SECTION 1.89. Default: What Constitutes Default; Remedies

(a) What constitutes default. For purposes of this subchapter, events described in paragraphs (1) or (2) of this subsection constitute a default on the part of a respondent in a contested case:

(1) Failure of the respondent to file a written response as provided in §1.88 of this title (relating to Written Response to Notice of Hearing); or

(2) Failure of the respondent to appear in person or by legal representative on the day and at the time set for hearing in a contested case, regardless of whether a written response has been filed.

(b) Remedies available upon default. The remedies described in paragraphs (1)-(3) of this subsection are available to TDI as appropriate, in the event a respondent is in default as provided in this section.

(1) The failure to file a written response within 20 days of the mailing of the notice of hearing shall entitle TDI to seek informal disposition by default from the commissioner as provided in the Insurance Code, Article 1.10, Sec. 7(d).

(2) The failure to file a written response within 20 days of the mailing of the notice of hearing in instances where an informal disposition has not occurred prior to the date and time of the hearing, and both TDI and the respondent appear in person or by legal representative, shall entitle TDI to a continuance at the time of the hearing for such reasonable period of time as determined by the administrative law judge.

(3) The failure to appear in person or by legal representative on the day and at the time set or hearing in a contested case as defined in §1.88 of this title (relating to Written Response to Notice of Hearing), regardless of whether a written response has been filed, shall entitle TDI to seek informal disposition by default from the commissioner as provided in the Insurance Code, Article 1.10, Sec. 7(d). The administrative law judge shall grant any motion by TDI to seek informal disposition by the commissioner of the case by default.

(c) Meaning of disposition by default. For purposes of this subchapter, "disposition by default" shall mean the issuance of an order against the respondent in which the allegations against the respondent in the notice of public hearing are deemed admitted as true, upon the offer of proof that proper notice was provided to the defaulting party opponent. For purposes of this section, proper notice means notice sufficient to meet the provisions of the Government Code, §§2001.051, 2001.052 and 2001.054, and §1.28 of this title (relating to Notice and Service). Such notice also shall include the required disclosure language set forth in §1.88(c) of this title (relating to Notice; when provided; required disclosure).

(d) Motion to set aside and reopen. After informal disposition of a contested case by default, a motion by the respondent to set aside the default order and reopen the record shall be granted if the respondent establishes that the failure to file a written response or to attend the hearing was neither intentional nor the result of conscious indifference, and that such failure was due to a mistake or accident.

(1) A motion to set aside the default order and reopen the record shall be filed with the commissioner prior to the time that the order of the commissioner becomes final pursuant to the provisions of the Government Code, Chapter 2001.

(2) A motion to set aside the default order and reopen the record is not a motion for rehearing and is not to be considered a substitute for a motion for rehearing. The filing of a motion to set aside the default order and reopen has no effect on either the statutory time periods for the filing of a motion for rehearing or on the time period for ruling on a motion for rehearing, as provided in the Insurance Code and the Government Code.

Source Note: The provisions of this §1.89 adopted to be effective May 23, 1996, 21 TexReg 4226.