§ 140.001.Definitions

Two definitions, and the second has three cumulative conditions built into it.

"Covered individual" means an individual entitled to the benefits the applicability provision describes.

"Payor of benefits" means an issuer of such a plan that pays benefits to or on behalf of a covered individual as a result of personal injuries caused by the tortious conduct of a third party, and that has a contractual right of subrogation as the chapter describes.

Both limbs are required, and the second is the gate. A plan with no subrogation clause in its contract is not a payor under this chapter, and takes nothing back — Texas does not supply an equitable subrogation right in its place.

The tortious conduct requirement is the other limit. The chapter governs the situation where a health plan paid for treatment of an injury someone else caused, and the injured person then recovers from that person.

Benefits paid for an illness, or for an accident nobody is liable for, are outside it entirely.

The chapter’s subject is a genuine conflict of interest. The injured person and their own insurer are competing for the same settlement fund, and without a rule the insurer’s contractual claim could absorb the whole of it — leaving the person who was injured with nothing after paying their lawyer.

The recovery provision is where that is resolved, by capping the payor’s share.