(a) The membership of the Texas Certified Self-Insurer Guaranty Association (the Association) shall consist of all certified self-insurers (members) that hold a certificate of authority to self-insure issued by the Commissioner of Workers' Compensation of the Texas Department of Insurance, Division of Workers' Compensation (the Commissioner). Only certified self-insurers may be members of the Association.      
        (1) Membership shall begin on the date the certificate of authority to self-insure takes effect and each member shall designate a representative to receive notices from the association.       
        (2) The members of the Association shall meet annually at a place and time designated by the Board of Directors. At the Annual Meeting, the members shall conduct any necessary and proper business.       
        (3) The association shall have a president and vice-president and may have other officers as necessary to conduct the business of the association.       
        (4) Special meetings of the association may be called by the president of the association on 30 days notice to the members of the association.       
        (5) A majority of the members present either in person or by proxy at any meeting of the association shall constitute a quorum.       
      (b) The business of the Association shall be managed by the Board of Directors (the Board).      
        (1) The Board shall consist of three members of the Association, one member designated by the Commissioner, and the Public Insurance Counsel. The members of the Board shall hereinafter be referred to as Directors. Each Director representing members of the Association must be a current employee of a member of the Association.       
        (2) A quorum of the board is three voting directors. No business may be conducted by the board unless a quorum of its members is present at the meeting. An action by the board requires the concurring vote of three directors. A motion to recommend an application for certification that fails to receive the concurring vote of three directors constitutes disapproval of the application.       
        (3) The board shall elect a chair and vice-chair annually. The chair and vice-chair must be voting members of the board of directors. The board may also elect other officers. The chair shall preside at all meetings of the board. In the absence of the chair, the vice-chair shall preside at the meeting.       
        (4) The board shall meet at least once during each calendar quarter. Additional meetings may be held as necessary to conduct the business of the association. Meetings shall be held at the call of the chair or upon written request to the chair by any three directors of the board.       
        (5) The board shall have the authority to hire an executive director to conduct the day-to-day operations of the association. The board may also authorize the hiring of additional staff as necessary. The executive director serves at the pleasure of the board. The employment or removal of an executive director requires the affirmative vote of at least three members of the board. The salaries of the executive director and staff shall be set by the board and be commensurate with the salaries paid by state agencies.       
        (6) The board shall have the authority to contract with others for any services necessary for the operation of the association, including administration of the trust fund and administration of claims of impaired self-insurers.       
        (7) A director shall abstain from voting on any matter in which he or she has, directly or indirectly, a personal, private, or business interest. As used in this rule, personal, private, or business interest includes being an officer, director, or affiliate of a person or entity subject to an action by the board, or directly or indirectly having a material financial interest in a matter before the board.       
        (8) The directors shall serve without compensation. But, the directors shall be reimbursed for any reasonable expenses incurred in carrying out the duties of the board.       
      (c) The members of the Association shall elect directors to represent the Association and shall elect officers of the Association annually. The terms for the elected directors will begin on January 1 of each year. The Association shall annually elect one director for a term of three years. Directors may serve consecutive terms on the Board.      
        (1) Prior to the election, the President shall appoint from the membership of the Association a Nominations Committee of at least three members, which shall be responsible for nominating Officers and Directors to be elected by the Association. The Board shall provide a method by which nominations may also be made by members of the Association. Any nominee must be a current employee of a member of the Association.       
        (2) Each member of the association may cast one vote for each director or officer to be elected by the association.       
        (3) If a vacancy occurs in any office elected by the association, including a director representing the members of the association (by death, resignation, or otherwise), the president, or in the event of a vacancy in the office of the president, the vice president, shall appoint a committee of at least three members which shall select a successor to fill the vacancy for the unexpired term. A vacancy occurs when a term expires, a director resigns, dies, is adjudicated mentally incompetent, or is convicted of a felony. If a director is convicted of a felony, and cannot be removed by statute, the director is prohibited from voting on any matter before the board.       
      (d) The Board shall levy assessments against each member necessary to create and maintain the Texas Certified Self-Insurer Guaranty Trust Fund (the Trust Fund). Assessments shall be levied in amounts that will provide at least $1 million, but not more than $2 million. For purposes of assessments, "payments" means all income benefits paid in the preceding reported calendar year pursuant to obligations as a certified self-insurer, or in the case of a first-year member of the Association, made by the member's carrier on behalf of the member, pursuant to the Texas Workers' Compensation Act. All earned income of the trust fund is retained by the trust fund and may be used by the Board of Directors as provided in subsection (f)(1) of these Bylaws.      
        (1) The amount assessed against each individual member shall be based on the ratio of the payments made by the member to the total payments made by or on behalf of all certified self-insurers.       
        (2) If the security deposit of an impaired certified self-insurer (or former self-insurer) is not adequate to cover its self-insured liabilities for workers' compensation benefits, the funds required to pay the additional benefits shall be paid from the Trust Fund and reimbursed to the Trust Fund through assessment. The Board shall assess those currently unimpaired self-insurers and former self-insurers that were members of the Association for any time during the five years immediately preceding the date of assessment (the "members subject to assessment"), in accordance with this section. The Board shall provide for the calculation of the estimated total amount necessary to pay all benefits and to reimburse the Trust Fund (the "estimated total assessment"). The estimated total assessment shall be assessed by the Board. The amount assessed against each of the members subject to assessment shall be based on the ratio of payments by a member to total payments.       
        (3) When all liabilities of an impaired certified self-insurer (or former self-insurer) have been paid, and the trust fund has been reimbursed, excess funds may be held in lieu of or in reduction of an Administrative Fee, paid to the Division of Workers' Compensation in lieu of or in reduction of a regulatory fee, used by the Board to pay administrative expenses of the Association, or otherwise used for the benefit of the members of the Association.       
        (4) The Board of Directors shall have the authority to collect from the impaired certified self-insurer (or former self-insurer) any amount that has been assessed against other self-insurers to pay the liabilities of the impaired certified self-insurer (or former self-insurer). The board may use any appropriate means for collection of the assessment up to and including filing suit against the impaired member or former member. Continued failure to pay the assessment may result in a recommendation to the Commissioner that the member's certificate of self-insurance be revoked.       
        (5) If the Trust Fund is terminated for any reason, the funds then held in the Trust Fund shall be paid to the Division of Workers' Compensation to be used for the administration of the Workers' Compensation Act.       
      (e) The association shall mail notice of any assessment to the designated representative of each member or former member of the association. Each member or former member shall pay all assessments not later than 30 days after it is notified of the assessment. Late payments shall accrue interest at the rate of 1.5% per month on any unpaid balance. The board may use any appropriate means for collection of the assessment up to and including filing suit against the member or former member and continued failure to pay the assessment may result in a recommendation to the Commissioner that the member's certificate of self-insurance be revoked.     
      (f) The board of directors shall approve a budget for the operating expenses for the succeeding year not later than December 31 of each year.      
        (1) Income earned from the investment of the trust fund shall be used for expenses of administration of the association and of the trust fund.       
        (2) The board may assess an administrative fee against members only when trust fund income is insufficient to pay the costs of administering the trust fund, operations of the association, and administering the claims of impaired members or former members.       
      (g) If the Commissioner declares that a certified self-insurer (or former self-insurer) is impaired and determines that the payment of benefits and claims administration shall be made through the association, the board shall provide for the administration and payment of claims on behalf of the impaired certified self-insurer (or former self-insurer) in accordance with the Texas Workers' Compensation Act. The board shall provide for the creation of a separate account for the administration of each impaired certified self-insurer (or former self-insurer) and for the payment from the trust fund to the separate account if the Commissioner advises the board that additional funds are needed to supplement the security deposit.     
      (h) The association shall indemnify, or pay in advance, any present or former director, officer, appointee, committee member, person serving in any appointed or elected capacity, or employee for expenses, or other loss in connection with any proceeding in which such a person is made a party because of the position they hold for the association to the full extent of the law.      
        (1) The association may purchase insurance for any present or former director, officer, appointee, committee member, person serving in any appointed or elected capacity, or employee of the association against any liability arising out of the position they hold for the association, whether or not the association would have the power to indemnify him or her against liability.       
        (2) The protection and indemnification provided in this article shall be in addition to any other right to which a director, officer, appointee, committee member, person serving in any appointed or elected capacity, or employee may be entitled.       
      (i) The board shall adopt and amend rules, including these bylaws, in accordance with the Administrative Procedure Act, Government Code, Chapter 2001. After proposing, publishing, and receiving comments on rules, the board shall meet and vote on a final version. Adoption of rules must be made contingent on approval by the Commissioner and ratification by the association. The rules so adopted shall be sent to the Commissioner. Upon approval by the Commissioner, and ratification by the association, the rules shall be filed with the Texas Register and shall become effective in accord with the provisions of the Administrative Procedure Act. Failure to obtain ratification by the members will result in the board reconsidering the rule and voting on a revised version.      
        (1) Rules shall be ratified by a majority vote of the members of the association after adoption by the board. The president may choose to conduct the ratification vote by mail-in ballot. Notice of rulemaking actions by the board must be given in the manner provided by this rule.       
        (2) Any notice required or allowed by this rule shall be in writing and delivered by the United States Postal Service or private delivery service, return receipt requested. In the case of notice to a member of the association, notice shall be made to the designated representative of the member. In the absence of a return receipt, notice shall be deemed to be given five days after deposit with the United States Postal Service or private delivery service, postage prepaid. Failure of a member to actually receive a notice shall not invalidate any action that may have been taken by the association or the board.       
      (j) The fiscal year of the association shall be January 1 through December 31 of each year.     
      (k) The board shall keep books and records of accounts, minutes of meetings of directors, and a record of members. All records of the association will be open to review by any member at a time and place convenient to the member and association staff. The financial records of the association shall be audited annually by an independent auditor.     
      (l) All meetings of the association and the board of directors shall be conducted in accordance with the most current edition of Roberts Rules of Order, except when in conflict with the Texas Workers' Compensation Act, these rules, and any other applicable statute including the Texas Open Meetings Act.     
     Source Note:        The provisions of this §181.1 adopted to be effective March 4, 1994, 19 TexReg 1232; amended to be effective April 2, 1996, 21 TexReg 2392; amended to be effective June 30, 1997, 22 TexReg 5926; amended to be effective December 11, 2006, 31 TexReg 9839