By: Parker, Lucio S.B. No. 1410
A BILL TO BE ENTITLED
AN ACT
1-1 relating to state indemnification of and liability insurance
1-2 premiums for certain health care claims.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 5.15-4, Insurance Code, is amended to
1-5 read as follows:
1-6 Art. 5.15-4. Reduction in Certain Professional Liability
1-7 Insurance Premiums
1-8 Sec. 1. Definitions. In this article, "charity care or
1-9 services," "eligible <medical> malpractice claim," "health care
1-10 professional," "health center," "health clinic," "insurer,"
1-11 "<medical> malpractice claim," and "patient encounter" have the
1-12 meanings assigned by Section 110.001, Civil Practice and Remedies
1-13 Code.
1-14 Sec. 2. Qualification for discount. A health care
1-15 professional, <or> health center, or health clinic is entitled to a
1-16 premium discount for medical professional liability insurance
1-17 coverage if the professional, <or> center, or health clinic meets
1-18 the criteria stated in Section 4 of this article.
1-19 Sec. 3. Amount of premium discount. The Texas Department
1-20 <State Board> of Insurance shall approve premium discounts to be
1-21 used by each insurer on premiums to be charged to a health care
1-22 professional, <or> health center, or health clinic covered by this
1-23 section. Each insurer shall file proposed premium discounts and
2-1 any loss and statistical data required by department <board> rule.
2-2 The insurer has the burden of demonstrating to the department
2-3 <board>, by a preponderance of the evidence, that the proposed
2-4 premium discount is adequate to reflect the reduction in the
2-5 insurer's liability exposure based on the state's indemnification
2-6 of the first $100,000 or $25,000 under Chapter 110, Civil Practice
2-7 and Remedies Code, of an eligible malpractice claim against a
2-8 health care professional, <or> health center, or health clinic.
2-9 The information required to be filed with the Texas Department
2-10 <State Board> of Insurance under this section is public information
2-11 and shall be made available to the public on written request.
2-12 Sec. 4. Qualification for premium discount. (a) A health
2-13 care professional is entitled to a premium discount for medical
2-14 professional liability insurance coverage if:
2-15 (1) the projected patient encounters of the health
2-16 care professional during the policy year will involve providing
2-17 charity care or services in 10 percent or more of the health care
2-18 professional's patient encounters; and
2-19 (2) the health care professional completes 15 hours of
2-20 continuing education during the calendar year in which the policy
2-21 is in effect <term of the policy> on patient safety and risk
2-22 reduction subjects related to the health care professional's
2-23 practice that are sponsored, approved, endorsed, or accredited by
2-24 the Texas Department <State Board> of Insurance or the health care
2-25 professional's licensing or certifying agency, an "insurer" as
3-1 defined in this Act, or state or nationally recognized accrediting
3-2 organizations or continuing medical or nurse education programs.
3-3 (b) A health center is entitled to a premium discount for
3-4 <medical> professional liability coverage if the health center
3-5 adopts a quality assurance program.
3-6 (c) A health clinic or health care professional under
3-7 Section 110.001(3)(D), Civil Practice and Remedies Code, is
3-8 entitled to a premium discount for professional liability coverage
3-9 if the health clinic or health care professional under Section
3-10 110.001(3)(D), Civil Practice and Remedies Code, provides at least
3-11 10 percent or more of charity care or services and adopts a quality
3-12 assurance program.
3-13 (d) The Texas Department <State Board> of Insurance may
3-14 adopt rules governing health center or health clinic quality
3-15 assurance programs.
3-16 Sec. 5. Request for premium discount. A health care
3-17 professional, <or> health center, or health clinic that desires a
3-18 premium discount for medical professional liability insurance
3-19 coverage shall submit to the insurer, at the time coverage is
3-20 applied for, a written verified application for a new policy or a
3-21 verified statement for a policy to be renewed stating that the
3-22 health care professional, <or> health center, or health clinic
3-23 desires a premium discount and qualifies for a premium discount
3-24 under this article. The application or statement also shall
3-25 provide for each policy for which a discount is requested necessary
4-1 information to determine the eligibility of the health care
4-2 professional, <or> health center, or health clinic and the amount
4-3 of the discount.
4-4 Sec. 6. Audit; penalty. (a) At the end of a policy year,
4-5 an insurer may audit the records of any health care professional,
4-6 <or> health center, or health clinic to which the insurer has
4-7 provided a discount under this article to determine if the health
4-8 care professional, <or> health center, or health clinic provided
4-9 the charity care and services necessary under Section 4 of this
4-10 article to qualify for the premium discount during the preceding
4-11 policy year.
4-12 (b) To conduct the audit, the insurer is entitled to access
4-13 to any books and records necessary to determine if the verified
4-14 application or statement submitted for the coverage was correct and
4-15 the health care professional, <or> health center, or health clinic
4-16 was eligible for the premium discount. If a health care
4-17 professional, <or> health center, or health clinic denies access to
4-18 the property or to the books and records, the insurer may obtain an
4-19 appropriate court order from a court of competent jurisdiction to
4-20 gain access to the books and the records.
4-21 (c) If an insurer's audit indicates that a health care
4-22 professional, <or> health center, or health clinic did not provide
4-23 charity care or services as required under Section 4 of this
4-24 article <in 10 percent or more of the health care professional's or
4-25 health center's patient encounters>, the insurer may charge the
5-1 health care professional, <or> health center, or health clinic an
5-2 amount equal to the difference between the premium paid and the
5-3 premium that would have been due if the health care professional,
5-4 <or> health center, or health clinic had not received the premium
5-5 discount plus 20 percent of the amount of the premium that would
5-6 have been due without the premium discount.
5-7 (d) If a health care professional, <or> health center, or
5-8 health clinic that has received the premium discount for the policy
5-9 year submits the difference between the premium paid and the
5-10 premium that would have been due if the health care professional,
5-11 <or> health center, or health clinic had not received the premium
5-12 discount plus interest at the legal rate for the unpaid premium
5-13 prior to 30 days before the expiration of the policy year, the
5-14 health care professional, <or> health center, or health clinic will
5-15 not be subject to the penalty provided in Subsection (c).
5-16 Sec. 7. Prohibitions on insurer; sanctions. (a) An insurer
5-17 may not cancel or refuse to renew <medical> professional liability
5-18 insurance coverage solely on the basis that the covered health care
5-19 professional, <or> health center, or health clinic is eligible for
5-20 a premium discount under this article except for the following
5-21 reasons:
5-22 (1) fraud or misrepresentation in obtaining coverage;
5-23 (2) failure to pay premiums when due; or
5-24 (3) the insurer's being placed under supervision or in
5-25 conservatorship or receivership, if the cancellation or nonrenewal
6-1 is approved by the supervisor, conservator, or receiver.
6-2 (b) A health care professional, <or> health center, or
6-3 health clinic who files the appropriate verified application or
6-4 statement under this article will be entitled to a premium discount
6-5 as approved by the department <board> under Section 3 of this
6-6 article. When consent to rate is used, a health care professional,
6-7 <or> health center, or health clinic will be entitled to the
6-8 appropriate discount from the rate agreed to by consent.
6-9 (c) An insurer who violates this article is subject to the
6-10 sanctions authorized under Section 7, Article 1.10, of this code.
6-11 Sec. 8. AUTHORITY OF TEXAS DEPARTMENT <STATE BOARD> OF
6-12 INSURANCE. The Texas Department <State Board> of Insurance shall
6-13 administer this article and shall adopt necessary rules, forms,
6-14 endorsements, and procedures to carry out this article.
6-15 Sec. 9. Expiration. Unless continued in existence this
6-16 article expires September 1, 1997 <1995>.
6-17 SECTION 2. Sections 110.001 through 110.003 and 110.005
6-18 through 110.007, Civil Practice and Remedies Code, are amended to
6-19 read as follows:
6-20 Sec. 110.001. Definitions. In this chapter:
6-21 (1) "Charity care or services" means care or services
6-22 provided by a health care professional or health clinic under:
6-23 (A) Chapter 31, 32, 35, or 61, Health and Safety
6-24 Code;
6-25 (B) the Medicaid program under Chapter 32, Human
7-1 Resources Code;
7-2 (C) a contract with a migrant, community, or
7-3 homeless health center that receives funds under 42 U.S.C. Section
7-4 254b, 254c, or 256; <or>
7-5 (D) Subchapter B, Chapter 311, Health and Safety
7-6 Code, or 42 U.S.C. Section 1395dd, to the extent the professional
7-7 <or the hospital in which the care or services are provided> is not
7-8 compensated;
7-9 (E) an approved family practice residency
7-10 training program established under Subchapter I, Chapter 66,
7-11 Education Code, to the extent the professional is not compensated
7-12 for the services; or
7-13 (F) an indigent health care program of a
7-14 hospital district created under the authority of Article IX,
7-15 Sections 4 through 11, of the Texas Constitution.
7-16 (2) "Eligible <medical> malpractice claim" means a
7-17 <medical> claim against a health care professional or health clinic
7-18 that <who> renders charity care in at least 10 percent of the
7-19 patient encounters engaged in by said health care professional or
7-20 health clinic during the policy year in which services were
7-21 rendered which resulted in a <the> claim <was made or> against the
7-22 health care professional or <a> health center or a claim against a
7-23 health care professional who participates in a Medicaid managed
7-24 care project established under Section 32.041, Human Resources
7-25 Code.
8-1 (3) "Health care professional" means:
8-2 (A) a person who is licensed to practice
8-3 medicine under the Medical Practice Act (Article 4495b, Vernon's
8-4 Texas Civil Statutes);
8-5 (B) a person registered by the Board of Nurse
8-6 Examiners as an advanced nurse practitioner or a certified nurse
8-7 midwife; <or>
8-8 (C) a person recognized by the Board of Medical
8-9 Examiners as a physician assistant; or
8-10 (D) a health care professional who participates
8-11 in a Medicaid managed care project established under Section
8-12 32.041, Human Resources Code.
8-13 (4) "Health center" means a federally qualified health
8-14 center, as that term is defined by 42 U.S.C. Section 1396d.
8-15 (5) "Health clinic" means a clinic or other facility
8-16 providing health care in conjunction with an approved family
8-17 residency practice program.
8-18 (6) "Insurer" means an insurance company chartered to
8-19 write or admitted to write and writing medical professional
8-20 liability insurance in this state, the Texas Medical Liability
8-21 Insurance Underwriting Association (Article 21.49-3, Insurance
8-22 Code), any self-insurance trust created under Article 21.49-4,
8-23 Insurance Code, for the purpose of providing medical professional
8-24 liability insurance, or a purchasing group domiciled, registered,
8-25 and writing medical professional liability insurance for health
9-1 centers in this state. The term "insurer" does not include an
9-2 institution of higher education that provides medical professional
9-3 liability coverage under Chapter 59, Education Code.
9-4 (7) "Malpractice <(6) "Medical malpractice> claim"
9-5 means a claim or action against a health care professional, <or>
9-6 health center, or health clinic alleging one or more negligent acts
9-7 or omissions in the diagnosis, care, or treatment of a patient and
9-8 alleging that injury to or death of a patient resulted therefrom,
9-9 without regard to whether said claim or action is based upon tort
9-10 or contract principles.
9-11 (8) <(7)> "Patient encounter" means an occasion on
9-12 which a health care professional, health center, or health clinic
9-13 renders professional health care services to a patient.
9-14 Sec. 110.002. STATE LIABILITY: PERSONS COVERED. In a cause
9-15 of action against a health care professional, <or> health center,
9-16 or health clinic based on conduct described in Section 110.003, the
9-17 state shall indemnify the health care professional, <or> health
9-18 center, or health clinic for actual damages adjudged against the
9-19 health care professional, <or> health center, or health clinic or
9-20 which the health care professional, <or> health center, or health
9-21 clinic becomes obligated to pay pursuant to a settlement reached in
9-22 accordance with this chapter.
9-23 Sec. 110.003. State Liability: Conduct Covered. (a) The
9-24 state is liable for indemnification under this chapter only if the
9-25 damages are based on an eligible <medical> malpractice claim
10-1 against a health care professional, <or> health center, or health
10-2 clinic in the course and scope of providing professional health
10-3 care.
10-4 (b) The state is not liable for indemnification in a case in
10-5 which the finder of fact determines that the defendant committed
10-6 gross negligence or an intentional act found to be a proximate
10-7 cause of the damages <for an intentional act or an act of gross
10-8 negligence>.
10-9 Sec. 110.005. TIMELY NOTICE TO ATTORNEY GENERAL REQUIRED.
10-10 The state is not liable for indemnification for damages under this
10-11 chapter unless the health care professional, <or> health center, or
10-12 health clinic against whom the cause of action is asserted:
10-13 (1) is covered under a valid professional liability
10-14 insurance policy that is issued by an insurer and that provides
10-15 coverage for the <medical> malpractice claim that is the subject of
10-16 the claim or action with a policy limit of not less than $100,000
10-17 per occurrence and $300,000 aggregate for the policy period; and
10-18 (2) delivers or causes to be delivered to the attorney
10-19 general a true copy of any written notice of said <medical>
10-20 malpractice claim and any summons or citation served on the health
10-21 care professional, <or> health center, or health clinic, which
10-22 written notice, summons, or citation shall be delivered to the
10-23 attorney general not later than the 60th <45th> day after the
10-24 receipt thereof by the health care professional, <or> health
10-25 center, or health clinic. However, subsequent notice shall not be
11-1 a basis for denial of a claim for indemnification unless the
11-2 attorney general proves by clear and convincing evidence that such
11-3 delay would unduly prejudice the state's ability to evaluate the
11-4 reasonableness of the settlement offer or agreement.
11-5 Sec. 110.006. INFORMATION PROVIDED TO ATTORNEY GENERAL;
11-6 SETTLEMENTS. (a) The insurer for a health care professional, <or>
11-7 health center, or health clinic that is the subject of an eligible
11-8 malpractice claim shall designate an attorney or other
11-9 representative assigned to the claim who shall keep the attorney
11-10 general or his designee reasonably informed of significant
11-11 developments in the claim or action, including all settings for
11-12 trials or dispositive motions, all settlement offers and demands,
11-13 all pleadings by or against the health care professional, <or>
11-14 health center, or health clinic, all judgments or other dispositive
11-15 orders, and all written recommendations of counsel for the health
11-16 care professional, <or> health center, or health clinic regarding
11-17 settlement.
11-18 (b) If a settlement agreement is reached between the health
11-19 care professional, <or> health center, or health clinic and a
11-20 claimant, the insurer for the health care professional, <or> health
11-21 center, or health clinic shall promptly notify the attorney general
11-22 of same. The settlement shall become final and binding upon the
11-23 state unless, within 10 days of the receipt of said notice by the
11-24 attorney general (or such greater or lesser period of time as the
11-25 court in which the action is filed may allow), the attorney general
12-1 files in said court (or, if no action is pending in any court, in a
12-2 district court of Travis County, Texas) a written objection to the
12-3 settlement setting forth in detail why the court should find that
12-4 the reasonable settlement value of the total claim being settled is
12-5 significantly less than the amount for which the state would be
12-6 liable for indemnification if the settlement were to be consummated
12-7 based upon all the facts and circumstances of the case. A hearing
12-8 shall promptly be held upon any such objection, either before the
12-9 court or a special master appointed by the court for that purpose.
12-10 At any such hearing, the burden shall be upon the attorney general
12-11 to prove by clear and convincing evidence that the reasonable
12-12 settlement value of the total claim being settled is significantly
12-13 less than the amount for which the state would be liable for
12-14 indemnification if the settlement were to be consummated based upon
12-15 all the facts and circumstances of the case. Unless the court
12-16 finds that the reasonable settlement value of the total claim being
12-17 settled is significantly less than the amount for which the state
12-18 would be liable for indemnification if the settlement were to be
12-19 consummated based upon all the facts and circumstances of the case,
12-20 the court shall enter an order approving the settlement and
12-21 directing the state to make the required indemnity payment
12-22 thereunder. Such an order shall be reviewable by an appellate
12-23 court only upon the filing of an application for writ of mandamus
12-24 within 15 days of the date said order is signed, and only for an
12-25 abuse of discretion by the trial court. Any such application for
13-1 writ of mandamus shall be given priority in the appellate court in
13-2 which it is filed above all other applications for writ of mandamus
13-3 docketed in said court.
13-4 (c) If the attorney general files an objection under
13-5 Subsection (b), the court may, with the agreement of the parties to
13-6 the settlement agreement, permit the payment of any other sums due
13-7 to be paid under said agreement by parties other than the state
13-8 while the objection of the attorney general is pending
13-9 adjudication.
13-10 (d) If a suit involving an eligible <medical> malpractice
13-11 claim is imminently scheduled for jury trial or alternative dispute
13-12 resolution, or if the defendant seeking indemnity is subject to a
13-13 time limit under the Stowers Doctrine to respond to a settlement
13-14 proposal, or is being tried before a jury, and settlement
13-15 negotiations are ongoing between the health care professional, <or>
13-16 health center, or health clinic and any claimant, either of those
13-17 parties may request the court to require the attorney general or
13-18 his designee to assign an attorney to monitor such negotiations so
13-19 that if a settlement agreement is reached between the parties, the
13-20 attorney so assigned by the attorney general can immediately advise
13-21 the court of any objection, in which event the hearing described in
13-22 Subsection (b) regarding the reasonableness of the settlement
13-23 amount shall be held immediately after the settlement agreement is
13-24 reduced to writing or announced on the record in open court, so
13-25 that the trial court may render its determination before the petit
14-1 jury or jury panel is discharged.
14-2 (e) Except to the extent that the attorney general is
14-3 authorized under this section to object to the reasonableness of a
14-4 settlement, the attorney general shall not be authorized to
14-5 intervene in any court proceeding involving an eligible <medical>
14-6 malpractice claim. The insurer for the health care professional,
14-7 <or> health center, or health clinic shall be in charge of the
14-8 defense of any such claim.
14-9 (f) Upon final disposition of an eligible <medical>
14-10 malpractice claim by settlement or judgment, funds shall be paid by
14-11 the comptroller on vouchers that shall be promptly prepared,
14-12 verified, and signed by the attorney general.
14-13 Sec. 110.007. EXPIRATION. Unless continued in existence,
14-14 this chapter expires September 1, 1997 <1995>.
14-15 SECTION 3. (a) Section 2 of this Act applies to any cause
14-16 of action in which no final judgment has been entered prior to the
14-17 effective date of this Act.
14-18 (b) Section 1 of this Act applies only to professional
14-19 liability insurance policies delivered, issued for delivery, or
14-20 renewed on or after January 1, 1994. Policies delivered, issued
14-21 for delivery, or renewed before January 1, 1994, are governed by
14-22 the law that existed immediately before the effective date of this
14-23 Act, and that law is continued in effect for that purpose.
14-24 SECTION 4. This Act takes effect September 1, 1993.
14-25 SECTION 5. The importance of this legislation and the
15-1 crowded condition of the calendars in both houses create an
15-2 emergency and an imperative public necessity that the
15-3 constitutional rule requiring bills to be read on three several
15-4 days in each house be suspended, and this rule is hereby suspended.