TITLE 28. INSURANCE

PART 1. TEXAS DEPARTMENT OF INSURANCE

CHAPTER 22. PRIVACY

SUBCHAPTER A. INSURANCE CONSUMER FINANCIAL INFORMATION PRIVACY

28 TAC §22.9

The Texas Department of Insurance proposes amendments to 28 TAC §22.9, concerning annual privacy notices. These amendments are necessary to reduce privacy notice confusion by eliminating the requirement for covered entities to send out redundant privacy notices and aligning the rule with recent changes to federal requirements regarding disclosures of privacy policies found in 15 U.S.C. §6803 (part of the Gramm-Leach-Bliley Act (GLBA)), consistent with Insurance Code Chapter 601.

EXPLANATION. Insurance Code Chapter 601 requires individuals and entities that receive an authorization from TDI to comply with 15 U.S.C. §6803, relating to disclosures of privacy policies. It directs the commissioner to adopt rules to implement Chapter 601 and in doing so attempt to keep state privacy requirements consistent with federal law. In 2001, TDI adopted rules in 28 TAC Chapter 22 substantially similar to the NAIC Model Privacy of Consumer Financial and Health Information Regulation. The rules were updated in 2014.

In December of 2015, the president signed the Fixing America’s Surface Transportation (FAST) Act, which included an amendment to the privacy notice requirements in 15 U.S.C. §6803. FAST Act Title LXXV, "Eliminate Privacy Notice Confusion," added an exception to the general requirement that privacy notices must be sent to consumers annually when a financial institution has not changed its privacy policies and procedures since privacy notices were last sent and the financial institution discloses nonpublic personal information only in accordance with certain provisions of GLBA and related regulations.

Proposed amendments to §22.9 are necessary to reduce privacy notice confusion by eliminating the requirement for covered entities to send out redundant privacy notices and aligning the rule with GLBA as amended, consistent with Insurance Code Chapter 601. The proposed amendment to §22.9(a) references the proposed new exception to the annual privacy notice requirement in subsection (d). New §22.9(d) provides that a covered entity excepted from providing an annual privacy notice under 15 U.S.C. §6803(f), or one that would be excepted if it were a financial institution, is not required to provide an annual privacy notice under the section. New §22.9(d) also provides that the covered entity must provide the notice in accordance with §22.9(a) whenever either of the criteria for the exception under 15 U.S.C. §6803(f) is not met. When a covered entity has not sent out a privacy notice within the previous period of 12 consecutive months because of the exception in §22.9(d) and the exception ceases to apply to the covered entity, the covered entity must promptly provide a privacy notice to customers under §22.9(a). The covered entity may also be subject to the requirements of §22.12, relating to revised privacy notices, depending on the nature of the change that made the exception cease to apply. TDI also proposes nonsubstantive grammar and style changes throughout the section.

FISCAL NOTE AND LOCAL EMPLOYMENTS IMPACT STATEMENT. Stan Strickland, Deputy Commissioner, Legal Division, has determined that for each year of the first five years the proposed amendments will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the amended rule. There will not be any measurable effect on local employment or the local economy as a result of the proposal.

PUBLIC BENEFIT AND COST NOTE. Mr. Strickland has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of the proposed sections will be reducing confusion associated with annual privacy notices. There will be no economic cost to comply with the amendments. In fact, industry indicates that there will be substantial savings in mailing costs as a result of eliminating the requirement to send redundant privacy notices.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. As required by Government Code §2006.002(c), TDI has determined that the proposal will not have an adverse economic effect on small or micro businesses because the proposed rule does not impose new costs on any regulated entities regardless of size. Therefore, in accordance with Government Code §2006.002(c), TDI has determined that a regulatory flexibility analysis is not required.

TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under Government Code §2007.043.

REQUEST FOR PUBLIC COMMENT. TDI invites the public and affected persons to comment on this proposal. Submit your written comments on the proposal no later than 5 p.m., Central time, on January 2, 2017. Send written comments by mail to the Texas Department of Insurance, Office of the Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104; or by email to chiefclerk@tdi.texas.gov. You must simultaneously submit an additional copy of the comment by mail to Carole Cearley, Attorney, Office of Policy Development Counsel, Mail Code 110-1C, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104; or by email to carole.cearley@tdi.texas.gov. You must submit any request for a public hearing separately to the Office of Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104, before the close of the public comment period. If a hearing is held, written comments and public testimony presented at the hearing will be considered.

STATUTORY AUTHORITY. The amendments are proposed under Insurance Code §§601.002, 601.051, and 36.001.

Section 601.002 requires individuals and entities that receive an authorization from TDI to comply with 15 U.S.C. §6803, concerning privacy policy disclosures to consumers.

Section 601.051 directs the commissioner to adopt rules to implement the chapter and in doing so to attempt to keep state privacy requirements consistent with federal law.

Section 36.001 provides that the commissioner of insurance may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.

CROSS REFERENCE TO STATUTE. Section 22.9 implements Insurance Code Chapter 601 and §36.001.

§22.9.Annual Privacy Notice.

(a) A covered entity must [shall] provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship, except as provided in subsection (d) of this section. "Annually" means at least once in any period of 12 consecutive months during which that relationship exists. A covered entity may define the 12-consecutive-month period, but the covered entity must [shall] apply it to the customer on a consistent basis. A covered entity provides a notice annually if it defines the 12-consecutive-month period as a calendar year and provides the annual notice to the customer once in each calendar year following the calendar year in which the covered entity provided the initial notice. For example, if a customer opens an account on any day of year 1, the covered entity must [shall] provide an annual notice to that customer by December 31 of year 2.

(b) A covered entity is not required to provide an annual notice to a former customer. A former customer is an individual with whom a covered entity no longer has a continuing relationship.

(1) A covered entity no longer has a continuing relationship with an individual if the individual no longer is a current policyholder of an insurance product or no longer obtains insurance services with or through the covered entity.

(2) A covered entity no longer has a continuing relationship with an individual if the individual's policy is lapsed, expired, or otherwise not in force, and the covered entity has not communicated with the customer about the relationship for a period of 12 consecutive months, other than to provide annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials.

(3) For the purposes of this subchapter, a covered entity no longer has a continuing relationship with an individual if:

(A) the covered entity sends mail to the individual's last known address, according to the covered entity's records, and the postal authorities return that mail as undeliverable, and

(B) subsequent attempts by the covered entity to obtain a current valid address for the individual are unsuccessful.

(4) A covered entity no longer has a continuing relationship with a customer, in the case of providing real estate settlement services, at the later of the following events:

(A) the customer completes execution of all documents related to the real estate closing;

(B) payment for those services has been received; or

(C) the covered entity has completed all of its responsibilities with respect to the settlement, including filing documents in the public record.

(c) A covered entity must [shall] deliver any annual privacy notices required by this section according to §22.13 of this title (relating to Delivery).

(d) A covered entity that is excepted from annual privacy notice requirements under 15 U.S.C. §6803(f), or one that would be excepted if it were a financial institution, is not required to provide an annual privacy notice under this section. At any time the covered entity fails to meet both of the criteria for the exception under §6803(f), the covered entity is subject to the annual notice requirement in this section.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605871

Norma Garcia

General Counsel

Texas Department of Insurance

Earliest possible date of adoption: January 1, 2017

For further information, please call: (512) 676-6584


PART 2. TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION

CHAPTER 57. REQUEST FOR CASE FOLDERS AND CERTIFICATIONS OF ACTIONS OF THE BOARD

28 TAC §§57.5, 57.10, 57.15

1. INTRODUCTION. The Texas Department of Insurance, Division of Workers’ Compensation (division) proposes the repeal of 28 TAC §57.5, concerning request for copies or statistical information, 28 TAC §57.10, concerning written request for public information and 28 TAC §57.15, concerning telephone request for public information.

Government Code §2001.039 requires a state agency to review and consider re-adoption, re-adoption with amendments, or repeal of its rules no later than the fourth anniversary of the rule effective date. In compliance with Government Code §2001.039, the division reviewed and considered all sections in Chapter 57 and determined that a repeal of the chapter is necessary because the sections are duplicative of other statutes governing requests for public information.

A notice of the proposed rule review of Chapter 57, Request For Case Folders and Certifications of Actions of the Board, was published in the September 23, 2016, issue of the Texas Register (41 TexReg 7597). The division did not receive comments on the review. The adopted rule review of Chapter 57 was published in the November 11, 2016, issue of the Texas Register (41 TexReg 9029).

The division proposes the repeal of 28 TAC §§57.5, 57.10 and 57.15, which were adopted to be effective November 20, 1977 (2 TexReg 4322), because those sections are outdated and no longer necessary since other statutes and rules currently govern requests for public information and access to division records. Title 28 TAC §§57.5, 57.10, and 57.15 pertain to requests for records compiled by the Industrial Accident Board, and the purpose of these rules was to ensure compliance with Texas Civil Statutes Article 8307 §9, §9(a) and Article 6252-§17a, known as the Open Records Act. However, during the 71st Legislature, 2nd Called Session, the former Texas Civil Statutes Article 8307 §9, and §9(a) were repealed and the Industrial Accident Board became the Texas Workers' Compensation Commission and the Texas Workers' Compensation Act was enacted in Chapter 1 of the Texas Civil Statutes Article 8308. After the repeal of Article 8307, the Texas Civil Statutes Article 8307 §9(a), which provided for confidentiality of records and fraudulent claims, was re-codified in Articles 8308-2.31 through 8308-2.34 and Article 8308-10.04. Subsequently, the 73rd Legislature repealed Article 8308 and the statute was re-codified in Labor Code Chapter 402. The Texas Civil Statutes Article 8307 §9, which provided for certified copies of records and fees, was re-codified to the Labor Code §502.063. The 73rd Legislature also repealed Texas Civil Statutes Article 6252-§17a and the statute was re-codified in the Government Code Chapter 552, known as the Public Information Act. Thus, historical changes in the Texas workers' compensation system along with statutory repeals and re-codifications have resulted in latter statutory authority governing the request for public information.

The subject matter addressed by 28 TAC §§57.5, 57.10, and 57.15 is currently governed by Government Code Chapter 552, known as the Public Information Act; Labor Code §402.081, concerning division records; Labor Code §402.090, concerning statistical information; Labor Code §402.087, concerning information available to prospective employers; 1 TAC Chapter 70, concerning Cost of Copies of Public Information; and 28 TAC §108.1, concerning charges for copies of public information. Every section of Chapter 57 proposed for repeal has a more recent statutory or regulatory analogue, which articulates the law governing access to division records and requests for public information. Specifically, 28 TAC §57.5 addresses requests for certified copies or statistical information and rules regarding fees for those requests. Labor Code §402.081 relates to division records, including providing copies and certification of records. Labor Code §402.090 relates to the release of statistical information. Additionally, 28 TAC §108.1 addresses charges for copies of public information and 1 TAC Chapter 70 addresses Cost of Copies of Public Information. Title 28 TAC §57.10 addresses written requests for public information from prospective employers and 28 TAC §57.15 addresses telephone requests for public information from prospective employers. Labor Code §402.087 relates to written and telephone requests of information available to prospective employers. The division proposes repeal of 28 TAC §§ 57.5, 57.10, and 57.15 because these rules are no longer necessary.

2. FISCAL NOTE. Mr. Joseph McElrath, Executive Deputy Commissioner of Business Process, has determined that for each year of the first five years the proposed repeal is in effect, there will be no fiscal impact to state or local governments because of the proposal. There will be no measurable effect on local employment or the local economy because of the proposal.

3. PUBLIC BENEFIT/COST NOTE. Mr. McElrath also determined that for each year of the first five years the proposed repeal is in effect, the public benefit anticipated because of the proposed repeal is the elimination of obsolete administrative regulations. There will be no economic cost to persons required to comply with the proposed repeal.

4. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. As required by the Government Code §2006.002(c), the division has determined that the proposed repeal will not have an adverse economic effect on small or micro business because it is simply a repeal of obsolete rules. Therefore, in accordance with the Government Code §2006.002(c), the division is not required to prepare a regulatory flexibility analysis.

5. TAKINGS IMPACT ASSESSMENT. The division has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.

6. REQUEST FOR PUBLIC COMMENT. If you want to comment on the proposal, submit your written comments by 5:00 p.m. CST on January 2, 2017. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to rulecomments@tdi.texas.gov or by mail to Maria Jimenez, Texas Department of Insurance, Division of Workers' Compensation, Office of General Counsel, MS-40, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744-1645. If a hearing is held, the division will consider written comments and public testimony presented at the hearing.

7. STATUTORY AUTHORITY. The repeal is proposed under Government Code §2001.039, Labor Code §402.00111 and §402.061.

Government Code §2001.039 requires state agencies to review and consider re-adoption, re-adoption with amendments or repeal of its rules no later than the fourth anniversary of the rule effective date. Labor Code §402.00111 requires the commissioner of workers' compensation to exercise all executive authority, including rulemaking authority, under Title 5 of the Labor Code. Labor Code §402.061 requires the commissioner of workers' compensation to adopt rules as necessary for the implementation and enforcement of the Texas Workers' Compensation Act.

No other codes, statutes, or articles are affected by this proposal.

§57.5.Request for Copies or Statistical Information.

§57.10.Written Request for Public Information.

§57.15.Telephone Request for Public Information.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605917

Nicholas Canaday lll

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: January 1, 2017

For further information, please call: (512) 804-4703