77R10815 PB-D
By Carona, et al. S.B. No. 415
Substitute the following for S.B. No. 415:
By Averitt C.S.S.B. No. 415
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to operation of the Texas Medical Liability Insurance
1-3 Underwriting Association and to participation of nursing homes in
1-4 that association.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 2(6), Article 21.49-3, Insurance Code, is
1-7 amended to read as follows:
1-8 (6) "Health care provider" means:
1-9 (A) any person, partnership, professional
1-10 association, corporation, facility, or institution duly licensed or
1-11 chartered by the State of Texas to provide health care as defined
1-12 in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance
1-13 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
1-14 Statutes), as:
1-15 (i) a registered nurse, hospital, dentist,
1-16 podiatrist, pharmacist, chiropractor, or optometrist;
1-17 (ii) a for-profit[,] or not-for-profit
1-18 nursing home;
1-19 (iii) [, or] a radiation therapy center
1-20 that is independent of any other medical treatment facility and
1-21 which is licensed by the Texas Department of Health in that
1-22 agency's capacity as the Texas [State] Radiation Control Agency
1-23 pursuant to the provisions of Chapter 401, Health and Safety Code,
1-24 and which is in compliance with the regulations promulgated under
2-1 that chapter;
2-2 (iv) [by the Texas State Radiation Control
2-3 Agency,] a blood bank that is a nonprofit corporation chartered to
2-4 operate a blood bank and which is accredited by the American
2-5 Association of Blood Banks;
2-6 (v) [,] a nonprofit corporation which is
2-7 organized for the delivery of health care to the public and which
2-8 is certified under Chapter 162, Occupations Code; [Article 4509a,
2-9 Revised Civil Statutes of Texas, 1925,] or
2-10 (vi) a [migrant] health center as defined
2-11 by 42 U.S.C. Section 254b [P.L. 94-63], as amended; [(42 U.S.C.
2-12 Section 254b), or a community health center as defined by P.L.
2-13 94-63, as amended (42 U.S.C. Section 254c), that is receiving
2-14 federal funds under an application approved under either Title IV,
2-15 P.L. 94-63, as amended (42 U.S.C. Section 254b), or Title V, P.L.
2-16 94-63, as amended (42 U.S.C. Section 254c),] or
2-17 (B) an officer, employee, or agent of an entity
2-18 listed in Paragraph (A) [any of them] acting in the course and
2-19 scope of that person's [his] employment.
2-20 SECTION 2. Section 3A, Article 21.49-3, Insurance Code, is
2-21 amended by adding Subsection (c) to read as follows:
2-22 (c) In consultation with the Texas Department of Human
2-23 Services, the commissioner shall, by rule, adopt minimum
2-24 underwriting standards for for-profit nursing homes that must be
2-25 met before a for-profit nursing home may obtain coverage through
2-26 the association. The standards must ensure the highest practical
2-27 level of care for residents of those nursing homes.
3-1 SECTION 3. Section 4(b)(1), Article 21.49-3, Insurance Code,
3-2 is amended to read as follows:
3-3 (1) The rates, rating plans, rating rules, rating
3-4 classifications, territories, and policy forms applicable to the
3-5 insurance written by the association and statistics relating
3-6 thereto shall be subject to Subchapter B of Chapter 5 of the
3-7 Insurance Code, as amended, giving due consideration to the past
3-8 and prospective loss and expense experience for medical
3-9 professional liability insurance within and without this state of
3-10 all of the member companies of the association, trends in the
3-11 frequency and severity of losses, the investment income of the
3-12 association, and such other information as the commissioner [board]
3-13 may require; provided, that if any article of the above subchapter
3-14 is in conflict with any provision of this Act, this Act shall
3-15 prevail. For purposes of this article, rates, rating plans, rating
3-16 rules, rating classifications, territories, and policy forms for
3-17 for-profit nursing homes are subject to the requirements of Article
3-18 5.15-1 of this code to the same extent as not-for-profit nursing
3-19 homes.
3-20 SECTION 4. Section 4, Article 21.49-3, Insurance Code, is
3-21 amended by adding Subsection (d) to read as follows:
3-22 (d) A policy of medical liability insurance issued to or
3-23 renewed for a physician or health care provider by the association
3-24 under this article may not include coverage for punitive damages
3-25 assessed against the physician or health care provider.
3-26 SECTION 5. Section 4A, Article 21.49-3, Insurance Code, is
3-27 amended to read as follows:
4-1 Sec. 4A. POLICYHOLDER'S STABILIZATION RESERVE FUND. (a)
4-2 There is hereby created a policyholder's stabilization reserve fund
4-3 which shall be administered as provided herein and in the plan of
4-4 operation of the association.
4-5 (b) Each policyholder shall pay annually into the
4-6 stabilization reserve fund a charge, the amount of which shall be
4-7 established annually by advisory directors chosen by health care
4-8 providers and physicians eligible for insurance in the association
4-9 in accordance with the plan of operation. The charge shall be in
4-10 proportion to each premium payment due for liability insurance
4-11 through the association. Such charge shall be separately stated in
4-12 the policy, but shall not constitute a part of premiums or be
4-13 subject to premium taxation, servicing fees, acquisition costs, or
4-14 any other such charges.
4-15 (c) The [policyholder's] stabilization reserve fund shall be
4-16 collected and administered by the association and shall be treated
4-17 as a liability of the association along with and in the same manner
4-18 as premium and loss reserves. The fund shall be valued annually by
4-19 the board of directors as of the close of the last preceding year.
4-20 (d) Except as provided by Subsection (e) of this section,
4-21 collections [Collections] of the stabilization reserve fund charge
4-22 shall continue only until such time as the net balance of the
4-23 stabilization reserve fund is not less than the projected sum of
4-24 premiums to be written in the year following valuation date.
4-25 (e) If in any fiscal year the incurred losses and defense
4-26 and cost-containment expenses from physicians or any single
4-27 category of health care provider result in a net underwriting loss
5-1 and exceed 25 percent of the stabilization reserve fund, as valued
5-2 for that year, the commissioner may by order direct the initiation
5-3 or continuation of the stabilization reserve fund charge for
5-4 physicians or that category of health care provider until the fund
5-5 recovers the amount by which those losses and cost-containment
5-6 expenses exceed 25 percent of the fund.
5-7 (f) The stabilization reserve fund shall be credited with
5-8 all stabilization reserve fund charges collected from policyholders
5-9 and shall be charged with any deficit from the prior year's
5-10 operation of the association.
5-11 SECTION 6. Sections 2, 3A, and 4, Article 21.49-3, Insurance
5-12 Code, as amended by this Act, apply only to an insurance policy
5-13 delivered, issued for delivery, or renewed on or after January 1,
5-14 2002. A policy delivered, issued for delivery, or renewed before
5-15 January 1, 2002, is governed by the law as it existed immediately
5-16 before the effective date of this Act, and that law is continued in
5-17 effect for that purpose.
5-18 SECTION 7. This Act takes effect September 1, 2001.