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.

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