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Committee hears bill to require separate fiduciary accounts and bankruptcy notices from third‑party administrators
Summary
House Bill 2044 would require third‑party administrators to maintain separate fiduciary accounts for each payer and to disclose bankruptcy petitions to the commissioner; the Kansas Insurance Department said the changes stem from difficulties following a TPA bankruptcy in western Kansas.
House Bill 2044 would require third‑party administrators (TPAs) that handle premium collections and claims payments to keep separate fiduciary accounts for each payer and to immediately notify the commissioner of insurance if the administrator files a Chapter 9 or Chapter 11 bankruptcy petition.
Eileen, the reviser, told the House Committee on Insurance that Section 1 amends KSA 40‑3807 to require separate fiduciary accounts and prevent commingling of funds held for multiple payers, and Section 2 amends KSA 40‑309 to require prompt disclosure of bankruptcy petitions to the commissioner. The reviser noted statutory references in the bill and stood for technical questions.
Eric Turrick (Kansas Department of Insurance, Director of Government Affairs) said the proposal was prompted by a TPA bankruptcy in western Kansas. He told the committee the department learned about the bankruptcy only after the event and found it difficult to "pick up the pieces". Separating funds and requiring immediate notification would make bankruptcy proceedings and protection of payer funds more orderly, he said.
No proponents, opponents or neutral witnesses beyond agency staff appeared in the transcript. The committee closed the hearing on HB 2044 with no action recorded in the transcript.
Why it matters: TPAs act as intermediaries between insurers, providers and claimants. The department said separate accounts and bankruptcy notice would help protect payer funds and speed regulatory response if a TPA becomes insolvent.
What's next: The committee closed the hearing; the transcript does not record committee votes or final action on HB 2044.
