H.B. No. 1362
1-1 AN ACT
1-2 relating to certain health care liability claims for which the
1-3 state provides indemnification.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 110.001, 110.002, 110.003, and 110.005,
1-6 Civil Practice and Remedies Code, are amended to read as follows:
1-7 Sec. 110.001. Definitions. In this chapter:
1-8 (1) "Charity care or services" means care or services
1-9 provided by a health care professional or health clinic through
1-10 <under:>
1-11 <(A) Chapter 31, 32, 35, or 61, Health and
1-12 Safety Code;>
1-13 <(B) the Medicaid program under Chapter 32,
1-14 Human Resources Code;>
1-15 <(C) a contract with a migrant, community, or
1-16 homeless health center that receives funds under 42 U.S.C. Section
1-17 254b, 254c, or 256;>
1-18 <(D) Subchapter B, Chapter 311, Health and
1-19 Safety Code, or 42 U.S.C. Section 1395dd, to the extent the
1-20 professional or the hospital in which the care or services are
1-21 provided is not compensated;>
1-22 <(E)> an approved family practice residency
1-23 training program established under Subchapter I, Chapter 61 <66>,
1-24 Education Code, to the extent the professional is not compensated
2-1 for the services<;>
2-2 <(F) an indigent health care program of a
2-3 hospital district created under the authority of Article IX,
2-4 Sections 4 through 11, of the Texas Constitution; or>
2-5 <(G) a county correctional institution to
2-6 inmates who are in custody of such county correctional institution
2-7 operated by such county or under contract with such county>.
2-8 (2) "Eligible health care liability claim" means a
2-9 health care liability claim as defined in the Medical Liability and
2-10 Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas
2-11 Civil Statutes) against a health care professional or health clinic
2-12 that renders charity care in at least 10 percent of the patient
2-13 encounters engaged in by said health care professional or health
2-14 clinic during the policy year in which the claim was made<, a claim
2-15 against a health center, or a claim against a health care
2-16 professional who participates in a Medicaid managed care project
2-17 established under Section 32.041, Human Resources Code>.
2-18 (3) "Health care professional" means:
2-19 (A) a person who is licensed to practice
2-20 medicine under the Medical Practice Act (Article 4495b, Vernon's
2-21 Texas Civil Statutes);
2-22 (B) a person registered by the Board of Nurse
2-23 Examiners as an advanced nurse practitioner or a certified nurse
2-24 midwife; or
2-25 (C) a person licensed by the Physician Assistant
2-26 Advisory Council under the Texas State Board of Medical Examiners
2-27 as a physician assistant<; or>
3-1 <(D) a health care professional who participates
3-2 in a Medicaid managed care project established under Section
3-3 32.041, Human Resources Code>.
3-4 (4) <"Health center" means a federally qualified
3-5 health center, as that term is defined by 42 U.S.C. Section 1396d.>
3-6 <(5)> "Health clinic" means a clinic or other facility
3-7 providing health care in conjunction with an approved family
3-8 residency practice program.
3-9 (5) <(6)> "Insurer" means an insurance company
3-10 chartered to write or admitted to write and writing health care
3-11 liability or medical professional liability insurance in this
3-12 state, the Texas Medical Liability Insurance Underwriting
3-13 Association (Article 21.49-3, Insurance Code), any self-insurance
3-14 trust created under Article 21.49-4, Insurance Code, for the
3-15 purpose of providing health care liability or medical professional
3-16 liability insurance, or a purchasing group domiciled, registered,
3-17 and writing health care liability or medical professional liability
3-18 insurance for health centers in this state. The term "insurer"
3-19 includes an institution of higher education that provides health
3-20 care liability or medical professional liability coverage under
3-21 Chapter 59, Education Code.
3-22 (6) <(7)> "Health Care Liability claim" means a claim
3-23 or action against a health care professional<, health center,> or
3-24 health clinic for treatment, lack of treatment, or other claimed
3-25 departure from accepted standards of medical care or health care or
3-26 safety which proximately results in injury to or death of a
3-27 patient, whether the patient's claim or cause of action sounds in
4-1 tort or contract.
4-2 (7) <(8)> "Patient encounter" means an occasion on
4-3 which a health care professional<, health center,> or health clinic
4-4 renders professional health care services to a patient.
4-5 Sec. 110.002. State Liability: Persons Covered. In a
4-6 health care liability cause of action against a health care
4-7 professional<, health center,> or health clinic based on conduct
4-8 described in Section 110.003, the state shall indemnify the health
4-9 care professional<, health center,> or health clinic for actual
4-10 damages adjudged against the health care professional<, health
4-11 center,> or health clinic or which the health care professional<,
4-12 health center,> or health clinic becomes obligated to pay pursuant
4-13 to a settlement reached in accordance with this chapter.
4-14 Sec. 110.003. State Liability: Conduct Covered. (a) The
4-15 state is liable for indemnification under this chapter only if the
4-16 damages are based on an eligible health care liability claim
4-17 against a health care professional<, health center,> or health
4-18 clinic in the course and scope of providing professional health
4-19 care.
4-20 (b) The state is liable for indemnification in a case unless
4-21 the jury or, if a jury is waived, the trial judge in a cause of
4-22 action against a health care professional<, health center,> or
4-23 health clinic returns a verdict and judgment against the applicable
4-24 defendant finding that such person or entity committed gross
4-25 negligence or an intentional act found to be a proximate cause of
4-26 the damages of the plaintiff.
4-27 Sec. 110.005. Timely Notice to Attorney General Required.
5-1 The state is not liable for indemnification for damages under this
5-2 chapter unless the health care professional<, health center,> or
5-3 health clinic against whom the cause of action is asserted:
5-4 (1) is covered under a valid professional health care
5-5 liability or medical liability insurance policy that is issued by
5-6 an insurer and that provides coverage for the health care liability
5-7 claim that is the subject of the claim or action with a policy
5-8 limit of not less than $100,000 per occurrence and $300,000
5-9 aggregate for the policy period; and
5-10 (2) delivers or causes to be delivered to the attorney
5-11 general a true copy of any summons or citation in a health care
5-12 liability claim served on the health care professional<, health
5-13 center,> or health clinic, which summons or citation shall be
5-14 delivered to the attorney general not later than the 60th day after
5-15 the receipt thereof by the health care professional<, health
5-16 center,> or health clinic. However, subsequent notification of
5-17 such summons or citation shall not be a basis for denial of a claim
5-18 for indemnification unless the attorney general proves by clear and
5-19 convincing evidence that such delay would unduly prejudice the
5-20 state's ability to evaluate the reasonableness of the settlement
5-21 offer or agreement. No such claim may be asserted by the state
5-22 unless, within 10 days of the receipt of such late notification by
5-23 the attorney general (or such greater or lesser period of time as
5-24 the court in which the action is filed may allow), the attorney
5-25 general files in said court (or, if no action is pending in any
5-26 court, in a district court in Travis County, Texas) a pleading
5-27 setting forth the reasons why the state's ability to evaluate the
6-1 reasonableness of the settlement offer or agreement has been
6-2 prejudiced.
6-3 SECTION 2. Sections 110.006(a), (b), (d), and (e), Civil
6-4 Practice and Remedies Code, are amended to read as follows:
6-5 (a) The insurer for a health care professional<, health
6-6 center,> or health clinic that is the subject of an eligible health
6-7 care liability claim shall designate an attorney or other
6-8 representative assigned to the claim who shall keep the attorney
6-9 general or his designee reasonably informed of significant
6-10 developments in the claim or action, including all settings for
6-11 trials or dispositive motions, all settlement offers and demands,
6-12 all pleadings by or against the health care professional<, health
6-13 center,> or health clinic, all judgments or other dispositive
6-14 orders, and all written recommendations of counsel for the health
6-15 care professional<, health center,> or health clinic regarding
6-16 settlement.
6-17 (b) If a settlement agreement is reached between the health
6-18 care professional<, health center,> or health clinic and a
6-19 claimant, the insurer for the health care professional<, health
6-20 center,> or health clinic shall promptly notify the attorney
6-21 general of same. The settlement shall become final and binding
6-22 upon the state unless, within 10 days of the receipt of said notice
6-23 by the attorney general (or such greater or lesser period of time
6-24 as the court in which the action is filed may allow), the attorney
6-25 general files in said court (or, if no action is pending in any
6-26 court, in a district court of Travis County, Texas) a written
6-27 objection to the settlement setting forth in detail why the
7-1 reasonable settlement value of the total claim being settled is
7-2 significantly less than the amount for which the state would be
7-3 liable for indemnification if the settlement were to be consummated
7-4 and any other reason why the state should not be liable for
7-5 indemnification under this chapter based upon all the facts and
7-6 circumstances of the case. A hearing shall promptly be held upon
7-7 any such objection, either before the court or a special master
7-8 appointed by the court for that purpose. At any such hearing, the
7-9 burden shall be upon the attorney general to prove by clear and
7-10 convincing evidence that the reasonable settlement value of the
7-11 total claim being settled is significantly less than the amount for
7-12 which the state would be liable for indemnification if the
7-13 settlement were to be consummated or any other reason why the state
7-14 should not be liable for indemnification under this chapter based
7-15 upon all the facts and circumstances of the case. Unless the court
7-16 finds that the reasonable settlement value of the total claim being
7-17 settled is significantly less than the amount for which the state
7-18 would be liable for indemnification if the settlement were to be
7-19 consummated or that there are other reasons why the state should
7-20 not be liable for indemnification under this chapter based upon all
7-21 the facts and circumstances of the case, the court shall enter an
7-22 order approving the settlement and directing the state to make the
7-23 required indemnity payment thereunder. Such an order shall be
7-24 reviewable by an appellate court only upon the filing of an
7-25 application for writ of mandamus within 15 days of the date said
7-26 order is signed, and only for an abuse of discretion by the trial
7-27 court. Any such application for writ of mandamus shall be given
8-1 priority in the appellate court in which it is filed above all
8-2 other applications for writ of mandamus docketed in said court.
8-3 (d) If a suit involving an eligible health care liability
8-4 claim is imminently scheduled for jury trial or alternative dispute
8-5 resolution, or if the defendant seeking indemnity is subject to a
8-6 time limit under the Stowers Doctrine or other applicable law to
8-7 respond to a settlement proposal, or is being tried before a jury,
8-8 and settlement negotiations are ongoing between the health care
8-9 professional<, health center,> or health clinic and any claimant,
8-10 either of those parties may request the court to require the
8-11 attorney general or his designee to assign an attorney to monitor
8-12 such negotiations so that if a settlement agreement is reached
8-13 between the parties, the attorney so assigned by the attorney
8-14 general can immediately advise the court of any objection, in which
8-15 event the hearing described in Subsection (b) shall be held
8-16 immediately after the settlement agreement is reduced to writing or
8-17 announced on the record in open court, so that the trial court may
8-18 render its determination before the petit jury or jury panel is
8-19 discharged.
8-20 (e) Except to the extent that the attorney general is
8-21 authorized under this section to object to the reasonableness of a
8-22 settlement, the attorney general shall not be authorized to
8-23 intervene in any court proceeding involving an eligible health care
8-24 liability claim. The insurer for the health care professional<,
8-25 health center,> or health clinic shall be in charge of the defense
8-26 of any such claim.
8-27 SECTION 3. Sections 1, 2, 3, 4, 5, 6, and 7, Article 5.15-4,
9-1 Insurance Code, are amended to read as follows:
9-2 Sec. 1. Definitions. In this article, "charity care or
9-3 services," "eligible health care liability claim," "health care
9-4 professional," <"health center,"> "health clinic," "insurer,"
9-5 "health care liability claim," and "patient encounter" have the
9-6 meanings assigned by Section 110.001, Civil Practice and Remedies
9-7 Code.
9-8 Sec. 2. Qualification for discount. A health care
9-9 professional<, health center,> or health clinic is entitled to a
9-10 premium discount for medical professional liability insurance
9-11 coverage if the professional<, center,> or health clinic meets the
9-12 criteria stated in Section 4 of this article.
9-13 Sec. 3. Amount of premium discount. (a) The Texas
9-14 Department of Insurance shall approve premium discounts to be used
9-15 by each insurer on premiums to be charged to a health care
9-16 professional<, health center,> or health clinic covered by this
9-17 section. Each insurer shall file proposed premium discounts and
9-18 any loss and statistical data required by department rule.
9-19 (b) The insurer has the burden of demonstrating to the
9-20 department, by a preponderance of the evidence, that the proposed
9-21 premium discount is adequate to reflect the reduction in the
9-22 insurer's liability exposure based on the state's indemnification
9-23 of the first $100,000 or $25,000 under Chapter 110, Civil Practice
9-24 and Remedies Code, of an eligible malpractice claim against a
9-25 health care professional<, health center,> or health clinic.
9-26 (c) The information required to be filed with the Texas
9-27 Department of Insurance under this section is public information
10-1 and shall be made available to the public on written request.
10-2 Sec. 4. Qualification for premium discount. (a) A health
10-3 care professional is entitled to a premium discount for medical
10-4 professional liability insurance coverage if:
10-5 (1) the projected patient encounters of the health
10-6 care professional during the policy year will involve providing
10-7 charity care or services in 10 percent or more of the health care
10-8 professional's patient encounters; and
10-9 (2) the health care professional completes 15 hours of
10-10 continuing education during the calendar year in which the policy
10-11 is in effect on patient safety and risk reduction subjects related
10-12 to the health care professional's practice that are sponsored,
10-13 approved, endorsed, or accredited by the Texas Department of
10-14 Insurance or the health care professional's licensing or certifying
10-15 agency, an "insurer" as defined in this Act, or state or nationally
10-16 recognized accrediting organizations or continuing medical or nurse
10-17 education programs.
10-18 (b) <A health center is entitled to a premium discount for
10-19 professional liability coverage if the health center adopts a
10-20 quality assurance program.>
10-21 <(c)> A health clinic <or health care professional under
10-22 Section 110.001(3)(D), Civil Practice and Remedies Code,> is
10-23 entitled to a premium discount for professional liability coverage
10-24 if the health clinic <or health care professional under Section
10-25 110.001(3)(D), Civil Practice and Remedies Code,> provides at least
10-26 10 percent or more of charity care or services and adopts a quality
10-27 assurance program.
11-1 (c) <(d)> The Texas Department of Insurance may adopt rules
11-2 governing <health center or> health clinic quality assurance
11-3 programs.
11-4 Sec. 5. Request for premium discount. A health care
11-5 professional<, health center,> or health clinic that desires a
11-6 premium discount for medical professional liability insurance
11-7 coverage shall submit to the insurer, at the time coverage is
11-8 applied for, a written verified application for a new policy or a
11-9 verified statement for a policy to be renewed stating that the
11-10 health care professional<, health center,> or health clinic desires
11-11 a premium discount and qualifies for a premium discount under this
11-12 article. The application or statement also shall provide for each
11-13 policy for which a discount is requested necessary information to
11-14 determine the eligibility of the health care professional<, health
11-15 center,> or health clinic and the amount of the discount.
11-16 Sec. 6. Audit; penalty. (a) At the end of a policy year,
11-17 an insurer may audit the records of any health care professional<,
11-18 health center,> or health clinic to which the insurer has provided
11-19 a discount under this article to determine if the health care
11-20 professional<, health center,> or health clinic provided the
11-21 charity care and services necessary under Section 4 of this article
11-22 to qualify for the premium discount during the preceding policy
11-23 year.
11-24 (b) To conduct the audit, the insurer is entitled to access
11-25 to any books and records necessary to determine if the verified
11-26 application or statement submitted for the coverage was correct and
11-27 the health care professional<, health center,> or health clinic was
12-1 eligible for the premium discount. If a health care professional<,
12-2 health center,> or health clinic denies access to the property or
12-3 to the books and records, the insurer may obtain an appropriate
12-4 court order from a court of competent jurisdiction to gain access
12-5 to the books and the records.
12-6 (c) If an insurer's audit indicates that a health care
12-7 professional<, health center,> or health clinic did not provide
12-8 charity care or services as required under Section 4 of this
12-9 article, the insurer may charge the health care professional<,
12-10 health center,> or health clinic an amount equal to the difference
12-11 between the premium paid and the premium that would have been due
12-12 if the health care professional<, health center,> or health clinic
12-13 had not received the premium discount plus 20 percent of the amount
12-14 of the premium that would have been due without the premium
12-15 discount.
12-16 (d) If a health care professional<, health center,> or
12-17 health clinic that has received the premium discount for the policy
12-18 year submits the difference between the premium paid and the
12-19 premium that would have been due if the health care professional<,
12-20 health center,> or health clinic had not received the premium
12-21 discount plus interest at the legal rate for the unpaid premium
12-22 prior to 30 days before the expiration of the policy year, the
12-23 health care professional<, health center,> or health clinic will
12-24 not be subject to the penalty provided in Subsection (c).
12-25 Sec. 7. Prohibitions on insurer; sanctions. (a) An insurer
12-26 may not cancel or refuse to renew professional liability insurance
12-27 coverage solely on the basis that the covered health care
13-1 professional<, health center,> or health clinic is eligible for a
13-2 premium discount under this article except for the following
13-3 reasons:
13-4 (1) fraud or misrepresentation in obtaining coverage;
13-5 (2) failure to pay premiums when due; or
13-6 (3) the insurer's being placed under supervision or in
13-7 conservatorship or receivership, if the cancellation or nonrenewal
13-8 is approved by the supervisor, conservator, or receiver.
13-9 (b) A health care professional<, health center,> or health
13-10 clinic who files the appropriate verified application or statement
13-11 under this article will be entitled to a premium discount as
13-12 approved by the department under Section 3 of this article. When
13-13 consent to rate is used, a health care professional<, health
13-14 center,> or health clinic will be entitled to the appropriate
13-15 discount from the rate agreed to by consent.
13-16 (c) An insurer who violates this article is subject to the
13-17 sanctions authorized under Section 7, Article 1.10, of this code.
13-18 SECTION 4. The change in law made by this Act to Chapter
13-19 110, Civil Practice and Remedies Code, applies only to claims under
13-20 that chapter filed with the attorney general on or after the
13-21 effective date of this Act. A claim or cause of action under that
13-22 chapter accruing under policies issued prior to the effective date
13-23 of this Act, filed with the attorney general pursuant to such Act,
13-24 shall remain eligible for indemnification under such chapter and
13-25 the former law is continued in effect for that purpose.
13-26 SECTION 5. The change in law made by this Act to Article
13-27 5.15-4, Insurance Code, applies only to an insurance policy that is
14-1 delivered, issued for delivery, or renewed on or after the
14-2 effective date of this Act. A policy that is delivered, issued for
14-3 delivery, or renewed before the effective date of this Act is
14-4 governed by the law as it existed immediately before the effective
14-5 date of this Act, and that law is continued in effect for that
14-6 purpose.
14-7 SECTION 6. The importance of this legislation and the
14-8 crowded condition of the calendars in both houses create an
14-9 emergency and an imperative public necessity that the
14-10 constitutional rule requiring bills to be read on three several
14-11 days in each house be suspended, and this rule is hereby suspended,
14-12 and that this Act take effect and be in force from and after its
14-13 passage, and it is so enacted.