HBA-CCH H.B. 3563 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3563 By: Dunnam Civil Practices 3/20/2001 Introduced BACKGROUND AND PURPOSE Currently, many insurance companies require holders of a liability insurance policy to utilize legal resources available through or associated with the insurance company. This practice creates a conflict of interest between an attorney and a policyholder, and enables the insurance company to control and reduce the potential amount of the policyholder's award. House Bill 3563 prohibits insurance companies from requiring a holder of a liability insurance policy to utilize legal services associated with the insurance company. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 3563 amends the Government Code to prohibit an insurer from using or requiring an insured under a liability insurance policy to use an attorney who is an employee of the insurer or an employee, owner, partner, or shareholder of a law firm that works solely for the insurer or solely for a group of affiliated insurers. The bill provides that an insurer who violates this provision commits an act that constitutes the practice of law. H.B. 3563 authorizes a person to bring an action against an insurer to recover any actual damages proximately suffered by an insured because of a violation of this bill, and obtain injunctive relief to prevent the threatened or continued violation of a provision. The bill requires a court to award reasonable and necessary attorney's fees to a person who recovers damages or obtains injunctive relief and, on its own motion or on the motion of any party, to disqualify an attorney who is representing an insured before that court in violation of a provision. The provisions of this bill apply only to an insurer that issues a liability insurance policy covering any resident of Texas, covering liability incurred by an insured in Texas, or under which the insurer provides a defense to an insured in a claim or action pending in Texas. EFFECTIVE DATE September 1, 2001.