SECTION 112.60. Filing Surety Bond or Other Form of Financial Security

(a) A sole proprietor, partnership, corporation, or other legal entity engaged in the fitting and dispensing of hearing instruments must file with the department financial security in a form provided by subsection (c), in the amount of $10,000 and conditioned on the promise to pay all:

(1) taxes and contributions due to the state and political subdivisions of the state by the sole proprietor, partnership, corporation, or other legal entity; and

(2) judgments that the sole proprietor, partnership, corporation, or other legal entity may be required to pay for negligently or improperly dispensed hearing instruments or for breaching a contract relating to the dispensing of hearing instruments.

(b) The financial security covers the actions, conduct, or liability of the sole proprietor, partnership, corporation, or other legal entity and the license holders employed by that entity as prescribed under Occupations Code §402.405 and §112.61.

(c) A sole proprietor, partnership, corporation, or other legal entity must file with the department one of the following acceptable forms of financial security in the amount required in subsection (a):

(1) a surety bond issued by an authorized entity;

(2) a deposit of cash;

(3) a certificate of deposit that is issued by a qualified financial institution, assigned to the executive director, and for the benefit of the department; or

(4) an original letter of credit acceptable to the department that:

(A) is irrevocable;

(B) is issued by a qualified financial institution which is financially responsible in the amount of the letter of credit;

(C) does not require examination of the performance of the underlying transaction between the department and the license holder;

(D) is payable to the department on demand or within a reasonably brief period of time after presentation of all required documents; and

(E) does not include any condition that makes payment to the department contingent upon the consent of or other action by the license holder or other party.

(d) A sole proprietor, partnership, corporation, or other legal entity must file the financial security with the department at the following times and in the manner prescribed in the following sections:

(1) for an employee's initial license application as prescribed under §112.30 or §112.33;

(2) for an employee's first license renewal on or after September 1, 2020, as prescribed under §112.32; and

(3) for a new employee who provides notice of change in employment as prescribed under §112.91.

(e) The financial security must be received on or before the date of issuance of the employee's license.

(f) A person to whom the Act does not apply pursuant to Texas Occupations Code §402.003 is not required to file financial security under this section.

(g) Financial security required under this section remains in effect until canceled by action of the surety, the principal, or the department. Notice of cancellation must be provided to the department no later than thirty (30) days prior to cancellation.

Source Note: The provisions of this §112.60 adopted to be effective October 1, 2016, 41 TexReg 4458; amended to be effective September 1, 2020, 45 TexReg 6096