By: Parker 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," "hospital,"
1-11 "insurer," "<medical> malpractice claim," and "patient encounter"
1-12 have the meanings assigned by Section 110.001, Civil Practice and
1-13 Remedies Code.
1-14 Sec. 2. Qualification for discount. A health care
1-15 professional, <or> health center, health clinic, or hospital is
1-16 entitled to a premium discount for medical professional liability
1-17 insurance coverage if the professional, <or> center, health clinic,
1-18 or hospital meets 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, health clinic, or hospital
1-23 covered by this section. The board shall base the approved
2-1 discounts upon loss and statistical data provided by each insurer
2-2 and on <Each insurer shall file proposed premium discounts and any
2-3 loss and statistical data required by board rule. The insurer has
2-4 the burden of demonstrating to the board, by a preponderance of the
2-5 evidence, that the proposed premium discount is adequate to
2-6 reflect> the reduction in the insurer's liability exposure based on
2-7 the state's indemnification of the first $100,000 or $25,000 under
2-8 Chapter 110, Civil Practice and Remedies Code, of an eligible
2-9 malpractice claim against a health care professional, <or> health
2-10 center, health clinic, or hospital. <The information required to
2-11 be filed with the State Board of Insurance under this section is
2-12 public information and shall be made available to the public on
2-13 written request.>
2-14 Sec. 4. Qualification for premium discount. (a) A health
2-15 care professional is entitled to a premium discount for medical
2-16 professional liability insurance coverage if:
2-17 (1) the projected patient encounters of the health
2-18 care professional during the policy year will involve providing
2-19 charity care or services in the number of cases designated by the
2-20 commissioner of health for the type or specialty of practice of the
2-21 health care professional for the calendar year in which the term of
2-22 the policy begins or the health care professional participates in a
2-23 Medicaid managed care demonstration project established under
2-24 Section 32.041, Human Resources Code <10 percent or more of the
2-25 health care professional's patient encounters>; and
3-1 (2) the health care professional completes 15 hours of
3-2 continuing education during the calendar year in which the policy
3-3 is in effect <term of the policy> on patient safety and risk
3-4 reduction subjects related to the health care professional's
3-5 practice that are sponsored, approved, endorsed, or accredited by
3-6 the Texas Department <State Board> of Insurance or the health care
3-7 professional's licensing or certifying agency, an "insurer" as
3-8 defined in this Act, or state or nationally recognized accrediting
3-9 organizations or continuing medical or nurse education programs.
3-10 (b) A health center is entitled to a premium discount for
3-11 <medical> professional liability coverage if the health center
3-12 adopts a quality assurance program.
3-13 (c) A health clinic or hospital is entitled to a premium
3-14 discount for professional liability coverage if the hospital
3-15 provides at least 10 percent or more of charity care or services
3-16 and adopts a quality assurance program.
3-17 (d) The Texas Department <State Board> of Insurance may
3-18 adopt rules governing health center, health clinic, or hospital
3-19 quality assurance programs.
3-20 Sec. 5. Request for premium discount. A health care
3-21 professional, <or> health center, health clinic, or hospital that
3-22 desires a premium discount for medical professional liability
3-23 insurance coverage shall submit to the insurer, at the time
3-24 coverage is applied for, a written verified application for a new
3-25 policy or a verified statement for a policy to be renewed stating
4-1 that the health care professional, <or> health center, health
4-2 clinic, or hospital desires a premium discount and qualifies for a
4-3 premium discount under this article. The application or statement
4-4 also shall provide for each policy for which a discount is
4-5 requested necessary information to determine the eligibility of the
4-6 health care professional, <or> health center, health clinic, or
4-7 hospital and the amount of the discount.
4-8 Sec. 6. Audit; penalty. (a) At the end of a policy year,
4-9 an insurer may audit the records of any health care professional,
4-10 <or> health center, health clinic, or hospital to which the insurer
4-11 has provided a discount under this article to determine if the
4-12 health care professional, <or> health center, health clinic, or
4-13 hospital provided the charity care and services necessary under
4-14 Section 4 of this article to qualify for the premium discount
4-15 during the preceding policy year.
4-16 (b) To conduct the audit, the insurer is entitled to access
4-17 to any books and records necessary to determine if the verified
4-18 application or statement submitted for the coverage was correct and
4-19 the health care professional, <or> health center, health clinic, or
4-20 hospital was eligible for the premium discount. If a health care
4-21 professional, <or> health center, health clinic, or hospital denies
4-22 access to the property or to the books and records, the insurer may
4-23 obtain an appropriate court order from a court of competent
4-24 jurisdiction to gain access to the books and the records.
4-25 (c) If an insurer's audit indicates that a health care
5-1 professional, <or> health center, health clinic, or hospital did
5-2 not provide charity care or services as required under Section 4 of
5-3 this article <in 10 percent or more of the health care
5-4 professional's or health center's patient encounters>, the insurer
5-5 may charge the health care professional, <or> health center, health
5-6 clinic, or hospital an amount equal to the difference between the
5-7 premium paid and the premium that would have been due if the health
5-8 care professional, <or> health center, health clinic, or hospital
5-9 had not received the premium discount plus 20 percent of the amount
5-10 of the premium that would have been due without the premium
5-11 discount.
5-12 (d) If a health care professional, <or> health center,
5-13 health clinic, or hospital that has received the premium discount
5-14 for the policy year submits the difference between the premium paid
5-15 and the premium that would have been due if the health care
5-16 professional, <or> health center, health clinic, or hospital had
5-17 not received the premium discount plus interest at the legal rate
5-18 for the unpaid premium prior to 30 days before the expiration of
5-19 the policy year, the health care professional, <or> health center,
5-20 health clinic, or hospital will not be subject to the penalty
5-21 provided in Subsection (c).
5-22 Sec. 7. Prohibitions on insurer; sanctions. (a) An insurer
5-23 may not cancel or refuse to renew <medical> professional liability
5-24 insurance coverage solely on the basis that the covered health care
5-25 professional, <or> health center, health clinic, or hospital is
6-1 eligible for a premium discount under this article except for the
6-2 following reasons:
6-3 (1) fraud or misrepresentation in obtaining coverage;
6-4 (2) failure to pay premiums when due; or
6-5 (3) the insurer's being placed under supervision or in
6-6 conservatorship or receivership, if the cancellation or nonrenewal
6-7 is approved by the supervisor, conservator, or receiver.
6-8 (b) A health care professional, <or> health center, health
6-9 clinic, or hospital who files the appropriate verified application
6-10 or statement under this article will be entitled to a premium
6-11 discount as approved by the board under Section 3 of this article.
6-12 When consent to rate is used, a health care professional, <or>
6-13 health center, health clinic, or hospital will be entitled to the
6-14 appropriate discount from the rate agreed to by consent.
6-15 (c) An insurer who violates this article is subject to the
6-16 sanctions authorized under Section 7, Article 1.10, of this code.
6-17 Sec. 8. AUTHORITY OF TEXAS DEPARTMENT <STATE BOARD> OF
6-18 INSURANCE. The Texas Department <State Board> of Insurance shall
6-19 administer this article and shall adopt necessary rules, forms,
6-20 endorsements, and procedures to carry out this article.
6-21 Sec. 9. Expiration. Unless continued in existence this
6-22 article expires September 1, 1997 <1995>.
6-23 SECTION 2. Sections 110.001 through 110.003 and 110.005
6-24 through 110.007, Civil Practice and Remedies Code, are amended to
6-25 read as follows:
7-1 Sec. 110.001. Definitions. In this chapter:
7-2 (1) "Charity care or services" means care or services
7-3 provided by a health care professional, health clinic, or hospital
7-4 under:
7-5 (A) Chapter 31, 32, 35, or 61, Health and Safety
7-6 Code;
7-7 (B) the Medicaid program under Chapter 32, Human
7-8 Resources Code;
7-9 (C) a contract with a migrant, community, or
7-10 homeless health center that receives funds under 42 U.S.C. Section
7-11 254b, 254c, or 256; <or>
7-12 (D) Subchapter B, Chapter 311, Health and Safety
7-13 Code, or 42 U.S.C. Section 1395dd, to the extent the professional
7-14 or the hospital in which the care or services are provided is not
7-15 compensated;
7-16 (E) an approved family practice residency
7-17 training program established under Subchapter I, Chapter 66,
7-18 Education Code, to the extent the professional is not compensated
7-19 for the services; or
7-20 (F) an indigent health care program of a
7-21 hospital district created under the authority of Article IX,
7-22 Sections 4 through 11, of the Texas Constitution.
7-23 (2) "Eligible <medical> malpractice claim" means a
7-24 <medical> claim against a health care professional, health center,
7-25 health clinic, or hospital, when the health care professional
8-1 renders charity care for the designated number of charity cases
8-2 established by the commissioner of health or the health care
8-3 professional participates in a Medicaid managed care demonstration
8-4 project established under Section 32.041, Human Resources Code, or,
8-5 in the case of a health center, health clinic, or hospital that
8-6 <who> renders charity care in at least 10 percent of the patient
8-7 encounters engaged in by said health center, health clinic, or
8-8 hospital <care professional> during the policy year in which the
8-9 claim was made or against a health center.
8-10 (3) "Health care professional" means:
8-11 (A) a person who is licensed to practice
8-12 medicine under the Medical Practice Act (Article 4495b, Vernon's
8-13 Texas Civil Statutes);
8-14 (B) a person registered by the Board of Nurse
8-15 Examiners as an advanced nurse practitioner or a certified nurse
8-16 midwife; or
8-17 (C) a person recognized by the Board of Medical
8-18 Examiners as a physician assistant.
8-19 (4) "Health center" means a federally qualified health
8-20 center, as that term is defined by 42 U.S.C. Section 1396d.
8-21 (5) "Health clinic" means a clinic or other facility
8-22 providing health care in conjunction with an approved family
8-23 residency practice program.
8-24 (6) "Hospital" means a general or special hospital
8-25 licensed under Chapter 241, Health and Safety Code.
9-1 (7) "Insurer" means an insurance company chartered to
9-2 write or admitted to write and writing medical professional
9-3 liability insurance in this state, the Texas Medical Liability
9-4 Insurance Underwriting Association (Article 21.49-3, Insurance
9-5 Code), any self-insurance trust created under Article 21.49-4,
9-6 Insurance Code, for the purpose of providing medical professional
9-7 liability insurance, or a purchasing group domiciled, registered,
9-8 and writing medical professional liability insurance for health
9-9 centers in this state. The term "insurer" does not include an
9-10 institution of higher education that provides medical professional
9-11 liability coverage under Chapter 59, Education Code.
9-12 (8) "Malpractice <(6) "Medical malpractice> claim"
9-13 means a claim or action against a health care professional, <or>
9-14 health center, health clinic, or hospital alleging one or more
9-15 negligent acts or omissions in the diagnosis, care, or treatment of
9-16 a patient and alleging that injury to or death of a patient
9-17 resulted therefrom, without regard to whether said claim or action
9-18 is based upon tort or contract principles.
9-19 (9) <(7)> "Patient encounter" means an occasion on
9-20 which a health care professional, health center, health clinic, or
9-21 hospital renders professional health care services to a patient.
9-22 For purposes of determining the number of patient encounters and
9-23 amount of charity care provided by a hospital or a health care
9-24 professional employed by or under contract with a hospital, the
9-25 calculations will be based on the hospital's emergency room visits
10-1 or inpatient admissions, as appropriate.
10-2 Sec. 110.002. STATE LIABILITY: PERSONS COVERED. In a cause
10-3 of action against a health care professional, <or> health center,
10-4 health clinic, or hospital based on conduct described in Section
10-5 110.003, the state shall indemnify the health care professional,
10-6 <or> health center, health clinic, or hospital for actual damages
10-7 adjudged against the health care professional, <or> health center,
10-8 health clinic, or hospital or which the health care professional,
10-9 <or> health center, health clinic, or hospital becomes obligated to
10-10 pay pursuant to a settlement reached in accordance with this
10-11 chapter.
10-12 Sec. 110.003. State Liability: Conduct Covered. (a) The
10-13 state is liable for indemnification under this chapter only if the
10-14 damages are based on an eligible <medical> malpractice claim
10-15 against a health care professional, <or> health center, health
10-16 clinic, or hospital in the course and scope of providing
10-17 professional health care.
10-18 (b) The state is not liable for indemnification in a case in
10-19 which the finder of fact determines that the defendant committed
10-20 gross negligence or an intentional act found to be a proximate
10-21 cause of the damages <for an intentional act or an act of gross
10-22 negligence>.
10-23 Sec. 110.005. TIMELY NOTICE TO COMMISSIONER OF HEALTH
10-24 <ATTORNEY GENERAL> REQUIRED. The state is not liable for
10-25 indemnification for damages under this chapter unless the health
11-1 care professional, <or> health center, health clinic, or hospital
11-2 against whom the cause of action is asserted:
11-3 (1) is covered under a valid professional liability
11-4 insurance policy that is issued by an insurer and that provides
11-5 coverage for the <medical> malpractice claim that is the subject of
11-6 the claim or action with a policy limit of not less than $100,000
11-7 per occurrence and $300,000 aggregate for the policy period; and
11-8 (2) delivers or causes to be delivered to the
11-9 commissioner of health or his designee <attorney general> a true
11-10 copy of any written notice of said <medical> malpractice claim and
11-11 any summons or citation served on the health care professional,
11-12 <or> health center, health clinic, or hospital, which written
11-13 notice, summons, or citation shall be delivered to the commissioner
11-14 of health <attorney general> not later than the 60th <45th> day
11-15 after the receipt thereof by the health care professional, <or>
11-16 health center, health clinic, or hospital. However, subsequent
11-17 notice shall not be a basis for denial of a claim for
11-18 indemnification unless the commissioner of health proves by clear
11-19 and convincing evidence that such delay would unduly prejudice the
11-20 state's ability to evaluate the reasonableness of the settlement
11-21 offer or agreement.
11-22 Sec. 110.006. INFORMATION PROVIDED TO COMMISSIONER OF HEALTH
11-23 <ATTORNEY GENERAL>; SETTLEMENTS. (a) The insurer for a health
11-24 care professional, <or> health center, health clinic, or hospital
11-25 that is the subject of an eligible malpractice claim shall
12-1 designate an attorney or other representative assigned to the claim
12-2 who shall keep the commissioner of health <attorney general> or his
12-3 designee reasonably informed of significant developments in the
12-4 claim or action, including all settings for trials or dispositive
12-5 motions, all settlement offers and demands, all pleadings by or
12-6 against the health care professional, <or> health center, health
12-7 clinic, or hospital, all judgments or other dispositive orders, and
12-8 all written recommendations of counsel for the health care
12-9 professional, <or> health center, health clinic, or hospital
12-10 regarding settlement.
12-11 (b) If a settlement agreement is reached between the health
12-12 care professional, <or> health center, health clinic, or hospital
12-13 and a claimant, the insurer for the health care professional, <or>
12-14 health center, health clinic, or hospital shall promptly notify the
12-15 commissioner of health <attorney general> of same. The settlement
12-16 shall become final and binding upon the state unless, within 10
12-17 days of the receipt of said notice by the commissioner of health
12-18 <attorney general> (or such greater or lesser period of time as the
12-19 court in which the action is filed may allow), the commissioner of
12-20 health <attorney general> files in said court (or, if no action is
12-21 pending in any court, in a district court of Travis County, Texas)
12-22 a written objection to the settlement setting forth in detail why
12-23 the court should find that the reasonable settlement value of the
12-24 total claim being settled is significantly less than the amount for
12-25 which the state would be liable for indemnification if the
13-1 settlement were to be consummated based upon all the facts and
13-2 circumstances of the case. A hearing shall promptly be held upon
13-3 any such objection, either before the court or a special master
13-4 appointed by the court for that purpose. At any such hearing, the
13-5 burden shall be upon the commissioner of health <attorney general>
13-6 to prove by clear and convincing evidence that the reasonable
13-7 settlement value of the total claim being settled is significantly
13-8 less than the amount for which the state would be liable for
13-9 indemnification if the settlement were to be consummated based upon
13-10 all the facts and circumstances of the case. Unless the court
13-11 finds that the reasonable settlement value of the total claim being
13-12 settled is significantly less than the amount for which the state
13-13 would be liable for indemnification if the settlement were to be
13-14 consummated based upon all the facts and circumstances of the case,
13-15 the court shall enter an order approving the settlement and
13-16 directing the state to make the required indemnity payment
13-17 thereunder. Such an order shall be reviewable by an appellate
13-18 court only upon the filing of an application for writ of mandamus
13-19 within 15 days of the date said order is signed, and only for an
13-20 abuse of discretion by the trial court. Any such application for
13-21 writ of mandamus shall be given priority in the appellate court in
13-22 which it is filed above all other applications for writ of mandamus
13-23 docketed in said court.
13-24 (c) If the commissioner of health <attorney general> files
13-25 an objection under Subsection (b), the court may, with the
14-1 agreement of the parties to the settlement agreement, permit the
14-2 payment of any other sums due to be paid under said agreement by
14-3 parties other than the state while the objection of the
14-4 commissioner of health <attorney general> is pending adjudication.
14-5 (d) If a suit involving an eligible <medical> malpractice
14-6 claim is imminently scheduled for jury trial or alternative dispute
14-7 resolution, or if the defendant seeking indemnity is subject to a
14-8 time limit under the Stowers Doctrine to respond to a settlement
14-9 proposal, or is being tried before a jury, and settlement
14-10 negotiations are ongoing between the health care professional, <or>
14-11 health center, health clinic, or hospital and any claimant, either
14-12 of those parties may request the court to require the commissioner
14-13 of health <attorney general> or his designee to assign an attorney
14-14 to monitor such negotiations so that if a settlement agreement is
14-15 reached between the parties, the attorney so assigned by the
14-16 commissioner of health <attorney general> can immediately advise
14-17 the court of any objection, in which event the hearing described in
14-18 Subsection (b) regarding the reasonableness of the settlement
14-19 amount shall be held immediately after the settlement agreement is
14-20 reduced to writing or announced on the record in open court, so
14-21 that the trial court may render its determination before the petit
14-22 jury or jury panel is discharged.
14-23 (e) Except to the extent that the commissioner of health
14-24 <attorney general> is authorized under this section to object to
14-25 the reasonableness of a settlement, the commissioner of health
15-1 <attorney general> shall not be authorized to intervene in any
15-2 court proceeding involving an eligible <medical> malpractice claim.
15-3 The insurer for the health care professional, <or> health center,
15-4 health clinic, or hospital shall be in charge of the defense of any
15-5 such claim.
15-6 (f) Upon final disposition of an eligible <medical>
15-7 malpractice claim by settlement or judgment, funds shall be paid by
15-8 the comptroller on vouchers that shall be promptly prepared,
15-9 verified, and signed by the commissioner of health <attorney
15-10 general>.
15-11 Sec. 110.007. EXPIRATION. Unless continued in existence,
15-12 this chapter expires September 1, 1997 <1995>.
15-13 SECTION 3. Subtitle C, Title 2, Health and Safety Code, is
15-14 amended by adding Chapter 62 to read as follows:
15-15 CHAPTER 62. DETERMINATION OF CHARITY CARE REQUIREMENTS
15-16 Sec. 62.001. DETERMINATION OF CHARITY CARE REQUIREMENTS.
15-17 (a) For the purposes of determining qualifications of a health
15-18 care professional under the indemnification program provided in
15-19 Chapter 110, Civil Practice and Remedies Code, and the discount
15-20 program under Article 5.15-4, Insurance Code, the commissioner of
15-21 health shall make a determination of the number of charity care
15-22 cases which would reasonably approximate 10 percent of the annual
15-23 average caseload of a health care professional in the type or
15-24 specialty of practice of a health care professional.
15-25 (b) In making the determination, the commissioner of health
16-1 may consider various factors including the following:
16-2 (1) the type or area of specialty or practice of the
16-3 health care professional;
16-4 (2) data as to the number of patients normally
16-5 attended by the health care professional of that type or specialty
16-6 on an annual basis; and
16-7 (3) the geographical variances of the patient loads of
16-8 the particular type or specialty of health care professional.
16-9 (c) The commissioner of health shall be responsible for
16-10 monitoring the effectiveness of the indemnification program. The
16-11 commissioner of health shall establish specific goals, objectives,
16-12 and outcome indicators to determine the effectiveness of the
16-13 program and whether access to care for those qualifying for charity
16-14 care is increasing. The commissioner of health may collect data
16-15 and gather information to evaluate the effectiveness of the
16-16 program. The commissioner of health may report to the legislature
16-17 on the effectiveness of the program.
16-18 (d) The commissioner of health shall adopt all necessary
16-19 rules and procedures to carry out the purposes of this section.
16-20 Sec. 162.002. EXPIRATION. Unless continued in existence,
16-21 this chapter expires September 1, 1997.
16-22 SECTION 4. (a) Section 2 of this Act applies to any cause
16-23 of action in which no final judgment has been entered prior to the
16-24 effective date of this Act.
16-25 (b) Sections 1 and 3 of this Act apply only to professional
17-1 liability insurance policies delivered, issued for delivery, or
17-2 renewed on or after January 1, 1994. Policies delivered, issued
17-3 for delivery, or renewed before January 1, 1994, are governed by
17-4 the law that existed immediately before the effective date of this
17-5 Act, and that law is continued in effect for that purpose.
17-6 SECTION 5. This Act takes effect September 1, 1993.
17-7 SECTION 6. The importance of this legislation and the
17-8 crowded condition of the calendars in both houses create an
17-9 emergency and an imperative public necessity that the
17-10 constitutional rule requiring bills to be read on three several
17-11 days in each house be suspended, and this rule is hereby suspended.