By: Duncan S.B. No. 1555
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain civil actions for injury to a child, elderly
1-3 individual, or disabled individual and certain related liability
1-4 insurance coverage.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. LIMITATION ON EXEMPLARY DAMAGES IN CERTAIN ACTIONS
1-7 SECTION 1.01 Section 41.008, Civil Practice and Remedies
1-8 Code, is amended to read as follows:
1-9 Sec. 41.008. LIMITATION ON AMOUNT OF RECOVERY. (a) In an
1-10 action in which a claimant seeks recovery of exemplary damages, the
1-11 trier of fact shall determine the amount of economic damages
1-12 separately from the amount of other compensatory damages.
1-13 (b) Except as provided by this section, exemplary
1-14 [Exemplary] damages awarded against a defendant may not exceed an
1-15 amount equal to the greater of:
1-16 (1) [(A)] two times the amount of economic damages[;]
1-17 plus the lesser of:
1-18 (A) [(B)] an amount equal to any noneconomic
1-19 damages found by the jury; or
1-20 (B) [, not to exceed] $750,000; or
1-21 (2) $200,000.
1-22 (c) Except as provided by Subsection (d), Subsection (b)
1-23 does not apply to a cause of action against a defendant from whom a
2-1 plaintiff seeks recovery of exemplary damages based on conduct
2-2 described as a felony in the following sections of the Penal Code
2-3 if, except for Sections 49.07 and 49.08, the conduct was committed
2-4 knowingly or intentionally:
2-5 (1) Section 19.02 (murder);
2-6 (2) Section 19.03 (capital murder);
2-7 (3) Section 20.04 (aggravated kidnapping);
2-8 (4) Section 22.02 (aggravated assault);
2-9 (5) Section 22.011 (sexual assault);
2-10 (6) Section 22.021 (aggravated sexual assault);
2-11 (7) Section 22.04 (injury to a child, elderly
2-12 individual, or disabled individual);
2-13 (8) Section 32.21 (forgery);
2-14 (9) Section 32.43 (commercial bribery);
2-15 (10) Section 32.45 (misapplication of fiduciary
2-16 property or property of financial institution);
2-17 (11) Section 32.46 (securing execution of document by
2-18 deception);
2-19 (12) Section 32.47 (fraudulent destruction, removal,
2-20 or concealment of writing);
2-21 (13) Chapter 31 (theft) the punishment level for which
2-22 is a felony of the third degree or higher;
2-23 (14) Section 49.07 (intoxication assault); or
2-24 (15) Section 49.08 (intoxication manslaughter).
2-25 (d) Subsection (b) applies to a cause of action against a
2-26 defendant who is a nursing institution certified to provide
3-1 services to Medicaid recipients in accordance with Chapter 32,
3-2 Human Resources Code, or licensed under Chapter 242, Health and
3-3 Safety Code, and from whom a plaintiff seeks recovery of exemplary
3-4 damages based on conduct described as a felony in Section 22.04,
3-5 Penal Code, only if the defendant is finally convicted under that
3-6 section for the conduct that gives rise to the plaintiff's cause of
3-7 action.
3-8 (e) [(d)] In this section, "intentionally" and "knowingly"
3-9 have the same meanings assigned those terms in Sections 6.03(a) and
3-10 (b), Penal Code.
3-11 (f) [(e)] The provisions of Subsections (a), [and] (b) , and
3-12 (d) may not be made known to a jury by any means, including voir
3-13 dire, introduction into evidence, argument, or instruction.
3-14 (g) If exemplary damages are awarded under this chapter
3-15 against a nursing institution certified to provide services to
3-16 Medicaid recipients in accordance with Chapter 32, Human Resources
3-17 Code, or licensed under Chapter 242, Health and Safety Code, the
3-18 court shall refer the institution to the Department of Human
3-19 Services for investigation and enforcement proceedings and
3-20 sanctions, as appropriate.
3-21 SECTION 1.02. Section 41.008, Civil Practice and Remedies
3-22 Code, as amended by this article, applies only to an action filed
3-23 on or after the effective date of this Act. An action filed before
3-24 the effective date of this Act is governed by the law in effect
3-25 immediately before that date, and that law is continued in effect
3-26 for that purpose.
4-1 ARTICLE 2. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL ACTION
4-2 SECTION 2.01. Subchapter B, Chapter 32, Human Resources
4-3 Code, is amended by adding Section 32.053 to read as follows:
4-4 Sec. 32.053. ADMISSIBILITY OF CERTAIN EVIDENCE RELATING TO
4-5 NURSING INSTITUTIONS. (a) Except as provided by Subsection (b),
4-6 the following are not admissible as evidence in a civil action:
4-7 (1) any finding by the department that an institution
4-8 licensed under Chapter 242, Health and Safety Code, has violated a
4-9 standard for participation in the medical assistance program under
4-10 this chapter; or
4-11 (2) the fact of the assessment of a monetary penalty
4-12 against an institution under Section 32.021 or the payment of the
4-13 penalty by an institution.
4-14 (b) A finding described by Subsection (a)(1) or the fact of
4-15 assessment or payment of a penalty described by Subsection (a)(2)
4-16 is admissible in a civil action only if:
4-17 (1) the finding or the assessment of the monetary
4-18 penalty has been affirmed by the entry of a final, adjudicated
4-19 order of the department, following formal appeal, that is not
4-20 otherwise subject to appeal; and
4-21 (2) the finding or fact is otherwise admissible under
4-22 the Texas Rules of Evidence.
4-23 (c) This section does not apply in an enforcement action in
4-24 which the state or an agency or political subdivision of the state
4-25 is a party.
4-26 SECTION 2.02. Subchapter A, Chapter 242, Health and Safety
5-1 Code, is amended by adding Section 242.017 to read as follows:
5-2 Sec. 242.017. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL
5-3 ACTIONS. (a) Except as provided by Subsection (b), the following
5-4 are not admissible as evidence in a civil action:
5-5 (1) any finding by the department that an institution
5-6 has violated this chapter or a rule adopted under this chapter; or
5-7 (2) the fact of the assessment of a penalty against an
5-8 institution under this chapter or the payment of the penalty by an
5-9 institution.
5-10 (b) A finding described by Subsection (a)(1) or the fact of
5-11 assessment or payment or a penalty described by Subsection (a)(2)
5-12 is admissible in a civil action only if:
5-13 (1) the finding or the assessment of the penalty has
5-14 been affirmed by the entry of a final, adjudicated order of the
5-15 department, following formal appeal, that is not otherwise subject
5-16 to appeal; and
5-17 (2) the finding or fact is otherwise admissible under
5-18 the Texas Rules of Evidence.
5-19 (c) This section does not apply in an enforcement action in
5-20 which the state or an agency or political subdivision of the state
5-21 is a party.
5-22 SECTION 2.03. Sections 32.021(i), (j), and (k), Human
5-23 Resources Code, are repealed.
5-24 SECTION 2.04. (a) This article is intended to emphasize the
5-25 lack of admissibility in a civil action of documents relating to:
5-26 (1) a survey, inspection, or investigation conducted
6-1 with respect to an institution that is licensed under Chapter 242,
6-2 Health and Safety Code; or
6-3 (2) the licensing of an institution under Chapter 242,
6-4 Health and Safety Code.
6-5 (b) The change in law made by this article may not be
6-6 construed to mean that the documents described by Subsection (a) of
6-7 this section were admissible in civil actions before the effective
6-8 date of this Act.
6-9 ARTICLE 3. RATE ROLLBACK FOR CERTAIN LIABILITY INSURANCE COVERAGE
6-10 SECTION 3.01. Subchapter O, Chapter 5, Insurance Code, is
6-11 amended by adding Article 5.132 to read as follows:
6-12 Art. 5.132. TEMPORARY RATE ROLLBACKS FOR CERTAIN LIABILITY
6-13 INSURANCE
6-14 Sec. 1. PURPOSE OF ARTICLE. The purpose of this article is
6-15 to ensure that liability insurance rates for nursing institutions
6-16 will immediately reflect the reduction in risk to insurers writing
6-17 liability insurance policies for those institutions that will
6-18 result from legislation enacted by the 77th Legislature, Regular
6-19 Session, that:
6-20 (1) amended Section 41.008, Civil Practice and
6-21 Remedies Code, to limit the circumstances in which the cap on
6-22 exemplary damages under that section will not apply to a judgment
6-23 against a nursing institution; and
6-24 (2) added Sections 32.053 and 242.017, Human Resources
6-25 Code, and repealed Sections 32.021(i), (j), and (k), Human
6-26 Resources Code, to clarify the admissibility of certain documents
7-1 in a civil action against a nursing institution.
7-2 Sec. 2. APPLICABILITY OF ARTICLE. This article applies to
7-3 any insurer authorized to engage in business in this state,
7-4 including a Lloyd's plan, that writes a policy of professional
7-5 liability insurance for a nursing institution certified to provide
7-6 services to Medicaid recipients in accordance with Chapter 32,
7-7 Human Resources Code, or licensed under Chapter 242, Health and
7-8 Safety Code.
7-9 Sec. 3. RATE ROLLBACK. (a) Notwithstanding Chapter 40 of
7-10 this code, on or before September 1 of each year, the commissioner
7-11 shall hold a rulemaking hearing under Chapter 2001, Government
7-12 Code, to:
7-13 (1) determine a percentage of equitable
7-14 across-the-board reductions in insurance rates required for
7-15 liability coverage described by Section 2 of this article; and
7-16 (2) adopt those rate reductions by rule.
7-17 (b) The rate reduction adopted under this section shall be
7-18 based on the evidence presented at the hearing required by
7-19 Subsection (a) of this section. The rates resulting from the rate
7-20 reductions adopted under this section must be reasonable, adequate,
7-21 not unfairly discriminatory, and not excessive.
7-22 (c) A rate reduction adopted under this section applies only
7-23 to a policy delivered, issued for delivery, or renewed on or after
7-24 the 90th day after the date the rule establishing the rate
7-25 reduction is adopted.
7-26 (d) Any rule or order of the commissioner that determines,
8-1 approves, or sets a rate reduction under this section that is
8-2 appealed or challenged remains in effect during the pendency of the
8-3 appeal or challenge. During the pendency of the appeal or
8-4 challenge, an insurer shall use the rate reduction provided in the
8-5 order being appealed or challenged, and the rate reduction is
8-6 lawful and valid during the period of the appeal or challenge.
8-7 Sec. 4. ADMINISTRATIVE RELIEF. (a) Except as provided by
8-8 Subsection (b) of this section, a rate filed for policies
8-9 described by Section 2 of this article after the adoption of a rate
8-10 reduction under Section 3 of this article shall reflect the rate
8-11 reduction. The commissioner shall disapprove a rate, subject to
8-12 the procedures established by Section 7, Article 5.13-2 of this
8-13 code, if the commissioner finds that the filed rate does not
8-14 reflect that reduction.
8-15 (b) The commissioner is not required to disapprove a filed
8-16 rate that reflects less than the full amount of the rate reduction
8-17 imposed under Section 3 of this article if:
8-18 (1) the commissioner determines based on clear and
8-19 convincing evidence that an insurer will be financially unable to
8-20 continue writing the type of policies to which this article
8-21 applies; or
8-22 (2) the rate reduction would likely result in placing
8-23 the insurer in a hazardous financial condition described by Section
8-24 2, Article 1.32 of this code.
8-25 Sec. 5. DECLARATION OF INAPPLICABILITY TO CERTAIN POLICIES.
8-26 The commissioner by order shall declare this article inapplicable
9-1 to insurance policies otherwise subject to this article at the time
9-2 the commissioner finds, based on actuarially credible data, that
9-3 rates for those policies reflect the actual experience for those
9-4 policies under the legislation described by Section 1 of this
9-5 article.
9-6 Sec. 6. DURATION OF REDUCTIONS. Unless the commissioner
9-7 grants an exemption under Section 4 or 5 of this article, each rate
9-8 resulting from the reduction required under Section 3 of this
9-9 article remains in effect until January 1, 2006.
9-10 Sec. 7. MODIFICATION. The commissioner by bulletin or
9-11 directive may, based on the evidence accumulated by the
9-12 commissioner before the bulletin or directive is issued, modify a
9-13 rate reduction adopted under this article if a final, unappealable
9-14 judgment of a court with appropriate jurisdiction stays the effect
9-15 of, enjoins, or otherwise modifies or declares unconstitutional any
9-16 of the legislation described by Section 1 of this article on which
9-17 the commissioner based the rate reduction.
9-18 Sec. 8. HEARINGS AND ORDERS. Notwithstanding Chapter 40 of
9-19 this code, a rulemaking hearing under this article shall be held
9-20 before the commissioner or the commissioner's designee. The
9-21 rulemaking procedures established by this section do not apply to
9-22 any other rate promulgation proceeding.
9-23 Sec. 9. RECOMMENDATIONS TO LEGISLATURE. The commissioner
9-24 shall assemble information, conduct hearings, and take other
9-25 appropriate measures to assess and evaluate changes in the
9-26 marketplace resulting from the implementation of this article and
10-1 shall report the commissioner's findings and recommendations to the
10-2 legislature.
10-3 SECTION 3.02. (a) Notwithstanding Section 3(a), Article
10-4 5.132, Insurance Code, as added by this article, on or before
10-5 October 1, 2001, the commissioner of insurance by rule shall adopt
10-6 an appropriate rate reduction for insurance policies described by
10-7 Section 2 of that article. The rate reduction adopted under this
10-8 subsection shall be developed without consideration of the effect
10-9 of the legislation described by Section 1, Article 5.132.
10-10 (b) Notwithstanding Subsection (a) of this section, if the
10-11 commissioner of insurance has not adopted rate reductions required
10-12 by that subsection before January 1, 2002, a 20 percent rate
10-13 reduction, measured from the base rates in effect on April 1, 2001,
10-14 applies to each policy described by Section 2, Article 5.132,
10-15 Insurance Code, as added by this article, delivered, issued for
10-16 delivery, or renewed on or after January 1, 2002.
10-17 (c) A rate filed under an order of the commissioner of
10-18 insurance issued before May 1, 2001, is not subject to the rate
10-19 reduction required by this article before January 1, 2002.
10-20 ARTICLE 4. AVAILABILITY OF COVERAGE FROM TEXAS MEDICAL
10-21 LIABILITY INSURANCE UNDERWRITING ASSOCIATION
10-22 SECTION 4.01. Section 2(6), Article 21.49-3, Insurance Code,
10-23 is amended to read as follows:
10-24 (6) "Health care provider" means:
10-25 (A) any person, partnership, professional
10-26 association, corporation, facility, or institution duly licensed or
11-1 chartered by the State of Texas to provide health care as defined
11-2 in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance
11-3 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
11-4 Statutes), as:
11-5 (i) a registered nurse, hospital, dentist,
11-6 podiatrist, pharmacist, chiropractor, or optometrist;
11-7 (ii) a for-profit[,] or not-for-profit
11-8 nursing home;
11-9 (iii) [, or] a radiation therapy center
11-10 that is independent of any other medical treatment facility and
11-11 which is licensed by the Texas Department of Health in that
11-12 agency's capacity as the Texas [State] Radiation Control Agency
11-13 pursuant to the provisions of Chapter 401, Health and Safety Code,
11-14 and which is in compliance with the regulations promulgated under
11-15 that chapter;
11-16 (iv) [by the Texas State Radiation Control
11-17 Agency,] a blood bank that is a nonprofit corporation chartered to
11-18 operate a blood bank and which is accredited by the American
11-19 Association of Blood Banks;
11-20 (v) [,] a nonprofit corporation which is
11-21 organized for the delivery of health care to the public and which
11-22 is certified under Chapter 162, Occupations Code; [Article 4509a,
11-23 Revised Civil Statutes of Texas, 1925,] or
11-24 (vi) a [migrant] health center as defined
11-25 by 42 U.S.C. Section 254b [P.L. 94-63], as amended; [(42 U.S.C.
11-26 Section 254b), or a community health center as defined by P.L.
12-1 94-63, as amended (42 U.S.C. Section 254c), that is receiving
12-2 federal funds under an application approved under either Title IV,
12-3 P.L. 94-63, as amended (42 U.S.C. Section 254b), or Title V, P.L.
12-4 94-63, as amended (42 U.S.C. Section 254c),] or
12-5 (B) an officer, employee, or agent of an entity
12-6 listed in Paragraph (A) [any of them] acting in the course and
12-7 scope of that person's [his] employment.
12-8 SECTION 4.02. Section 3A, Article 21.49-3, Insurance Code,
12-9 is amended by adding Subsection (c) to read as follows:
12-10 (c) A for-profit or not-for-profit nursing home not
12-11 otherwise eligible under this section for coverage from the
12-12 association is eligible for coverage if the nursing home
12-13 demonstrates, in accordance with the requirements of the
12-14 association, that the nursing home made a bona fide effort to
12-15 obtain coverage from an authorized insurer and was unable to obtain
12-16 coverage.
12-17 SECTION 4.03. Section 4(b)(1), Article 21.49-3, Insurance
12-18 Code, is amended to read as follows:
12-19 (1) The rates, rating plans, rating rules, rating
12-20 classifications, territories, and policy forms applicable to the
12-21 insurance written by the association and statistics relating
12-22 thereto shall be subject to Subchapter B of Chapter 5 of the
12-23 Insurance Code, as amended, giving due consideration to the past
12-24 and prospective loss and expense experience for medical
12-25 professional liability insurance within and without this state of
12-26 all of the member companies of the association, trends in the
13-1 frequency and severity of losses, the investment income of the
13-2 association, and such other information as the commissioner [board]
13-3 may require; provided, that if any article of the above subchapter
13-4 is in conflict with any provision of this Act, this Act shall
13-5 prevail. For purposes of this article, rates, rating plans, rating
13-6 rules, rating classifications, territories, and policy forms for
13-7 for-profit nursing homes are subject to the requirements of Article
13-8 5.15-1 of this code to the same extent as not-for-profit nursing
13-9 homes.
13-10 ARTICLE 5. EFFECTIVE DATE
13-11 SECTION 5.01. This Act takes effect immediately if it
13-12 receives a vote of two-thirds of all the members elected to each
13-13 house, as provided by Section 39, Article III, Texas Constitution.
13-14 If this Act does not receive the vote necessary for immediate
13-15 effect, this Act takes effect September 1, 2001.