1-1 By: Sibley, et al. S.B. No. 386 1-2 (In the Senate - Filed January 30, 1997; February 3, 1997, 1-3 read first time and referred to Committee on Economic Development; 1-4 March 3, 1997, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 9, Nays 2; March 3, 1997, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 386 By: Sibley 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to health care liability claims. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Title 4, Civil Practice and Remedies Code, is 1-13 amended by adding Chapter 88 to read as follows: 1-14 CHAPTER 88. HEALTH CARE LIABILITY 1-15 Sec. 88.001. DEFINITIONS. In this chapter: 1-16 (1) "Appropriate and medically necessary" means the 1-17 standard for health care services as determined by physicians and 1-18 health care providers in accordance with the prevailing practices 1-19 and standards of the medical profession and community. 1-20 (2) "Enrollee" means an individual who is enrolled in 1-21 a health care plan, including covered dependents. 1-22 (3) "Health care plan" means any plan whereby any 1-23 person undertakes to provide, arrange for, pay for, or reimburse 1-24 any part of the cost of any health care services. 1-25 (4) "Health care provider" means a person or entity as 1-26 defined in Section 1.03(a)(3), Medical Liability and Insurance 1-27 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil 1-28 Statutes). 1-29 (5) "Health care treatment decision" means a 1-30 determination made when medical services are actually provided by 1-31 the health care plan and a decision which affects the quality of 1-32 the diagnosis, care, or treatment provided to the plan's insureds 1-33 or enrollees. 1-34 (6) "Health insurance carrier" means a company that is 1-35 authorized to issue a policy of accident and sickness insurance 1-36 under Section 1, Chapter 397, Acts of the 54th Legislature, 1955 1-37 (Article 3.70-1, Vernon's Texas Insurance Code). 1-38 (7) "Health maintenance organization" means an 1-39 organization licensed under the Texas Health Maintenance 1-40 Organization Act (Chapter 20A, Vernon's Texas Insurance Code). 1-41 (8) "Managed care entity" means any entity which 1-42 delivers, administers, or assumes risk for health care services 1-43 with systems or techniques to control or influence the quality, 1-44 accessibility, utilization, or costs and prices of such services 1-45 to a defined enrollee population, but does not include an employer 1-46 acting on behalf of its employees or the employees of one or more 1-47 subsidiaries or affiliated corporations of the employer. 1-48 (9) "Physician" means: 1-49 (A) an individual licensed to practice medicine 1-50 in this state; 1-51 (B) a professional association organized under 1-52 the Texas Professional Association Act (Article 1528f, Vernon's 1-53 Texas Civil Statutes) or a nonprofit health corporation certified 1-54 under Section 5.01, Medical Practice Act (Article 4495b, Vernon's 1-55 Texas Civil Statutes); or 1-56 (C) another person wholly owned by physicians. 1-57 (10) "Ordinary care" means, in the case of a health 1-58 insurance carrier, health maintenance organization, or managed care 1-59 entity, that degree of care that a health insurance carrier, health 1-60 maintenance organization, or managed care entity of ordinary 1-61 prudence would use under the same or similar circumstances. In the 1-62 case of a person who is an employee, agent, ostensible agent, or 1-63 representative of a health insurance carrier, health maintenance 1-64 organization, or managed care entity, "ordinary care" means that 2-1 degree of care that a person of ordinary prudence in the same 2-2 profession, specialty, or area of practice as such person would use 2-3 in the same or similar circumstances. 2-4 Sec. 88.002. APPLICATION. (a) A health insurance carrier, 2-5 health maintenance organization, or other managed care entity for a 2-6 health care plan has the duty to exercise ordinary care when making 2-7 health care treatment decisions and is liable for damages for harm 2-8 to an insured or enrollee proximately caused by its failure to 2-9 exercise such ordinary care. 2-10 (b) A health insurance carrier, health maintenance 2-11 organization, or other managed care entity for a health care plan 2-12 is also liable for damages for harm to an insured or enrollee 2-13 proximately caused by the health care treatment decisions made by 2-14 its: 2-15 (1) employees; 2-16 (2) agents; 2-17 (3) ostensible agents; or 2-18 (4) representatives who are acting on its behalf and 2-19 over whom it has the right to exercise influence or control or has 2-20 actually exercised influence or control. 2-21 (c) The standards in Subsections (a) and (b) create no 2-22 obligation on the part of the health insurance carrier, health 2-23 maintenance organization, or other managed care entity to provide 2-24 to an insured or enrollee treatment which is not covered by the 2-25 health care plan of the entity. 2-26 (d) A health insurance carrier, health maintenance 2-27 organization, or managed care entity may not remove a physician or 2-28 health care provider from its plan or refuse to renew the physician 2-29 or health care provider with its plan for advocating on behalf of 2-30 an enrollee for appropriate and medically necessary health care for 2-31 the enrollee. 2-32 (e) A health insurance carrier, health maintenance 2-33 organization, or other managed care entity may not enter into a 2-34 contract with a physician, hospital, or other health care provider 2-35 or pharmaceutical company which includes an indemnification or hold 2-36 harmless clause for the acts or conduct of the health insurance 2-37 carrier, health maintenance organization, or other managed care 2-38 entity. Any such indemnification or hold harmless clause in an 2-39 existing contract is hereby declared void. 2-40 (f) Nothing in any law of this state prohibiting a health 2-41 insurance carrier, health maintenance organization, or other 2-42 managed care entity from practicing medicine or being licensed to 2-43 practice medicine may be asserted as a defense by such health 2-44 insurance carrier, health maintenance organization, or other 2-45 managed care entity in an action brought against it pursuant to 2-46 this section or any other law. 2-47 (g) In an action against a health insurance carrier, health 2-48 maintenance organization, or managed care entity, a finding that a 2-49 physician or other health care provider is an employee, agent, 2-50 ostensible agent, or representative of such health insurance 2-51 carrier, health maintenance organization, or managed care entity 2-52 shall not be based solely on proof that such person's name appears 2-53 in a listing of approved physicians or health care providers made 2-54 available to insureds or enrollees under a health care plan. 2-55 SECTION 2. This Act takes effect September 1, 1997, and 2-56 applies only to a cause of action that accrues on or after that 2-57 date. An action that accrues before the effective date of this Act 2-58 is governed by the law applicable to the action immediately before 2-59 the effective date of this Act, and that law is continued in effect 2-60 for that purpose. 2-61 SECTION 3. The importance of this legislation and the 2-62 crowded condition of the calendars in both houses create an 2-63 emergency and an imperative public necessity that the 2-64 constitutional rule requiring bills to be read on three several 2-65 days in each house be suspended, and this rule is hereby suspended. 2-66 * * * * *