and the Texas Register Act, Texas Civil Statutes, Article 6252-13a. (1) If no timely request for a hearing is made by an applicant, the applicant is deemed to have waived the opportunity for a hearing and the proposed action may be taken. (2) If an applicant who has requested a hearing fails to appear or be represented at the scheduled hearing, the applicant is deemed to have waived the opportunity for a hearing and the proposed action may be taken. sec.151.8. Approval, Reapproval, and Inspection of a Nurse Aide Training and Competency Evaluation Program. (a) Initial approval of a nurse aide training and competency evaluation program (NATCEP) shall be made on the basis of the application submitted to the Texas Department of Health (department). (b) Approval of a NATCEP is granted for a period of two years. (c) If substantive changes described in sec.151.4(j) of this title (relating to Nurse Aide Training and Competency Evaluation Program Requirements) are made within the two-year period, the NATCEP must notify the department and the department must review the NATCEP. An on-site review by the department may be necessary. (d) The department shall send a notice of renewal and a renewal application form to a NATCEP at least 60 days prior to the expiration date of the approval. (e) A NATCEP must file the renewal application form before the expiration date of the approval. A NATCEP which makes timely application for renewal may continue to train. A NATCEP which files the renewal application form after the expiration date may not train until the renewal application form is approved by the department. (f) After receipt of the completed renewal application form, the department shall schedule and conduct an on-site review of the NATCEP to determine if it is in compliance with the requirements of the Act and this chapter. (g) The department may conduct an on-site review of a NATCEP at any reasonable time. (h) The department shall present to a NATCEP a written report of the results of any on-site review summarizing any violations of or noncompliance with the Act or this chapter. (1) The NATCEP must submit a written response to the department which includes a plan of action to correct all violations or noncompliance and the results of such action. (2) The department may direct a NATCEP to comply with the requirements of the Act and this chapter. (3) A NATCEP not meeting the requirements of the Act and this chapter may be subject to further on-site reviews or proposed disapproval or withdrawal of approval. sec.151.9. Withdrawal of Approval of a Nurse Aide Training and Competency Evaluation Program, Program Director, and Skills Examiner. (a) Approval of a nurse aide training and competency evaluation program (NATCEP), program director, or skills examiner may be withdrawn for any violation of or noncompliance with the Act or this chapter. (b) The department shall withdraw approval of a NATCEP that refuses to permit unannounced visits by the state. (c) The department shall withdraw approval of a NATCEP offered by or in a facility which falls within a prohibition in sec.151.4(e) of this title (relating to Nurse Aide Training and Competency Evaluation Program Requirements). (d) If the department proposes to withdraw approval of a NATCEP, program director, or skills examiner, the department shall notify the NATCEP, program director, or skills examiner by mail at the last known address as shown in the department's records or by personal delivery. The notice must state the facts or conduct alleged to warrant the action and state that the individual has an opportunity to request in writing a hearing. (e) The NATCEP or individual notified may request a hearing within 20 days of the date the notice is mailed or personally delivered to the NATCEP or individual. This request shall be in writing and submitted to the program administrator, Nurse Aide Training Program at the department. (1) A hearing shall be scheduled to commence within 30 days from the department's receipt of the request for a hearing and shall be conducted pursuant to the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, and Chapter 1 of this title (relating to Texas Board of Health). (2) If the NATCEP or individual does not request a hearing in writing, the NATCEP or individual is deemed to have waived the opportunity for a hearing, and the proposed action may be taken. (3) If the NATCEP or individual fails to appear or be represented at the scheduled hearing, the NATCEP or individual is deemed to have waived the opportunity for a hearing and the action may be taken. (f) Students who have started a NATCEP from which approval is proposed to be or has been withdrawn shall be allowed to complete the NATCEP. sec.151.10. Waiver and Reciprocity Requirements. (a) A nurse aide shall be deemed to be competent and shall be placed on the registry by waiver of the requirements if the individual: (1) was found to be competent (whether or not by the State of Texas) before July 1, 1989, after completion of a nurse aide training course of at least 100 hours duration; and (2) has completed the documentation required by the department. (b) A nurse aide who is on a registry in another state shall be placed on the registry by reciprocity if the individual: (1) is currently on the nurse aide registry in another state which has a program which is in compliance with the Act; and (2) has completed the documentation required by the department. sec.151.11. Registry; Findings; Inquiries. (a) The Texas Department of Health (department) shall establish and maintain a registry of all individuals who qualify under sec.151.3(a)(2) of this title (relating to Facility Requirements). Each individual listed on the registry shall keep the department informed of his or her current address and telephone number. (b) A nurse aide shall provide documentation to the department every 24 months using a form provided by the department that the nurse aide has performed nursing or nursing-related services or acted as a nurse aide for monetary compensation for any period of time within the previous 24 months. The department shall remove a registry entry for an individual who does not provide such documentation, unless a finding of abuse, neglect, or misappropriation of resident property is on the registry for that individual. (c) The department shall review and investigate allegations of abuse, neglect, or misappropriation of resident property by a nurse aide. A nurse aide shall be given written notice by the department of a proposed finding on an allegation and must request, in writing, a hearing within 20 days of the date the notice is mailed or personally delivered to the nurse aide or the right to a hearing shall be waived, and the department may reach a finding on the allegation without a hearing. (1) When a timely written request for a hearing is received by the department, the department shall request the department's office of general counsel to appoint a hearing examiner to conduct the hearing. (2) Any hearing shall be in accordance with the department's formal hearing procedures in Chapter 1 of this title and the Administrative Procedure and Texas Register Act, Texas Civil Statutes Article 6252-13a. (3) The department shall not make a finding that an individual has neglected a resident if the individual demonstrates that such neglect was caused by factors beyond the control of the individual. (4) If the nurse aide fails to appear or be represented at the scheduled hearing, the department may reach a finding on the allegation without a hearing. (5) The registry, the nurse aide, and the administrator of the facility where the event occurred shall be notified of the findings. (6) The registry shall include the documented findings involving an individual listed on the registry, as well as any brief statement of the individual disputing the findings. (d) The information on the registry shall be made available to the public. (e) The department, in the case of inquiries to the registry, shall verify if the individual is listed on the registry and shall disclose any information concerning a finding of abuse, neglect, or misappropriation of resident property involving an individual listed on the registry. It shall also disclose any statement by the individual related to the finding or a clear and accurate summary of such a statement. sec.151.12. Requirements for Retraining. If there has been a continuous period of 24 consecutive months after completion of a nurse aide training and competency evaluation program (NATCEP) during none of which a person performed nursing or nursing-related services or acted as a nurse aide for monetary compensation, the person shall complete a new NATCEP or a new competency evaluation program (CEP). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 19, 1992. TRD-9204021 Robert A. MacLean, M.D. Deputy Commissioner Texas Department of Health Effective date: April 1, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 834-6628 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 1. General Administration Subchapter C. Assessment of Maintenance Taxes, 1992 28 TAC sec.1.410 The State Board of Insurance of the Texas Department of Insurance adopts new sec.1.410, concerning assessment of maintenance taxes for payment for 1992, with changes to the proposed text as published in the January 14, 1992, issue of the Texas Register (17 TexReg 296). The new section is necessary to provide a method and rate of assessment for maintenance taxes for 1992. The maintenance tax rates vary from year to year since the rate is based on the actual funding needs of the agency by line of insurance after taking into account any unexpended funds. The new section is changed in subsections (d) and (e) to reflect a change in the due date of the payments from March 1, 1992 to April 15, 1992. This change is necessary to allow the department sufficient time to finally adopt the rates in this section. In addition, two commas were added in the second sentence of subsection (d) to clarify the meaning of the sentence. Section 1.410 provides the method and the rates of assessment for maintenance taxes for 1992. It sets the rates of assessment and applies those rates to life, accident, and health insurance; motor vehicle insurance; casualty and fidelity insurance and guaranty and surety bonds; fire and allied lines insurance, including inland marine; workers' compensation insurance; title insurance; health maintenance organizations; third party administrators; and corporations issuing prepaid legal services contracts. The department received one comment regarding an inconsistency in terminology in the preamble and text of the new section. The phrases "gross premium receipts" and "gross premiums" are used in the preamble and the text respectively to describe the basis for assessing the maintenance tax. The commentor points out that insurance companies do not always receive total premiums at the time the policy is written. In other words, there may be a timing difference between the time the policy is written and the premiums are actually received. The department recognizes the inconsistency in the terms. However, because the inconsistency was located in the preamble's introductory paragraph rather than the text of the section, no change has been made to the text of the section based on this comment. The only comment received was from the New Hampshire Insurance Company. The comment did not favor the usage of a term in the introductory paragraph which it interpreted as inconsistent with the text of the new section. The new section is adopted under the Texas Insurance Code, Articles 4.17, 5. 12, 5.24, 5.49, 5.68, 9.46, 21.07-6 sec. sec.21, and 23.08; and the Texas Health Maintenance Organization Act, Article 20A.33, which provide authorization for the Texas Department of Insurance to assess maintenance taxes for the lines of insurance and related activities specified in new sec.1.410. sec.1.410. Assessment of Maintenance Tax, 1992. (a) The following rates for maintenance taxes are assessed on gross premiums of insurers as delineated in this section for the calendar year 1991 for the lines of insurance specified: (1) for motor vehicle insurance, pursuant to the Texas Insurance Code, Article 5.12, the rate is .070 of 1.0%; (2) for casualty and fidelity insurance and guaranty and surety bonds, pursuant to the Texas Insurance Code, Article 5.24, the rate is .210 of 1.0%; (3) for fire insurance and allied lines, including inland marine, pursuant to the Texas Insurance Code, Article 5.49, the rate is .574 of 1.0%; (4) for workers' compensation insurance, pursuant to the Texas Insurance Code, Article 5.68, the rate is .217 of 1.0%; (5) for title insurance, pursuant to the Texas Insurance Code, Article 9. 46, the rate is .178 of 1.0%. (b) The rate for the maintenance tax to be assessed on gross premiums for the calendar year 1991 for life, accident, and health insurance, pursuant to the Texas Insurance Code, Article 4.17, is .040 of 1.0%. (c) The following rates for maintenance taxes are assessed for the calendar year 1991 for the entities specified: (1) for health maintenance organizations, pursuant to the Texas Health Maintenance Organization Act, Article 20A.33, the rate is $.62 per enrollee for single service health maintenance organizations and $1.25 per enrollee for multi-service health maintenance organizations; (2) for third party administrators, pursuant to the Texas Insurance Code, Article 21.07-6, sec.21, the rate is .800 of 1.0% of the correctly reported gross amount of administrative or service fees; (3) for corporations issuing prepaid legal service contracts, pursuant to the Texas Insurance Code, Article 23.08, the rate is 1.0% of correctly reported gross revenues. (d) The taxes assessed under subsections (a), (b), (c)(1), and (c)(3) of this section shall be due and payable to the Texas Department of Insurance as follows: 50% on April 15, 1992, or on the date upon which the annual statement for such insurer is required to be filed during 1992; and 50% on September 15, 1992. Insurers, whose maintenance tax liability for the previous tax year was less than $2,000 on each of the lines of insurance specified in the Texas Insurance Code, Articles 5.12, 5.24, 5.49, 5.68, 4.17, 9.46, 20A.33, and 23.08, shall remit 100% of such taxes on April 15, 1992, or on the date upon which the annual statement for such insurer is required to be filed during 1992. (e) Taxes assessed under subsection (c)(2) of this section shall be due and payable to the Texas Department of Insurance as follows: 50% on April 15, 1992, or the date upon which the annual statement for such insurer is required to be filed during 1992; and 50% on September 15, 1992. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 23, 1992. TRD-9204115 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 13, 1992 Proposal publication date: January 14, 1992 For further information, please call: (512) 463-6327 Chapter 5. Property and Casualty Insurance Subchapter K. Commercial Multi-Peril Policies 28 TAC sec.5.9101 The State Board of Insurance of the Texas Department of Insurance adopts new sec.5.9101, concerning identifying the lines of insurances that may be included in the commercial multi-peril policy, and establishing procedures for the filing of rates and policy forms for the commercial multi-peril policy with the Texas Department of Insurance, with changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 823). The State Board of Insurance of the Texas Department of Insurance adopts this section under the Texas Insurance Code, Article 5.81. Article 5.81 provides the Texas Department of Insurance with the authority to approve policy forms and rates for multi-peril policies of insurance and to make rules as are necessary and desirable to carry out the purposes of Article 5.81. The adopted section is necessary to carry out the purposes of Article 5.81. The section sets out the lines of insurance which may be included in the commercial multi-peril policy and provides for the filing of rates and policy forms with the Texas Department of Insurance. The definitions subsection of the section provides definitions of words used in the section. The commercial multi- peril package policy subsection sets out the types of coverages which may be included in a commercial multi-peril package policy. The rate standards subsection establishes the factors which an insurer may consider in setting rates. The rate filings subsection sets out the information to be filed with the State Board of Insurance and the procedures to be followed if the State Board of Insurance determines an insurer's rates require supervision or if an insured is aggrieved with respect to any filing in effect. The disapproval subsection provides the procedure to be used if the State Board of insurance disapproves a rate filing. The forms subsection provides that a commercial multi-peril package policy or printed endorsement may not be used unless such form has been filed with and approved by the State Board of Insurance. Additionally, the forms subsection establishes the procedure to be used for filing the form for approval and the procedure to be followed by the State Board of Insurance if the form is disapproved. The additional lines of insurance subsection establishes that in addition to lines of insurance enumerated in subsection (b) of this section, professional liability and/or commercial automobile, other than garage insurance as described in subsection (b)(7), may also be included in a multi-peril package policy provided that the rates and policy forms for these lines of insurance are the rates and forms approved in the manner provided by Texas Insurance Code, Article 5.15 for professional liability and Articles 5.101 and 5.06 for commercial automobile. The Texas Department of Insurance received comments regarding the proposed section during the public comment period. One commenter suggested that the commercial automobile and professional liability lines of insurance be subject to the rate and form approval subsection of this section rather than be approved separately under Texas Insurance Code, Article 5.15, for professional liability, and Articles 5.101 and 5.06, for commercial automobile. The same commenter also suggested that insurance coverage of certain types of businesses by considered to be incidental to the general liability and commercial property coverages and, therefore, fall within the provisions of this section. This commenter provided a similar comment relating to incidental commercial auto coverages. The second commenter suggested that insurance including all coverages and endorsements currently included in the Texas Garage Policy be added to the list of lines of insurance which may be included in a commercial multi-peril package policy, with rates filed and forms approved pursuant to the provisions of this section. Vinson & Elkins L.L.P. Long, Burner, Parks & Sealy. The agency believes that adoption of the suggestion by Vinson & Elkins to consider the "miscellaneous professional liability" lines as incidental to the general liability and commercial property coverages would circumvent the legislative intent of Texas Insurance Code, Article 5.13-2. The agency believes the legislature intended to create a narrow pilot for the general liability and commercial property coverages. Therefore, the agency does not agree with this suggestion. For the same reason, the agency rejects Vinson & Elkins' suggestion to treat the incidental commercial auto coverages as coverages incidental to general liability and commercial property coverages. The agency agrees with the suggestion proposed by Long, Burner, Parks & Sealy to add insurance currently included in the Texas Garage Policy to the list of lines of insurance which may be included in a commercial multi-peril package policy with rates filed and forms approved pursuant to the provisions of this section. The agency believes the insurance currently included in the Texas Garage Policy is more akin to general liability insurance than automobile insurance. For this reason, the agency amends the section to include the insurance currently included in the Texas Garage Policy to the list of lines of insurance which may be included in a Commercial Multi-Peril Package Policy with rates filed and forms approved pursuant to provisions of this section. The new section is adopted under the Texas Insurance Code, Article 5.81, which provides the Texas Department of Insurance with the authority to approve policy form and rates for multi-peril policies of insurance and to make rules as are necessary and desirable to carry out the purposes of Article 5.81. sec.5.9101. Multi-Peril Policies. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Filer-An insurer that files rates, prospective loss costs, or supplementary rating information under this section. (2) Insurer-Every insurance company, corporation, interinsurance exchange, mutual, reciprocal, association, Lloyds, or other organization or insurer writing any of the characters of insurance business herein set forth in this section, but does not include the Texas Catastrophe Property Insurance Association or any county or farm mutual insurance company or association as regulated under the Texas Insurance Code, Chapters 16 and 17. However, the provisions of subsections (c), (d), and (e) of this section shall not apply to Lloyds. (3) Prospective loss costs-That portion of a rate that does not include provisions for profit or expenses, other than loss adjustment expenses, that is based on historical aggregate losses and loss adjustment expenses projected by development to their ultimate value and through trending to a future point in time. (4) Rate-The cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost, with an adjustment to account for the treatment of expenses, profit, and individual insurer variation in loss experience, before any application of individual risk variations based on loss or expense considerations. The term does not include a minimum premium. (5) Supplementary rating information-Any manual, rating schedule, plan of rules, rating rules, classification systems, territory codes and descriptions, rating plans, and other similar information required by the State Board of Insurance to determine the applicable premium for an insured. For the multi-peril package policy with a divisible premium, the supplementary rating information must be submitted for each line of insurance included. The term includes factors and relativities, such as increased limits factors, classification relativities, deductible relativities, or other similar factors. (6) Supporting information- (A) the experience and judgment of the filer and the experience or information of other insurers or advisory organizations relied on by the filer; (B) the interpretation of any other information relied on by the filer; (C) descriptions of methods used in making the rates; and (D) any other information required by the State Board of Insurance to be filed. (b) Commercial multi-peril package policy. Insurers which write lines of insurance covered by the Texas Insurance Code, Chapter 5, may include coverage for any two or more of the following lines of insurance in a commercial multi- peril package policy with rates filed and forms approved pursuant to the provisions of this section: (1) general liability; (2) commercial property; (3) boiler and machinery; (4) commercial crime; (5) commercial glass; (6) inland marine; and (7) garage insurance including all coverages and endorsements included in the Texas Garage Policy, except for those coverages specifically rated on the basis of the risk characteristics of the automobile or the person driving. (c) Rate standards. (1) Rates for commercial multi-peril package policies under this section shall be made in accordance with the provisions of this subsection. (2) In setting rates, an insurer shall consider: (A) past and prospective loss experience inside and outside this state; (B) any applicable catastrophe hazards; (C) operation expenses; (D) investment income; (E) a reasonable margin for profit and contingencies; and (F) any other relevant factors inside and outside this state. (3) An insurer may group risks by classifications for the establishment of rates and minimum premiums and may modify classification rates to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in those risks on the basis of any factor listed in paragraph (2) of this subsection. (4) Rates may not be excessive, inadequate, or unfairly discriminatory and may not be unreasonable. (5) In setting rates applicable solely to policyholders in this state, an insurer shall use available premium, loss, claim, and exposure information from this state to the full extent of the actuarial credibility of that information. The insurer may use experience from outside this state as necessary to supplement information from this state that is not actuarially credible. (d) Rate filings. (1) For each line of insurance included in a commercial multi-peril package policy with a divisible premium, each insurer shall file with the State Board of Insurance all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state. For each commercial multi-peril package policy with an indivisible premium based on the loss experience under such package policy as a whole, each insurer shall file with the State Board of Insurance all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state. (2) If the State Board of Insurance determines after a hearing that an insurer's rates require supervision because of the insurer's financial condition or the insurer's rating practices, the State Board of Insurance may require the insurer to file with the State Board of Insurance all rates, supplementary rate information, and any supporting information prescribed by the State Board of Insurance. (3) An insured that is aggrieved with respect to any filing in effect, or the public insurance counsel, may make a written application to the State Board of Insurance for a hearing on the filing. The application must specify the grounds on which the applicant bases the grievance. If the State Board of Insurance finds that the application is made in good faith, that the applicant would be so aggrieved if the grounds in the application are established, and that those grounds otherwise justify holding the hearing, the State Board of Insurance shall hold a hearing not later than the 30th day after the date of receipt of the application. The State Board of Insurance shall give at least 10 days' written notice to the applicant and to each insurer that made the filing in question. (4) If, after the hearing, the State Board of Insurance finds that the filing does not meet the requirements of this section, the State Board of Insurance shall issue an order specifying how the filing fails to meet the requirements of this section and stating the date on which, within a reasonable period after the order date, the filing is no longer in effect. The State Board of Insurance shall send copies of the order to the applicant and to each affected insurer. (5) Each insurer subject to this section shall file with the State Board of Insurance, on a quarterly basis, information relating to changes in losses, premiums, and market share since January 1, 1993. (6) Each filing and any supporting information filed under this section, is open to public inspection as of the date of the filing. (e) Disapproval. (1) The State Board of Insurance shall disapprove a rate if the State Board of Insurance determines that the rate filing made under this section does not meet the standard established under this section. (2) If the State Board of Insurance disapproves a filing, the board shall issue an order specifying in what respects the filing fails to meet the requirements of this section. Upon written request made to the State Board of Insurance, the filer is entitled to a hearing not later than the 30th day after the effective date of the disapproval order. (3) If the State Board of Insurance disapproves a rate that is in effect, the board may issue a disapproval order only after a hearing held after at least 20 days' written notice to the insurer that made the filing. The disapproval order shall be issued not later than the 15th day after the close of the hearing and shall specify how the rate fails to meet the requirements of this section. The disapproval order shall state the date on which the further use of that rate is prohibited. The board shall set the date not earlier than the 45th day after the date on which the hearing closes. (f) Forms. (1) A commercial multi-peril package policy or printed endorsement for use in connection with a commercial multi-peril package policy described in subsection (b) of this section may not be delivered or issued for delivery in this state unless the form has been filed with and approved by the State Board of Insurance. (2) Each filing shall be made not later than the 60th day before the date of any use or delivery for use. At the expiration of the 60-day period a filed form is approved unless, before the expiration of the 60 days, the State Board of Insurance approves or disapproves the form by order. Approval of a form by the State Board of Insurance constitutes a waiver of any unexpired portion of the 60-day period. The State Board of Insurance may extend by not more than an additional 60 days the period during which it may approve or disapprove a form by giving notice to the filer of the extension before the expiration of the initial period. At the expiration of any extension and in the absence of any earlier approval or disapproval, the form shall be considered approved. For good cause shown, the State Board of Insurance may withdraw its approval at any time after notice and a hearing. (3) An order of the State Board of Insurance disapproving any form or any notice of the State Board of Insurance's intention to withdraw a previous approval shall state the grounds for the disapproval in enough detail to reasonably inform the filer of the grounds. An order of withdrawal of a previously approved form takes effect on the expiration of the prescribed period, but not sooner than the 30th day after the effective date of the withdrawal order, as prescribed by the State Board of Insurance. (4) An insurer may not use in this state any form after disapproval of the form or withdrawal of approval by the State Board of Insurance. (5) If the State Board of Insurance promulgates standard commercial multi-peril insurance forms, endorsements, and other related forms, an insurer, at its discretion may use these forms instead of the insurer's own forms for writing commercial multi-peril insurance. Forms submitted by insurers for approval under this subsection must provide coverage equivalent to that provided in the policy and endorsement forms used for these lines of coverages on the effective date of this section. An endorsement may not reduce coverage provided under the approved policy form. (g) Additional lines of insurance. (1) In addition to the lines of insurance enumerated in subsection (a) of this section, one or more of the following lines of insurance may also be included in a multi-peril package policy: (A) professional liability; (B) commercial automobile, other than garage insurance as described in subsection (b) (7) of this section. (2) The rates and policy forms for the lines of insurance enumerated in paragraph (1) of this subsection shall be those rates and forms approved in the manner provided by the Texas Insurance Code, Article 5.15 for professional liability and Articles 5.101 and 5.06 for commercial automobile. Policy forms and endorsements for these lines of insurance shall be self-contained and severed from all other coverages under the multi-peril policy. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 23, 1992. TRD-9204117 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 13, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-6327 Subchapter M. Filing Requirement 28 TAC sec.5.9302 The State Board of Insurance of the Texas Department of Insurance adopts new 28 TAC sec.5.9302 establishing the definition of the term "equivalent coverage" as such term is used in Article 5.13-2, sec.8(e) of the Texas Insurance Code for policy forms filed by individual insurers for commercial property and general liability insurance, and, as such term is used in 28 TAC sec.5.9101 for policy forms filed by individual insurers for commercial multi-peril insurance, with changes to the proposed text as published in the January 21, 1992, issue of the Texas Register (17 TexReg 460). The State Board of Insurance of the Texas Department of Insurance adopts this section because it is necessary to establish, by defining the term "equivalent coverage", the acceptable coverage that must be provided in policy forms filed by individual insurers for commercial property, general liability, and commercial multi-peril insurance. The term "equivalent coverage" is used in the Texas Insurance Code, Article 5.13-2, sec.8(e) and in 28 TAC sec.5.9101(g)(5) but is undefined. This section provides the definition of "equivalent coverage" to be used in conjunction with the Texas Insurance Code, Article 5.13-2, sec.8(e) and 28 TAC sec.5.9101(g)(5). The section provides a definition of the term "equivalent coverage" to be used in conjunction with the provisions contained in the Texas Insurance Code, Article 5.13-2, sec.8(e) and in 28 TAC sec.5.9101(g)(5). Both the Texas Insurance Code, Article 5.13-2, sec.8(e) and 28 TAC sec.5.9101(g)(5) require that policy forms filed by individual insurers for commercial property, general liability insurance, and commercial multi-peril insurance provide equivalent coverage to the policy forms for those same coverages that were in effect on or before October 1, 1991. The section requires an insurer who is submitting policy forms for approval to submit a comparative evaluation of the filed policy forms to similar approved policy forms that were in effect on October 1, 1991. The section also requires a disclosure form to be signed by the policyholder to accompany the policy form if a designated limit for a specific coverage is less than the limit for a similar coverage in the approved policy form in effect on October 1, 1991. Additionally, the section contains an exception to the "equivalent coverage" definition for policy forms containing exclusions and/or limitations previously approved by the State Board of Insurance for use on an individual basis if such policy forms are accompanied by explanation for such exclusion and/or limitation and a disclosure and election form to be signed by the policyholder. The section also contains an exception for "large risk" policy forms. The term "large risk" is defined in the section. The Texas Department of Insurance received comments from the law firm of Vinson & Elkins. Vinson & Elkins submitted such comments on behalf of State Farm Insurance Company. The comments generally favor the proposed section. However, there are two subsections in the section in which State Farm recommends a change from the proposed language. State Farm wants subsection (e)(3) to define "equivalent coverage" for certain enumerated coverages to state "Coverage equal in value, taken as a whole" instead of the language, "substantially the same coverage". The second proposed change would be to eliminate the requirement that an insurer submit with the policy forms a disclosure form to be signed by the policyholder if a designated limit applying to a specific type of coverage is less than the limit for the same coverage in an approved policy form in effect on October 1, 1991. Vinson & Elkins, on behalf of State Farm Insurance Company commented against the adoption. The agency disagrees with the comments submitted by Vinson & Elkins on behalf of State Farm. The agency believes the language proposed by State Farm relating to subsection (e>(3) acts to weaken the effect of the term "equivalent coverage". The agency is concerned that the phrase "coverage equal in value, taken as whole" would allow for a give-and-take approach to the specific coverage. Such a give-and-take application may actually act to provide less coverage than the coverage contained in an approved policy form in effect on October 1, 1991. The agency wants the coverage to be substantially the same coverage in every aspect. The agency's approach eliminates the give-and-take approach. State Farm's second comment relates to the requirement that an insurer submit a disclosure form to be signed by the policyholder if a designated limit applying to a specific type of coverage within the policy form is less than the limit for similar coverages contained in an approved policy form in effect on October 1, 1991. State Farm suggests that this requirement be eliminated. The agency disagrees with this suggestion because it believes that some evidence should exist to indicate that the policyholder was aware that a designated limit in policy form is less than the limit in an approved policy form in effect on October 1, 1991. The new section is adopted under the Texas Insurance Code, Article 1.04(b), which authorizes the State Board of Insurance to adopt rules; Article 5.13-2, which requires that policy forms submitted by insurers for approval in general liability lines and commercial property lines must provide coverage equivalent to that provided in the policy forms used for those lines on the effective date of Article 5.13-2, Article 5.81, which authorizes the State Board of Insurance to approve forms for multi-peril policies of insurance and to adopt rules to carry out the purposes of that article; and, Article 5.98, which authorizes the State Board of Insurance to adopt rules to accomplish the purposes of Subchapter L, Chapter 5, Texas Insurance Code. sec.5.9302. Equivalent Coverage. (a) The term "equivalent coverage" as provided in the Insurance Code, Article 5.13-2, sec.8(e), for policy forms filed by individual insurers for commercial property and general liability insurance and as provided in 28 TAC sec.5.9101(g)(5) of this title (relating to Multi-Peril Policies) for commercial multi-peril policy forms for commercial property, general liability, boiler and machinery, commercial crime, commercial glass, commercial inland marine, and garage liability insurance shall be subject to the standards set forth in subsections (b)-(h) of this section. (b) The term "policy form(s)" in these rules shall include printed endorsements and other related forms as set forth in the Insurance Code, Article 5.13-2. (c) Whether coverage is deemed to be equivalent by the Texas Department of Insurance shall be based on comparisons of like or similar policy forms that were approved by the State Board of Insurance prior to and in effect on October 1, 1991, to those policy forms filed by individual companies under this rule. For example, named peril policy will be compared to named peril policy, all risk policy will be compared to all risk policy, commercial liability policy will be compared to commercial liability policy. (d) All filings of policy forms submitted to the State Board of Insurance must contain a statement signed by an officer of the company attesting in a good faith belief that the filed policy forms provide equivalent coverage, as defined in subsection (e) of this sections, to those policy forms approved by the State Board of Insurance prior to and in effect on October 1, 1991. (e) Equivalent coverage shall mean the following. (1) Policy forms filed for approval must, taken as a whole, provide coverage that is at least equal in value to coverage provided under policy forms approved by the State Board of Insurance prior to and in effect on October 1, 1991. The insurer submitting such policy forms for approval shall submit: (A) a comparative evaluation of the filed policy forms to like or similar policy forms that were approved by the State Board of Insurance prior to and in effect on October 1, 1991; and (B) an express disclosure form to be signed by the policyholder and attached to the initial policy if a designated limit applying to a specific type of property or to a specific coverage within the filed policy form is less than the limit for the same or similar coverage in the comparable policy form approved by the State Board of Insurance prior to and in effect on October 1, 1991. (2) Policy forms filed for approval must include all provisions and conditions required by the Texas Insurance Code, including any specific notices to a policyholder. (3) Except as provided in subsections (f) and (g) of this section, policy forms filed for approval must contain substantially the same coverage provided under policy forms approved by the State Board of Insurance prior to and in effect on October 1, 1991, for: (A) debris removal; (B) pollution (all lines of insurance); (C) defense costs; (D) punitive damages; (E) liquor liability; (F) collapse of building peril; (G) any other coverage the State Board of Insurance, by rule, may determine to be necessary as a matter of public policy. (f) Policy forms filed for approval may contain exclusions and/or limitations which have previously been approved by the State Board of Insurance for use on an individual basis, and must be accompanied by: (1) an explanatory memorandum setting forth the proposed application of and the reasons for the exclusion and/or limitation; (2) a disclosure and election form to be signed by the policyholder and attached to a policy indicating the policyholder and the insurer have negotiated and agreed to the coverage to be provided in the policy. (g) Policy forms filed for approval and designated as policy forms for use with "large risks" shall not be subject to the requirements for equivalent coverage set out in this rule except subsections (e)(2) and (h) of this section. Such filed policy forms shall be considered to provide equivalent coverage if the coverage is negotiated between the insurer and policyholder. The filing of policy forms for "large risks" must be accompanied by: (1) an explanatory memorandum; (2) a disclosure and election form to be signed by the policyholder and attached to a policy indicating the policyholder and the insurer have negotiated and agreed to the coverage to be provided in the policy. (h) The term "large risk" means any of the following: (1) an insured that has total insured property values of $10,000,000 or more; (2) an insured that has been provided an engineering and/or inspection service that meets standards approved by the Texas Department of Insurance; (3) an insured that has total annual gross revenues of $20,000,000 or more; or (4) an insured that has a total premium of $25,000 or more for property insurance or $50,000 or more for general liability insurance, or $75,000 or more for multi-peril insurance. (i) The negotiation of the coverage to be provided a policyholder, including the consenting of a policyholder to exclusions of coverage shall be fair and reasonable and subject to the applicable provisions of the Texas Insurance Code. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 23, 1992. TRD-9204118 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 13, 1992 Proposal publication date: January 21, 1992 For further information, please call: (512) 463-6327 Chapter 7. Corporate and Financial Subchapter B. Insurance Holding Company System Regulatory Act 28 TAC sec.sec.7.201-7.205, 7.209-7.213 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.sec.7.201-7.205 and 7.209-7.213, concerning administrative regulation under the Insurance Holding Company System Regulatory Act (the Insurance Code, Article 21.49-1). Sections 7.202, 7.204, and 7.213 are adopted with changes to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 381). Sections 7.201, 7.203, and 7.205, 7. 209- 7.212 are adopted without changes and will not be republished. The amendments are necessary to provide editorial changes and clarifications and to reflect statutory amendments to Article 21.49-1 enacted by passage of House Bill 2, 72nd Legislature, 1991. The adoption makes editorial changes in sec.7.202(a)(2) and in sec.7.202(a)(5) based on comments received. The adoption changes sec.7.204(a)(2)(F) to exclude fully insured deposits rather than fully insured demand deposits due to comments received. The adoption changes sec.7. 204(b) by moving the new text regarding indemnification under a consolidated federal income tax agreement to sec.7.204(a)(2)(E), at the suggestion of commenters. Section 7.204(d)(2)(B) was changed, based on comments, by moving the language regarding pro rata distributions of any class of an insurer's own securities to a separate subparagraph, sec.7.204(d)(2)(C), and, changing the next subparagraph to sec.7.204(d)(2)(D). The adoption corrects an omission of language from the proposed text as published so that the first sentence of sec.7.213(h)(2) reads: "The financial statements shall include the annual financial statements of the persons identified in subsection (c)(1) of this section for the preceding fiscal year, and similar unaudited financial information as of a date not earlier than 120 days prior to the filing of the statement, accompanied by affidavit or certification of the chief financial officer of the applicant that such unaudited financial statement is true and correct, as of its date, and that there has been no material change in financial condition, as defined by the Act, sec.3, from the date of the financial statement to the date of the affidavit or certification." The HCDividend form, adopted by reference under sec.7.203, was not published but is on file with the Secretary of State's Office, Texas Register Section, and may be obtained from the Holding Company Division, Mail Code 304-2A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. The amendments to sec.7.201 remove the ability to incorporate by reference on the completely restated registration statement required by sec.7.203(g), and remove the availability of an extension of time to provide information which is available but impractical to furnish at the time required to be filed. The amendments to sec.7.202 expand the definition of "affiliate," "commissioner," "control," and "insurer" and provide a definition for "immediate family." The amendments to sec.7.203 remove the exemption provided in the total reinsurance of a mutual assessment company by a stipulated premium insurance company; provide that a disclaimer may be filed provided the person filing is in compliance with the Act, sec.5(a)-(c); require dividends and distributions to shareholders to be noticed, utilizing Form HCDividend as adopted by reference; and, make dividends to shareholders subject to applicable provisions of the Insurance Code. The amendments to sec.7.204 broaden the scope for certain transactions requiring notice or approval and provide that the calculation of extraordinary dividends or distributions shall be based on the declaration date(s) of such dividends or distributions. The amendments to sec.7.205 provide that a change or substitution of an attorney-in-fact of a Lloyd's or reciprocal or interinsurance exchange is subject to the Act, sec.5; provide for the docketing of a contested case for the purpose of pre-hearing matters and motions; provide that mergers contemplated by the Insurance Code, Article 21.28- A, sec.1, are subject to the Act, sec.5(c); and set forth additional violations and sanctions. The amendment to sec.7.209 deletes a previous exemption. The amendments to sec.7.210 require disclosure of certain additional transactions and remove a previous exemption. The amendments to sec.7. 211 and sec.7.212 are editorial changes. The amendment to sec.7.213 deletes a previous exemption. Copies of Form HCDividend may be obtained from the Holding Company Division, Mail Code 304-2A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. They are also on file with the Secretary of State. The Texas Legal Reserve Officials Association, the law firm of Thompson, Coe, Cousins & Irons, and Government Personnel Mutual Life Insurance Company submitted comments generally for the proposed sections; however, the commenters suggested minor modifications of the sections as proposed. A commenter suggested editorial changes to some of the subsections of sec.7. 204. The following changes were suggested: deletion of the word "demand" from sec.7.204(a)(2)(F); transfer of the sentence regarding consolidated federal income tax indemnification contained in sec.7.204(b) to either a subparagraph or to sec.7.204(a)(2)(E); and, transfer of the language concerning pro rata distributions with respect to extraordinary dividends contained in sec.7.204(d)(2) (B) to a separate subparagraph. The agency has incorporated the changes as suggested. A commenter expressed concern over the duplication of having to file some items with the agency more than once by eliminating the right to incorporate by reference in regard to Forms A, B, and E in sec.7.201(b)(2). The agency does not intend for companies to make unnecessary filings. This change only pertains to a completely restated up-to-date registration statement and states incorporation by reference is not permitted for registration statements filed for years ending in a five or a zero. A commenter suggested a change to the definition of affiliate in sec.7.202(a) (2) to read as follows: "If a controlling person is an individual who has an immediate family member who is also a shareholder, such immediate family member shall be deemed to be an affiliate of such controlling person." The agency disagrees with the comment and believes that the suggested change would make the definition too restrictive. A commenter suggested that the word "provide" be changed to the word "send" in sec.7.203(n). The commenter believes that the word "send" would clarify that the notice of dividend payment is to be "sent" rather than "received" within two business days and that "receipt" within two days is not practical. The agency does not agree with the commenter and does not believe that the existing language "provide notice" means receipt of the notice within two business days following the declaration of the dividend. Commenters suggested consolidation of the sentence relating to consolidated federal income tax agreements in sec.7.204(b) with the language in sec.7.204(a)(2) (E), since subsection (a)(2)(E) specifically references consolidated federal income tax returns. The agency agrees and has deleted the language from sec.7. 204(b) and moved it to sec.7.204(a)(2)(E) so that it now reads: agreements to consolidate federal income tax returns, which agreements shall provide that a domestic insurer will be adequately indemnified in the event the Internal Revenue Service levies upon the insurance company's assets for unpaid taxes in excess of the amount paid under the agreement." A commenter suggested that language specifically excluding mutual company dividends to policyholders be included in sec.7.204(d) which concerns extraordinary dividends, based on concerns that it might be construed that notice and approval of the commissioner would be required for declaration and payment of mutual company dividends to policyholders. The agency does not agree that additional language should be added regarding mutual company dividends to policyholders since it is clear that sec.7.204(d) applies to extraordinary dividends and distributions to shareholders. The amendments are adopted under the Insurance Code, Article 21.49-1, sec.11, which authorizes the Texas Department of Insurance to issue such rules, regulations, and orders as shall be consistent with and shall carry out the provisions of the Insurance Holding Company System Regulatory Act and to govern the conduct of its business and proceedings under the Insurance Code, Article 21. 49-1. sec.7.202. Definitions. (a) The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) (No change.) (2) Affiliate-An affiliate of, or person affiliated with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. If such controlling person includes a member of the immediate family of a person, any other person that is an affiliate of such family member shall be deemed to be an affiliate of such controlling person. (3) (No change.) (4) Commissioner-The commissioner of insurance of the State of Texas, the commissioner's deputies, or the State Board of Insurance, as appropriate. (5) Control-The term "control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, or with members of the person's immediate family, owns, controls, or holds with the power to vote, or if any person other than a corporate officer or director of a person holds proxies representing, 10% or more of the voting securities or authority of any other person, or if any person by contract or agreement is designated as an attorney-in-fact for a Lloyd's plan insurer under the Insurance Code, Article 18.02, or for a reciprocal or interinsurance exchange under the Insurance Code, Articles 19.02 and 19.10. This presumption may be rebutted by a showing made in the manner provided by the Act, sec.3(j), that control does not exist in fact and that the person rebutting the presumption is in compliance with the Act, sec.5(a)-(c). The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect, where a person exercises directly or indirectly either alone or pursuant to an agreement with one or more other persons such a controlling influence over the management or policies of an authorized insurer as to make it necessary or appropriate in the public interest or for the protection of the policyholders of the insurer that the person be deemed to control the insurer. (6)-(11) (No change.) (12) Immediate family-A person's spouse, father, mother, children, brothers, sisters, and grandchildren, the father, mother, brothers, and sisters of the person's spouse, and the spouse of the person's child, brother or sister, mother, father, or grandparent. (13) Insurance holding company system-Consists of two or more affiliated persons, one or more of which is an insurer. (14) Insurer-Includes all insurance companies organized or chartered under the laws of this state, or licensed to do business in this state, including capital stock companies, mutual companies, farm mutual insurance companies, title insurance companies, fraternal benefit societies, local mutual aid associations, local mutual burial associations, statewide mutual assessment companies, county mutual insurance companies, Lloyds' plan companies, reciprocal or interinsurance exchanges, stipulated premium insurance companies and group hospital service companies, and any other entity which is made subject to the Insurance Code, Article 21.49-1, by applicable law, except that it shall not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. (15) Person-An individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but shall not include any securities broker performing no more than the usual and customary broker's function. (16) Security holder-Of a specified person is one who owns any security of such person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing. The term "debt obligation" shall not include trade, commercial, or open accounts, matured claims, or agents' commissions. (17) Subsidiary-Of a specified person is an affiliate controlled by such person directly or indirectly through one or more intermediaries. (18) Ultimate controlling person-That person which is not controlled by another person (as defined in this subsection). (19) Voting security-Any security or other instrument giving or granting to the holder the power to vote at a meeting of shareholders of a person for or against the election of directors or any other matter involving the direction of the management and policies of such person, or any other security or instrument which the Texas Department of Insurance deems to be of similar nature including, but not limited to, those described in such rules and regulations as the Texas Department of Insurance may prescribe in the public interest as a voting security. (b) (No change.) sec.7.204. Commissioner's Approval Required. (a) Prior approval and notice. (1) (No change.) (2) The following transactions between a domestic insurer and any person in its holding company system may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into any such transaction at least 30 days prior thereto, or such shorter period as he may permit, and he has not disapproved it within such period: (A) (No change.) (B) reinsurance treaties or agreements or modifications to those treaties or agreements, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer; (C) (No change.) (D) management or service agreements, cost sharing agreements, rental or leasing aggreements; (E) agreements to consolidate federal income tax returns, which agreements shall provide that a domestic insurer will be adequately indemnified in the event the Internal Revenue Service levies upon the insurance company's assets for unpaid taxes in excess of the amount paid under the agreement; (F) transactions with affiliated financial institutions, other than fully insured deposits; and (G) any material transactions which the commissioner has determined after notice may adversely affect the interest of the insurer's policyholders or of the public. (3) A domestic insurer may not enter into transactions that are part of a plan or series of similar transactions with persons within the holding company system to avoid the statutory threshold amount and thus avoid review. If the commissioner determines that the transactions were entered into over any 12- month period for that purpose, the commissioner may consider the series of transactions with regard to their cumulative effect and may apply the applicable statutory thresholds or the commissioner may apply sanctions under the Code. (4) Nothing herein contained shall be deemed to authorize or permit any transactions which, in the case of a noncontrolled insurer, would be otherwise contrary to law. (5) The commissioner, in reviewing transactions hereunder, shall consider whether the transactions comply with the standards set forth in subsection (c) of this section and whether they may adversely affect the interest of policyholders. Any disapproval by the commissioner of any such transactions shall set forth the specific reasons for such disapproval. (6) The approval of any transaction under this subsection shall be deemed an amendment under sec.7.203(e) of this title (relating to Registration of Insurers) to an insurer's registration statement without further filing. (b) Transactions. Requests for approval of transactions pursuant to subsection (a)(1) of this section and notices of proposed transactions pursuant to subsection (a)(2) of this section, shall be accompanied by descriptions of the essential features of such transactions which are reasonably adequate to permit proper evaluation thereof by the commissioner. Such descriptions shall in all cases include at least the following: the nature and purpose of the transaction; the nature and amounts of any payments or transfers of assets between the parties; the identities of all parties to such transactions; whether any officers or directors of a party are pecuniarily interested therein, and copies of any proposed contracts, agreements, or memoranda of understanding between the parties relating to the transaction along with sufficient competent documentation evidencing compliance with the standards specified in the Act, sec.4(a), and evidencing that the transaction will not adversely affect the interest of policyholders. No such request or notice shall be deemed filed with the commissioner until the date all such material has been provided. (c) (No change.) (d) Extraordinary dividends and other distributions. (1) (No change.) (2) For purposes of these sections, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding 12 months exceeds the greater of: (A) 10% (20% if such insurer is a title insurer) of such insurer's surplus as regards policyholders as of the 31st day of December next preceding; or (B) the net gain from operations of such insurer, if such insurer is a life or title insurer, or the net investment income, if such insurer is not a life or title insurer, for the 12-month period ending the 31st day of December next preceding; (C) an extraordinary dividend or distribution shall not include pro rata distributions of any class of an insurer's own securities. (D) in determining the 12-month cumulative amount for dividends or distributions, the calculation shall be based on the declaration date(s) of such dividends or distributions. (3) (No change.) (e) (No change.) sec.7.213. Form E. (a) Statement regarding the exemption from approval of the acquisition of control of a domestic insurer. Name of domestic insurer:______________________. Name of acquiring person (applicant):____________________. Filed with the Texas Department of Insurance, date:____________, 19__. Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed: ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ ___________________________________________________________. (b)-(g) (No change.) (h) Financial statements and exhibits. (1) (No change.) (2) The financial statements shall include the annual financial statements of the persons identified in subsection (c)(1) of this section for the preceding fiscal year, and similar unaudited financial information as of a date not earlier than 120 days prior to the filing of the statement, accompanied by affidavit or certification of the chief financial officer of the applicant that such unaudited financial statement is true and correct, as of its date, and that there has been no material change in financial condition, as defined by the Act, sec.3, from the date of the financial statement to the date of the affidavit or certification. Such statements may be prepared on either an individual basis, or, unless the commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business. Unless exempted by the commissioner, the annual financial statement of the applicant shall be made in accordance with generally accepted auditing standards and accompanied by the certificate of an independent certified public accountant to the effect that such statement presents fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If such certificate is not available, then such financial statement shall be sworn to by the applicant as correctly reflecting its financial condition, and in such case, the commissioner of insurance at the commissioner's discretion may require such financial statement to be certified by an independent public accountant. If the applicant is an insurer which is actively engaged in the business of insurance and licensed to do business in this state, it may provide financial statements which conform to the annual statement of the insurer filed with the insurance department of the insurer's domiciliary state and which are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the domiciliary state. If the applicant is an individual person, such person shall provide for the preceding fiscal year a reviewed financial statement accompanied by the certificate of an independent public accountant that he is not aware of any material modifications that should be made to the accompanying financial statement in order for it to be in conformity with generally accepted accounting principles and a balance sheet as of a date not earlier than 120 days prior to the filing of the statement accompanied by affidavit or certification that the balance sheet is true and correct as of its date. Any financial information required by this subsection may be waived by the commissioner if such information is not deemed material. (3) (No change.) (i) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 23, 1992. TRD-9204116 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 13, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 463-6327 Chapter 19. Agent's Licensing Subchapter O. Procedures and Requirements for Reinsurance Intermediaries (Brokers and Managers) 28 TAC sec.sec.19.1401-19.1407 The State Board of Insurance of the Texas Department of Insurance adopts new sec.sec.19.1401-19.1407. Section 19.1403(1) and sec.19.1407(b) and (c) are adopted with changes from the proposed text as published in the December 13, 1991, issue of the Texas Register (16 TexReg 7161). Sections 19.1401, 19. 1402, 19.1404, 19.1405, and 19.1406, are adopted without changes and will not be republished. The new sections govern the licensure and activities of brokers and managers who are licensed under the Reinsurance Intermediary Act, Texas Insurance Code, Article 21.07-7. The sections are necessary to implement the provisions of Article 21.07-7 and to provide effective regulation of reinsurance intermediaries. Section 19.1401 sets out the purpose and scope of these rules. Section 19. 1402 defines the terms used in these rules. Section 19.1403 contains the requirements for bonds or errors and omissions policies filed in compliance with these rules and Texas Insurance Code, Article 21.07-7. Section 19.1404 contains the requirements for interim profit-sharing by a manager and sec.19.1405 contains the requirements for the form of Audited Statements. Section 19.1406 describes the fees for the examinations required by Texas Insurance Code, Article 21.07-7, sec.9. Section 19.1407 describes the contract which must be entered into as required by Article 21.07-7. Among other things, that section requires that a copy of the contract and the approval of the insurer's board of directors or attorney-in-fact be filed with the commissioner for approval at least 30 days before the insurer assumes or cedes any business through the manager. Section 19. 1407 also requires that the contract must meet the minimum requirements specified in the Texas Insurance Code, Article 21.07-7, sec.6, and provides that failure to file complete and accurate information is grounds for disapproval of the contract by the commissioner. That section also provides that any disapproval by the commissioner of any contract shall set forth the specific reasons for such disapproval. Section 19.1407 provides that any amended contract containing material changes in the provisions of a contract filed with the commissioner, must be filed with the commissioner for approval as though it were a new contract. That section also describes the manner in which the contract must be filed with the department, describes the proper mailing code for such filing, and describes the time limit for approval or disapproval. Two individuals commenting requested changes in two difference aspects of the rules. An attorney representing six reinsurance intermediaries requested changes in the rule. An individual commented that the phrase "eligible to do business in this state" in sec.19.1403 discussing surplus lines insurers, was technically incorrect as surplus lines insurers do not technically "do business" in the state. The commenter suggested that the regulation would be technically more accurate if the words "to do business" were deleted so that the phrase in sec.19. 1403(1) would read "surplus line insurer eligible in this state." An individual commented that his business differed from the way in which the "classic" reinsurance intermediary would function and requested that he be relieved of the obligation for financial reporting and bonding requirements based upon the way in which he did business as an independent reinsurance sales representative. The attorney representing six reinsurance intermediaries requested that the contracts be approved or disapproved within 30 days of filing and requested that the errors and omissions policies provision be changed so that the insured, not the insurer, would notify the department of termination or cancellation of the policy because requiring the insurer to list the department as a certificate holder and notify the department of termination or cancellation would reduce the number of insurers willing to write those policies. The board agrees with the comment suggesting the deletion of the phrase "to do business" with respect to surplus lines insurers found in sec.19.1403(1) and that section has been changed accordingly. The board is unable to relieve the other individual commenter from the proposals for financial reporting and bonding requirements. The definition of reinsurance intermediary, broker and manager contained in these rules are taken directly from the statute. The legislature of necessity must enact statutes with broad coverage in order to afford protection for policyholders and neither the legislature nor the board can take all of the various permutations of the ways in which individuals may choose to do business into account in writing such definitions. While the statute does allow some discretion to the commissioner with respect to the requirements for filing of bonds or errors and omissions policies, the board is of the opinion that these requirements should be placed on any person who acts as a broker or manager, regardless of the way in which the individual chooses to conduct the business of a reinsurance intermediary. A person who is licensed as a reinsurance intermediary is licensed to perform all of those acts set forth in the definitions in the statute and, therefore, the financial protections afforded to policyholders for the actions of reinsurance intermediaries, must be set forth in terms commensurate with the duties which the reinsurance intermediary is licensed to perform rather than those duties which the individual actually chooses to perform. The board is of the opinion that the rules should be changed in sec.19.1407(b) and (c) to provide that the contracts must be approved or disapproved within 30 days of filing. The board is of the opinion that the insurer should notify the department of termination or cancellation and show the department as a certificate holder in order to protect the consumer in the event of claims covered by the policy. Notification to the department by the insurer will allow the department to better monitor the situation to ensure the intermediaries continue to maintain policies. The new sections are adopted under the Texas Insurance Code, Article 1.04 which provides general rulemaking authority for the Texas Department of Insurance and under the Texas Insurance Code, Article 21.07-7, sec.11, which provides that the board may adopt reasonable rules necessary to implement Article 21.07-7. sec.19.1403. Requirements for Bond or Errors and Omissions Policy. Any reinsurance intermediary must file and maintain a bond with the commissioner for the protection of all insurers represented or file and maintain an errors and omissions policy, meeting the following criteria. (1) The bond must be executed by the reinsurance intermediary as principal and by a surety company authorized to do business in this state, as surety, or surplus lines insurer eligible in this state, in the principal sum of $100,000 for a broker and in the principal sum of $250,000 for a manager, payable to the Texas Department of Insurance for the use and benefit of all insurers represented. The bond must provide that a copy of any cancellation or nonrenewal notice, shall be mailed to the Deputy Commissioner for Licensing, Texas Department of Insurance, Mail Code 105-5A, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The executed bond must be furnished to the Texas Department of Insurance. (2) The errors and omissions policy shall be in a form acceptable to the Texas Department of Insurance, and shall be filed with the deputy commissioner for licensing of the department at the address listed in paragraph (1) of this section. The policy must provide that the Texas Department of Insurance shall be a certificate holder and shall receive a copy of any cancellation or nonrenewal notice, which shall be mailed to the deputy commissioner for licensing at the address listed in paragraph (1) of this section. The errors and omissions policy shall cover all negligent acts or omissions of the reinsurance intermediary and any person acting on its behalf and shall provide coverage of at least $100,000 for each occurrence for brokers and shall provide coverage of at least $250,000 for each occurrence for managers. (3) The commissioner may determine that special circumstances require an additional amount of coverage for the bond or policy. sec.19.1407. Approval of Reinsurance Intermediary Manager's Contracts. (a) A written contract, which specifies the responsibilities of each party, shall be approved by the insurer's board of directors or attorney in fact and executed by a responsible officer of an insurer and a manager prior to entering into any transactions between the manager and the insurer. (b) A copy of the executed contract and the approval of the insurer's board of directors or attorney in fact shall be filed by the manager with the commissioner for approval at least 30 days before the insurer assumes or cedes any business through the manager. (c) The contract shall include the minimum requirements specified in the Texas Insurance Code, Article 21.07-7, sec.6. A contract which does not comply with the minimum requirements of the Texas Insurance Code or this section shall not be considered to have been filed with the commissioner for approval. The contract shall be approved or disapproved within 30 days of its filing. (d) A failure to file complete and accurate information in all material respects is grounds for disapproval of the contract by the commissioner under the Texas Insurance Code, Article 21.07-7, sec.6. (e) Any disapproval by the commissioner of any contract filed under this section shall set forth the specific reasons for such disapproval. (f) If any material changes occur in the provisions set forth in the contract filed with the commissioner, an amended contract setting forth such changes shall be filed with the commissioner for approval as if it were a new contract. (g) Contracts subject to this section and the Insurance Code, Article 21. 07-7, sec.6, shall be filed with the Reinsurance Activity Mail Code 303-2A, Texas Department Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104, for the purpose of determining compliance with this section. Telephonic or fax transmissions shall not constitute proper filing under this section. (h) This section shall be cumulative of and in addition to the requirements of Article 21.07-3, Article 21.07-7, and Article 21.49-1, Texas Insurance Code, and related regulations. Nothing contained in this section is intended to exempt an insurer or its reinsurance intermediary manager from other provisions of the Insurance Code. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 23, 1992. TRD-9204113 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 13, 1992 Proposal publication date: December 13, 1991 For further information, please call: (512) 463-6327 Chapter 25. Insurance Premium Finance Subchapter H. Annual Reports, Examinations, and Assessments 28 TAC sec.25.716 The State Board of Insurance of the Texas Department of Insurance adopts new sec.25.716, concerning the general administrative expense assessment of insurance premium finance companies in fiscal year 1992, with one change to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 389). The new section is necessary to provide a rate of assessment sufficient to meet the expenses of performing the department's statutory duties to examine, investigate, and regulate insurance premium finance companies. The mail code in the text was changed because the mail code for the premium finance section changed after the section was proposed. The new section provides a rate of assessment sufficient to meet the expenses of performing the department's statutory responsibilities for examining, investigating, and regulating insurance premium finance companies. Under the new section, the department levies a rate of assessment to cover fiscal year 1992's general administrative expense and collects the assessment from each insurance premium finance company on the basis of a percentage of total loan dollar volume for the 1991 calendar year. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Insurance Code, Articles 24.06(c) and 24.09. Article 24.06(c) provides that each insurance premium finance company licensed by the department shall pay an amount assessed by the department to cover the direct and indirect cost of examinations and investigations and a proportionate share of general administrative expense attributable to regulation of insurance premium finance companies. Article 24.09 authorizes the department to adopt and enforce rules necessary to carry out provisions of the Texas Insurance Code concerning the regulation of insurance premium finance companies. sec.25.716. General Administrative Expense Assessment, Fiscal Year 1992. On or before April 1, 1992, each insurance premium finance company holding a license issued by the Texas Department of Insurance under the Texas Insurance Code, Chapter 24, shall pay to the department an assessment made by the department to cover the general administrative expenses attributable to the regulation of insurance premium finance companies. Payment shall be made to the Texas Department of Insurance, 333 Guadalupe Street, Mail Code #106-4A, Austin, Texas 78701-3938. The assessment to cover general administrative expenses shall be computed and paid as follows. (1) The amount of the assessment shall be computed as 0.01012 of 1.0% of the total loan dollar volume of the company for the calendar year 1991. (2) If the amount of assessment computed under paragraph (1) of this section is less than $250, a minimum assessment of $250 shall be levied and collected. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 23, 1992. TRD-9204114 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 13, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part IV. School Land Board Chapter 155. Land Resources Coastal Public Lands 31 TAC sec.155.10 The School Land Board adopts the repeal of sec.155.10, concerning coastal land fees, without changes to the proposed text as published in the February 14, 1992, issue of the Texas Register (17 TexReg 1267). The section is repealed to avoid conflict with sec.1.3 of this title (relating to Fees). The subject matter of this section has been included in sec.1.3. No comments were received regarding adoption of the repeal. The repeal is adopted under the Natural Resources Code, sec.31.051 and sec.33. 064, which authorizes the School Land Board to make and enforce suitable procedural and substantive rules consistent with the law. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 17, 1992. TRD-9204100 Garry Mauro Chairman School Land Board Effective date: April 13, 1992 Proposal publication date: February 14, 1992 For further information, please call: (512) 463-5394 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part III. Texas Youth Commission Chapter 85. Admission and Placement Commitment and Reception 37 TAC sec.85.3, sec.85.5 The Texas Youth Commission (TYC) adopts amendments to sec.85.3 and sec.85.5, concerning commitment and reception, with changes to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 392). The amendments will bring about more efficient evaluation of each youth's needs and risk upon admission. Changes to sec.85.3 clarify the admission process, adding the statement that parents are notified of TYC's medical consent authority, and that a body identification form is completed. Changes to sec.85.5 clarify the wording of subsection (b)(7) on psychological evaluations. The amendments reflect changes in procedure for making placement assignments of youth committed to the agency. The south region placement function is being discontinued. All youth will be evaluated at the statewide reception center in Brownwood. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, sec.61.071, which provides the Texas Youth Commission with the authority to examine and make a study of each child and to establish rules for governing the study. sec.85.3. Admission Process. (a) Policy. Intake activities, including receipt of the youth from the committing county and orienting the youth to new surroundings, are performed by Texas Youth Commission (TYC) statewide reception center. (b) Rules. (1) The statewide reception center in Brownwood receives youth committed to TYC five days per week, between 8 a.m. and 5 p.m. Youth may be received after 5 p.m. only if prior arrangements are made. (2) Youth are allowed to have a limited number of personal possessions while at the reception center. Personal items beyond basic necessities are inventoried and returned to the county transporter. The transporter is asked to sign a receipt for items returned to his care. Items a youth is allowed to keep are inventoried and a receipt issued to the transporter. (3) Parents are notified of youth's admission and TYC's medical consent authority, and advised of procedures for mail and visits. (4) Each youth is assigned an official TYC registration number. (5) Staff completes personal data and commitment information. (6) A youth is assigned to a dormitory and caseworker. (7) Orientation to the admissions process and the TYC system is provided and documented as required in General Operating Policy (GOP) 53.05 sec.87.55 of this title (relating to Youth Orientation). (8) Routine admission procedures include, but are not limited to, the following. (A) Each youth and his possessions are searched. (B) Youth property including clothing is inventoried. (C) A body identification form (CCF-006) is completed, each youth showers, is screened for pediculosis, and receives treatment if indicated. (D) Initial health screening is performed for each youth. (E) Clothing is laundered if necessary. Clothing is issued as necessary. (F) Personal hygiene articles are made available as needed. (9) In addition to assessment and placement activities, the statewide reception center provides a program including recreation, education, and counseling. (10) Reception staff identifies the home parole officer according to the agency assignment system based on zip code area and county. The staff forwards to the home parole officer, within five working days of admission, the following: (A) copy of the court order; (B) copy of the Common Application (CCF-002); (C) county social summary; and (D) immediate notification when a youth is stating that he or she refuses to live at home when residential placement is complete. (11) Reception staff transports youth to their initial placements and notifies the families, the region parole officer, judge, prosecuting attorney, chief probation officer, and others as needed of the placement location. sec.85.5. Assessment/Evaluation. (a) Policy. The Texas Youth Commission (TYC) youth assessment process includes summarizing admission information, conducting diagnostic evaluations, identifying classification, and developing an initial placement category recommendation by the classification panel at the statewide reception center. The youth assessment process is completed within two weeks of receipt of the youth by TYC. (b) Rules. Staff at the statewide reception center conduct the following routine evaluations. (1) completion of the Common Application (CCF-002); (2) social summary; (3) risk/needs assessment; (4) family involvement assessment; (5) religious preference assessment; (6) recreation interest; (7) psychological evaluation (if one has not been completed within the last year). Residential treatment centers require an updated clinical interview for current status within six months prior to placement. (8) physical and dental examinations (within six months prior to placement in a halfway house); (9) educational assessment; (10) substance abuse screening and assessment; (11) vocational interests and experience; (12) psychiatric interview of youth sentenced or committed for murder, capital murder, and voluntary manslaughter (Type A violent offenses) and other youth as referred by the professional staff; and (13) assessment of behavior while at the reception center. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 16, 1992. TRD-9203975 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 483-5244 Placement Planning 37 TAC sec.85.37 The Texas Youth Commission (TYC) adopts an amendment to sec.85.37, concerning discharge, without changes to the proposed text as published in the January 21, 1992, issue of the Texas Register (17 TexReg 465). The amendment to the section will bring about a system to ensure that appropriate information is provided, regarding youth discharge. The amendment provides for informing youth as discharged of instructions for sealing their records. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.075, which provide the Texas Youth Commission with the authority to discharge committed youth. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 16, 1992. TRD-9203978 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 483-5244 Chapter 87. Treatment Program Planning 37 TAC sec.87.1 The Texas Youth Commission (TYC) adopts amendment to sec.87.1, concerning case planning, without changes to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 465). The amendment will provide additional information regarding numbers of youth on caseloads. The amendment will add instructions to include a projected discharge date to each youth's case plan. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.075, which provides the Texas Youth Commission with the authority to determine a youth's treatment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 16, 1992. TRD-9203976 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 483-5244 Chapter 91. Discipline and Control Disciplinary Practices 37 TAC sec.sec.91.7, 91.9, 91.11 The Texas Youth Commission (TYC) adopts amendments to sec. sec.91.7, 91.9, 91.11, and 91.69, concerning disciplinary practices, without changes to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 394). The amendments to the sections will bring about more consistent, effective evaluation of each youth's needs and risk. The amendments add one possible exception to the statement that TYC will not hold a revocation hearing on a youth so long as criminal charges are pending. The amendments also reflect changes in procedure for making placement assignments of youth committed to agency. The south region placement function is being discontinued. All youth will be evaluated at the statewide reception center in Brownwood. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, sec.61.071, which provide the Texas Youth Commission with the authority to examine and make a study of each child and to establish rules for governing the study. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 16, 1992. TRD-9203979 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 483-5244 Control 37 TAC sec.91.69 The amendment is adopted under the Human Resources Code, sec.61.071, which provide the Texas Youth Commission with the authority to examine and make a study of each child and to establish rules for governing the study. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 16, 1992. TRD-9203980 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 483-5244 Chapter 93. General Provisions Records, Reports, Forms 37 TAC sec.93.57, sec.93.59 The Texas Youth Commission (TYC) adopts amendments to sec.93.57 and sec.93.59, concerning records, reports, forms, without changes to the proposed text as published in the January 21, 1992, issue of the Texas Register (17 TexReg 466). The amendments will bring about a more efficient use of staff time in organizing records. The amendments will provide direction of accessing and moving committed youth files. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, sec.61.073, which provides the Texas Youth Commission with the authority to keep written records on each child. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 16, 1992. TRD-9203981 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 21, 1992 For further information, please call: (512) 483-5244 37 TAC sec.93.63 The Texas Youth Commission (TYC) adopts the repeal of sec.93.63, concerning the disposition of youth records, without changes to the proposed text as published in the January 21, 1992, issue of the Texas Register (17 TexReg 467). The repeal of this section will bring about greater administrative efficiency. The section is being repealed because it contains bureaucratic procedures which do not constitute a rule. No comments were received regarding adoption of the repeal. The repeal is adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules to provide the proper accomplishment of its functions. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 16, 1992. TRD-9203977 Ron Jackson Executive Director Texas Youth Commission Effective date: April 8, 1992 Proposal publication date: January 21, 1992 For further information, please call: (512) 483-5244 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 35. Pharmacy Services Subchapter D. Limitations 40 TAC sec.35.404 The Texas Department of Human Services adopts an amendment to sec.35.404, concerning limitations of prescription refills, in its Pharmacy Services chapter, without changes to the proposed text as published in the February 14, 1992, issue of the Texas Register (17 TexReg 1272). The amendment is justified because it helps decrease the confusion among pharmacists who must conform to both Medicaid and Board of Pharmacy proce- dures. The amendment will function by deleting obsolete information from the department's rules. The department received one comment from the Texas Pharmaceutical Association supporting the department's adoption of the amendment. The association commented that the rules provide for an efficient program, while allowing adequate access to pharmacy services for recipients. The amendment is adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 32, which authorizes the department to administer medical assistance programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 23, 1992. TRD-9204122 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: May 1, 1992 Proposal publication date: February 14, 1992 For further information, please call: (512) 450-3765