SRC-SLL S.B. 386 75(R)    BILL ANALYSIS


Senate Research CenterS.B. 386
By: Sibley
Economic Development
2-14-97
As Filed


DIGEST 

Currently, Texas law prohibits the corporate practice of medicine.  This
prevents managed care organizations from being held legally accountable
when making health care treatment decisions which affect the quality of
the diagnosis, care and treatment of an enrollee of a health care plan.
This bill will require health benefit plans and managed care entities to
exercise ordinary care when making health care treatment decisions which
affect the diagnosis, treatment, or quality of medical services provided
to an enrollee and would hold the plan accountable for negligent decisions
which result in injury. 

PURPOSE

As proposed, S.B. 386 requires health benefit plans and managed care
entities to exercise ordinary care when making health care treatment
decisions which affect the diagnosis, treatment, or quality of medical
services provided to an enrollee and would hold the plan accountable for
negligent decisions which result in injury. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 4, Civil Practice and Remedies Code, by adding
Chapter 88, as follows: 

CHAPTER 88.  HEALTH CARE LIABILITY

Sec.  88.001.  DEFINITIONS.  Defines "appropriate and medically
necessary," "enrollee," "health care plan," "health care provider,"
"health care treatment decision," "health insurance carrier," "health
maintenance organization," "managed care entity," and "physician." 

Sec.  88.002.  APPLICATION.  (a) Provides that a health insurance carrier,
health maintenance organization, or other managed care entity for a health
care plan has the duty to exercise ordinary care when making health care
treatment decisions which affect the diagnosis, care, or treatment of an
enrollee. 

(b) Provides that a health insurance carrier, health maintenance
organization, or other managed care entity for a health care plan is also
responsible for the decisions of its employees, agents, ostensible agents,
or representatives who are acting on its behalf and over whom it has the
right to exercise influence or control, or has actually exercised
influence or control, respecting decisions which may affect the quality of
the diagnosis, care, or treatment provided to its enrollees. 

(c) Provides that the standards in Subsections (a) and (b) create no
obligation on the part of the health insurance carrier, health maintenance
organization, or other managed care entity to provide treatment to an
enrollee which is not covered by the health care plan of the entity. 

(d) Prohibits a health insurance carrier, health maintenance organization,
or other  managed care entity from removing a physician or health care
provider from its plan for advocating on behalf of an enrollee for
appropriate and medically necessary health care for the enrollee. 

(e)  Prohibits a health insurance carrier, health maintenance
organization, or other managed care entity from entering into a contract
with a physician, hospital, or other health care provider or
pharmaceutical company which includes an indemnification or hold harmless
clause for the acts or conduct of the health insurance carrier, health
maintenance organization, or other managed care entity.  Provides that any
such indemnification or hold harmless clause in an  existing contract is
hereby declared void. 

(f) Provides that nothing in any law of this state prohibiting a health
insurance carrier, health maintenance organization, or other managed care
entity from practicing medicine or being licensed to practice medicine may
be asserted as a defense by such health insurance carrier, health
maintenance organization, or other managed care entity in an action
brought against it pursuant to this section or any other law. 

SECTION 2. Effective date: September 1, 1997.
  Makes application of this Act prospective.

SECTION 3. Emergency clause.