SECTION 13.534. Application Review, Approval, and Denial

(a) Commissioner's review. The commissioner will review the applicant's submission and other pertinent information, including information from TDLR, to ensure the applicant's compliance with applicable statutes and regulations, and:

(1) conduct any investigation that the commissioner considers necessary to determine whether the applicant has obtained an appropriate license or has delegated to contracting regulated entities, adequate facilities, resources, and competent personnel, as determined by the commissioner, to administer the plan and trust;

(2) examine under oath any person interested in or connected with the applicant or its plan or trust; or

(3) perform an examination to confirm compliance with applicable Texas statutes and rules, including funding of the trust.

(b) Application approval. After completing the review, the commissioner will approve an application for a certificate of approval if the commissioner has determined there is no cause for denial as listed in subsection (d) of this section and if the application for certificate of approval meets the requirements of §13.532 of this title (relating to Application Requirements).

(c) Term of certificate of approval. A certificate of approval remains in effect until terminated at the request of the approved PEO or canceled by the commissioner.

(d) Application denial. The commissioner will deny the application in writing in the following circumstances:

(1) if the applicant does not meet the requirements of §13.532 of this title; or

(2) if the applicant, any person representing the applicant, a member of the board of trustees, or any person that has a fiduciary relationship with the trust:

(A) makes a material misstatement or omission in the application for a certificate of approval;

(B) obtains or attempts to obtain at any time a certificate of approval or license for an insurance entity through intentional misrepresentation or fraud;

(C) misappropriates or converts to the person's own use or improperly withholds money under any fiduciary relationship;

(D) is prohibited from serving in any capacity under Employee Retirement Income Security Act of 1974, 29 U.S.C. §1111;

(E) without reasonable cause or excuse, fails to appear in response to a subpoena, examination, or any other order lawfully issued by the commissioner;

(F) has previously been subject to a determination by the commissioner resulting in:

(i) suspension or revocation of a certificate of approval or license; or

(ii) denial of a certificate of approval or license on grounds that would be sufficient for suspension or revocation; or

(G) is not eligible for licensure under Chapter 1, Subchapter D of this title (relating to Effect of Criminal Conduct).

(e) Notice of denial. If the commissioner denies the application, the commissioner will issue a written notice of denial to the applicant. The notice will state the basis for the denial.

(f) Hearing on denial. If, within 30 days of receiving a notice under subsection (e) of this section, the applicant submits a written request for a hearing, the commissioner will file a request to set a hearing at the State Office of Administrative Hearings, at which the applicant will be given an opportunity to show compliance with the related Insurance Code provisions and regulations. Hearings described in this subchapter will be conducted as required by Government Code Chapter 2001, concerning Administrative Procedure; Insurance Code Chapter 40, concerning Duties of State Office of Administrative Hearings and Commissioner in Certain Proceedings; Rate Setting Proceedings; TDI's and State Office of Administrative Hearing's rules of procedure; and any other applicable law and regulations.

Source Note: The provisions of this §13.534 adopted to be effective May 17, 2016, 41 TexReg 3479