By: Duncan S.B. No. 1838
2001S1282/1
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain long-term care facilities.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 ARTICLE 1. SHORT TITLE; PURPOSE
1-5 SECTION 1.01. This Act may be cited as the Long-Term Care
1-6 Facility Improvement Act.
1-7 SECTION 1.02. It is the purpose of this Act to:
1-8 (1) improve the quality of care for residents in
1-9 certain long-term care facilities in this state;
1-10 (2) ensure the continued availability of those
1-11 facilities for the residents of this state;
1-12 (3) improve the financial condition of those
1-13 facilities;
1-14 (4) increase the protections available to residents of
1-15 those facilities who may have liability claims against those
1-16 facilities; and
1-17 (5) increase the availability and improve
1-18 affordability of professional liability insurance for those
1-19 facilities.
1-20 ARTICLE 2. EXEMPLARY DAMAGES IN CERTAIN ACTIONS
1-21 SECTION 2.01. Chapter 41, Civil Practice and Remedies Code,
1-22 is amended by adding Subchapter B to read as follows:
1-23 SUBCHAPTER B. NURSING INSTITUTIONS
1-24 Sec. 41.051. DEFINITIONS. In this subchapter:
1-25 (1) "Insurer" means any insurer writing professional
2-1 liability insurance for nursing institutions in this state in
2-2 accordance with law. The term includes an authorized and admitted
2-3 insurer, an eligible surplus lines insurer, and the Texas Medical
2-4 Liability Insurance Underwriting Association established under
2-5 Article 21.49-3, Insurance Code.
2-6 (2) "Nursing institution" means an institution
2-7 licensed under Chapter 242, Health and Safety Code.
2-8 Sec. 41.052. INSURER LIABILITY FOR EXEMPLARY DAMAGES IN
2-9 CERTAIN CLAIMS. (a) An insurer that writes a professional
2-10 liability insurance policy that covers a nursing institution and
2-11 that excludes coverage for exemplary damages is not liable for
2-12 exemplary damages awarded in relation to a covered claim against
2-13 the nursing institution under this chapter or any other law. This
2-14 subsection applies without regard to the application of the common
2-15 law theory of recovery commonly known in Texas as the "Stowers
2-16 Doctrine." This subsection does not affect the application of that
2-17 doctrine to the liability of an insurer for compensatory damages.
2-18 (b) This section does not affect the contractual duties
2-19 imposed under an insurance policy.
2-20 (c) This section does not prohibit a nursing institution
2-21 from purchasing a policy to cover exemplary damages.
2-22 Sec. 41.053. NOTIFICATION OF AWARD OF EXEMPLARY DAMAGES. If
2-23 exemplary damages are awarded under this subchapter against a
2-24 nursing institution or an officer, employee, or agent of a nursing
2-25 institution, the court shall notify the Texas Department of Human
2-26 Services.
3-1 SECTION 2.02. Subchapter B, Chapter 242, Health and Safety
3-2 Code, is amended by adding Section 242.051 to read as follows:
3-3 Sec. 242.051. INSPECTION OR SURVEY AFTER CERTAIN DAMAGE
3-4 AWARDS. If the department receives notice from a court of an award
3-5 of exemplary damages against an institution or an officer,
3-6 employee, or agent of an institution under Subchapter B, Chapter
3-7 41, Civil Practice and Remedies Code, the department shall conduct
3-8 a full licensing inspection of the institution under this chapter
3-9 and, if appropriate, a full Medicaid certification survey of the
3-10 institution in accordance with Chapter 32, Human Resources Code.
3-11 SECTION 2.03. This article applies only to a cause of action
3-12 that accrues on or after the effective date of this Act. A cause
3-13 of action that accrues before the effective date of this Act is
3-14 governed by the law as it existed immediately before the effective
3-15 date of this Act, and that law is continued in effect for that
3-16 purpose.
3-17 ARTICLE 3. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL ACTION
3-18 SECTION 3.01. Subsections (i) and (k), Section 32.021, Human
3-19 Resources Code, are amended to read as follows:
3-20 (i) A record of the department, including a record of
3-21 [Except as provided by Subsections (j) and (k),] a department
3-22 survey, complaint investigation, incident investigation, or survey
3-23 report, that relates to [documents that] an institution, including
3-24 an intermediate care facility for the mentally retarded, may be
3-25 introduced into evidence in a civil action, enforcement action, or
3-26 related proceeding if the record is admissible under the Texas
4-1 Rules of Evidence [has violated a standard for participation in the
4-2 state Medicaid program, or the assessment of a monetary penalty by
4-3 the department or the payment of a monetary penalty by the
4-4 institution, is not admissible as evidence in a civil action to
4-5 prove that the institution has committed a violation].
4-6 (k) A department surveyor or investigator may testify in a
4-7 civil action as to observations, factual findings, conclusions, or
4-8 violations of requirements for licensure or for certification for
4-9 participation in the state Medicaid program that were made in the
4-10 discharge of official duties for the department, if the testimony
4-11 is admissible under [in accordance with] the Texas Rules of [Civil]
4-12 Evidence.
4-13 SECTION 3.02. Subchapter B, Chapter 242, Health and Safety
4-14 Code, is amended by adding Section 242.050 to read as follows:
4-15 Sec. 242.050. ADMISSIBILITY OF CERTAIN DOCUMENTS OR
4-16 TESTIMONY. Sections 32.021(i) and (k), Human Resources Code,
4-17 govern the admissibility in a civil action against an institution
4-18 of:
4-19 (1) a record of the department described by Section
4-20 32.021(i), Human Resources Code; or
4-21 (2) the testimony of a department surveyor or
4-22 investigator described by Section 32.021(k), Human Resources Code.
4-23 SECTION 3.03. Subchapter B, Chapter 252, Health and Safety
4-24 Code, is amended by adding Section 252.045 to read as follows:
4-25 Sec. 252.045. ADMISSIBILITY OF CERTAIN DOCUMENTS OR
4-26 TESTIMONY. Sections 32.021(i) and (k), Human Resources Code,
5-1 govern the admissibility in a civil action against a facility of:
5-2 (1) a record of the department described by Section
5-3 32.021(i), Human Resources Code; or
5-4 (2) the testimony of a department surveyor or
5-5 investigator described by Section 32.021(k), Human Resources Code.
5-6 SECTION 3.04. Subsection (j), Section 32.021, Human
5-7 Resources Code, is repealed.
5-8 SECTION 3.05. This article applies only to a civil action,
5-9 enforcement action, or related proceeding that is commenced on or
5-10 after the effective date of this Act. A civil action, enforcement
5-11 action, or related proceeding that is commenced before the
5-12 effective date of this Act is governed by the law applicable to the
5-13 action or proceeding immediately before the effective date of this
5-14 Act, and that law is continued in effect for that purpose.
5-15 ARTICLE 4. RATE ROLLBACK FOR CERTAIN LIABILITY INSURANCE COVERAGE
5-16 SECTION 4.01. Subchapter O, Chapter 5, Insurance Code, is
5-17 amended by adding Article 5.132 to read as follows:
5-18 Art. 5.132. TEMPORARY RATE ROLLBACKS FOR CERTAIN LIABILITY
5-19 INSURANCE
5-20 Sec. 1. PURPOSE OF ARTICLE. The purpose of this article is
5-21 to ensure that liability insurance rates for nursing institutions
5-22 will immediately reflect the reduction in risk to insurers writing
5-23 liability insurance policies for those institutions that will
5-24 result from legislation enacted by the 77th Legislature, Regular
5-25 Session, including legislation that:
5-26 (1) amended Chapter 41, Civil Practice and Remedies
6-1 Code, to limit the exposure of an insurer to exemplary damages for
6-2 certain claims against a nursing institution; and
6-3 (2) amended Sections 32.021(i) and (k), Human
6-4 Resources Code, added Section 242.050, Health and Safety Code, and
6-5 repealed Section 32.021(j), Human Resources Code, to clarify the
6-6 admissibility of certain documents in a civil action against a
6-7 nursing institution.
6-8 Sec. 2. APPLICABILITY OF ARTICLE. This article applies to
6-9 any insurer authorized to engage in business in this state,
6-10 including a capital stock company, a mutual company, a Lloyd's
6-11 plan, a reciprocal or interinsurance exchange, and the Texas
6-12 Medical Liability Insurance Underwriting Association, that writes a
6-13 policy of professional liability insurance for a nursing
6-14 institution licensed under Chapter 242, Health and Safety Code.
6-15 Sec. 3. RATE ROLLBACK. (a) Notwithstanding Chapter 40 of
6-16 this code, on or before September 1 of each year, the commissioner
6-17 shall hold a rulemaking hearing under Chapter 2001, Government
6-18 Code, to:
6-19 (1) determine a percentage of equitable
6-20 across-the-board reductions in insurance rates required for
6-21 liability coverage described by Section 2 of this article; and
6-22 (2) adopt those rate reductions by rule.
6-23 (b) The rate reduction adopted under this section shall be
6-24 based on the evidence presented at the hearing required by
6-25 Subsection (a) of this section. The rates resulting from the rate
6-26 reductions adopted under this section must be reasonable, adequate,
7-1 not unfairly discriminatory, and not excessive.
7-2 (c) A rate reduction adopted under this section applies only
7-3 to a policy delivered, issued for delivery, or renewed on or after
7-4 the 90th day after the date the rule establishing the rate
7-5 reduction is adopted.
7-6 (d) Any rule or order of the commissioner that determines,
7-7 approves, or sets a rate reduction under this section that is
7-8 appealed or challenged remains in effect during the pendency of the
7-9 appeal or challenge. During the pendency of the appeal or
7-10 challenge, an insurer shall use the rate reduction provided in the
7-11 order being appealed or challenged, and the rate reduction is
7-12 lawful and valid during the period of the appeal or challenge.
7-13 Sec. 4. ADMINISTRATIVE RELIEF. (a) Except as provided by
7-14 Subsection (b) of this section, a rate filed for policies described
7-15 by Section 2 of this article after the adoption of a rate reduction
7-16 under Section 3 of this article shall reflect the rate reduction.
7-17 The commissioner shall disapprove a rate, subject to the procedures
7-18 established by Section 7, Article 5.13-2 of this code, if the
7-19 commissioner finds that the filed rate does not reflect that
7-20 reduction.
7-21 (b) The commissioner is not required to disapprove a filed
7-22 rate that reflects less than the full amount of the rate reduction
7-23 imposed under Section 3 of this article if:
7-24 (1) the commissioner determines, based on clear and
7-25 convincing evidence, that an insurer will be financially unable to
7-26 continue writing the type of policies to which this article
8-1 applies; or
8-2 (2) the rate reduction would likely result in placing
8-3 the insurer in a hazardous financial condition described by Section
8-4 2, Article 1.32, of this code.
8-5 Sec. 5. DECLARATION OF INAPPLICABILITY TO CERTAIN POLICIES.
8-6 The commissioner by order shall declare this article inapplicable
8-7 to insurance policies otherwise subject to this article at the time
8-8 the commissioner finds, based on actuarially credible data, that
8-9 rates for those policies reflect the actual experience for those
8-10 policies under the legislation described by Section 1 of this
8-11 article.
8-12 Sec. 6. DURATION OF REDUCTIONS. Unless the commissioner
8-13 grants an exemption under Section 4 or 5 of this article, each rate
8-14 resulting from the reduction required under Section 3 of this
8-15 article remains in effect until the first anniversary of the date
8-16 the rate becomes effective.
8-17 Sec. 7. MODIFICATION. The commissioner by bulletin or
8-18 directive may, based on the evidence accumulated by the
8-19 commissioner before the bulletin or directive is issued, modify a
8-20 rate reduction adopted under this article if a final, unappealable
8-21 judgment of a court with appropriate jurisdiction stays the effect
8-22 of, enjoins, or otherwise modifies or declares unconstitutional any
8-23 of the legislation described by Section 1 of this article on which
8-24 the commissioner based the rate reduction.
8-25 Sec. 8. HEARINGS AND ORDERS. Notwithstanding Chapter 40 of
8-26 this code, a rulemaking hearing under this article shall be held
9-1 before the commissioner or the commissioner's designee. The
9-2 rulemaking procedures established by this section do not apply to
9-3 any other rate promulgation proceeding.
9-4 Sec. 9. INSURER DATA REPORTING. (a) Each insurer that
9-5 writes professional liability insurance policies for nursing
9-6 institutions licensed under Chapter 242, Health and Safety Code,
9-7 including an insurer whose rates are not regulated, shall, as a
9-8 condition of writing those policies in this state, comply with a
9-9 request for information from the commissioner under this section.
9-10 (b) The commissioner may require information in rate
9-11 filings, special data calls, informational hearings, and any other
9-12 means consistent with this code applicable to the affected insurer
9-13 that the commissioner believes will allow the commissioner to:
9-14 (1) determine whether insurers writing insurance
9-15 coverage described by Subsection (a) of this section are passing
9-16 the savings that accrue from the legislation described by Section 1
9-17 of this article to insured nursing institutions on a prospective
9-18 basis; or
9-19 (2) prepare the report required of the commissioner
9-20 under Section 10 of this article or any other report the
9-21 commissioner is required to submit to the legislature in connection
9-22 with the legislation described by Section 1 of this article.
9-23 (c) Information provided under this section is privileged
9-24 and confidential to the same extent as the information is
9-25 privileged and confidential under this code or any other law
9-26 governing an insurer described by Subsection (a) of this section.
10-1 The information remains privileged and confidential unless and
10-2 until introduced into evidence at an administrative hearing or in a
10-3 court of competent jurisdiction.
10-4 Sec. 10. RECOMMENDATIONS TO LEGISLATURE. The commissioner
10-5 shall assemble information, conduct hearings, and take other
10-6 appropriate measures to assess and evaluate changes in the
10-7 marketplace resulting from the implementation of this article and
10-8 shall report the commissioner's findings and recommendations to the
10-9 legislature.
10-10 Sec. 11. EXPIRATION. This article expires January 1, 2006.
10-11 A rate resulting from a reduction adopted by the commissioner under
10-12 Section 3 of this article in 2005 remains in effect until the first
10-13 anniversary of the date the rate becomes effective.
10-14 SECTION 4.02. (a) Notwithstanding Subsection (a), Section
10-15 3, Article 5.132, Insurance Code, as added by this article, on or
10-16 before October 1, 2001, the commissioner of insurance by rule shall
10-17 adopt an appropriate rate reduction for insurance policies
10-18 described by Section 2 of that article. The rate reduction adopted
10-19 under this subsection shall be developed without consideration of
10-20 the effect of the legislation described by Section 1, Article
10-21 5.132, Insurance Code, as added by this article.
10-22 (b) Notwithstanding Subsection (a) of this section, if the
10-23 commissioner of insurance has not adopted rate reductions required
10-24 by that subsection before January 1, 2002, a 20 percent rate
10-25 reduction, measured from the base rates in effect on April 1, 2001,
10-26 applies to each policy described by Section 2, Article 5.132,
11-1 Insurance Code, as added by this article, delivered, issued for
11-2 delivery, or renewed on or after January 1, 2002.
11-3 (c) A rate filed under an order of the commissioner of
11-4 insurance issued before May 1, 2001, is not subject to the rate
11-5 reduction required by this article before January 1, 2002.
11-6 ARTICLE 5. AVAILABILITY OF CERTAIN INSURANCE COVERAGE
11-7 SECTION 5.01. Subdivision (2), Section 2, Article 5.15-1,
11-8 Insurance Code, is amended to read as follows:
11-9 (2) "Health care provider" means any person,
11-10 partnership, professional association, corporation, facility, or
11-11 institution licensed or chartered by the State of Texas to provide
11-12 health care as a registered nurse, hospital, dentist, podiatrist,
11-13 chiropractor, optometrist, pharmacist, veterinarian, not-for-profit
11-14 kidney dialysis center, blood bank that is a nonprofit corporation
11-15 chartered to operate a blood bank and which is accredited by the
11-16 American Association of Blood Banks, for-profit nursing home or
11-17 not-for-profit nursing home, or an officer, employee, or agent of
11-18 any of them acting in the course and scope of his employment.
11-19 SECTION 5.02. Section 8, Article 5.15-1, Insurance Code, is
11-20 amended to read as follows:
11-21 Sec. 8. PUNITIVE DAMAGES UNDER MEDICAL PROFESSIONAL
11-22 LIABILITY INSURANCE. No policy of medical professional liability
11-23 insurance issued to or renewed for a health care provider or
11-24 physician in this state may include coverage for punitive damages
11-25 that may be assessed against the health care provider or physician;
11-26 provided, however, that the commissioner may approve an endorsement
12-1 form that provides for coverage for punitive damages to be used on
12-2 a policy of medical professional liability insurance issued to a
12-3 hospital, as the term "hospital" is defined in this article, or to
12-4 a for-profit or not-for-profit nursing home.
12-5 SECTION 5.03. Article 5.15-1, Insurance Code, is amended by
12-6 adding Section 11 to read as follows:
12-7 Sec. 11. REQUIRED PROVISION FOR CERTAIN PROFESSIONAL
12-8 LIABILITY POLICIES. A professional liability insurance policy
12-9 issued to a for-profit or not-for-profit nursing home must provide
12-10 that the insurer may not settle a claim that the insurer has a duty
12-11 under the policy to defend without the consent of the insured
12-12 nursing home.
12-13 SECTION 5.04. Subchapter B, Chapter 5, Insurance Code, is
12-14 amended by adding Article 5.15-4 to read as follows:
12-15 Art. 5.15-4. BEST PRACTICES FOR NURSING HOMES. (a) The
12-16 commissioner shall adopt best practices for risk management and
12-17 loss control that may be used by for-profit and not-for-profit
12-18 nursing homes.
12-19 (b) In determining rates for professional liability
12-20 insurance applicable to a for-profit or not-for-profit nursing
12-21 home, an insurance company or the Texas Medical Liability Insurance
12-22 Underwriting Association may consider whether the nursing home
12-23 adopts and implements the best practices adopted by the
12-24 commissioner under Subsection (a) of this article.
12-25 (c) In developing or amending best practices for for-profit
12-26 and not-for-profit nursing homes, the commissioner shall consult
13-1 with the Health and Human Services Commission and a task force
13-2 appointed by the commissioner. The task force must be composed of
13-3 representatives of:
13-4 (1) insurance companies that write professional
13-5 liability insurance for nursing homes;
13-6 (2) the Texas Medical Liability Insurance Underwriting
13-7 Association;
13-8 (3) nursing homes; and
13-9 (4) consumers.
13-10 SECTION 5.05. Subdivision (6), Section 2, Article 21.49-3,
13-11 Insurance Code, is amended to read as follows:
13-12 (6) "Health care provider" means:
13-13 (A) any person, partnership, professional
13-14 association, corporation, facility, or institution duly licensed or
13-15 chartered by the State of Texas to provide health care as defined
13-16 in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance
13-17 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
13-18 Statutes), as:
13-19 (i) a registered nurse, hospital, dentist,
13-20 podiatrist, pharmacist, chiropractor, or optometrist;
13-21 (ii) a for-profit[,] or not-for-profit
13-22 nursing home;
13-23 (iii) [, or] a radiation therapy center
13-24 that is independent of any other medical treatment facility and
13-25 which is licensed by the Texas Department of Health in that
13-26 agency's capacity as the Texas [State] Radiation Control Agency
14-1 pursuant to the provisions of Chapter 401, Health and Safety Code,
14-2 and which is in compliance with the regulations promulgated under
14-3 that chapter;
14-4 (iv) [by the Texas State Radiation Control
14-5 Agency,] a blood bank that is a nonprofit corporation chartered to
14-6 operate a blood bank and which is accredited by the American
14-7 Association of Blood Banks;
14-8 (v) [,] a nonprofit corporation which is
14-9 organized for the delivery of health care to the public and which
14-10 is certified under Chapter 162, Occupations Code; [Article 4509a,
14-11 Revised Civil Statutes of Texas, 1925,] or
14-12 (vi) a [migrant] health center as defined
14-13 by 42 U.S.C. Section 254b [P.L. 94-63], as amended; [(42 U.S.C.
14-14 Section 254b), or a community health center as defined by P.L.
14-15 94-63, as amended (42 U.S.C. Section 254c), that is receiving
14-16 federal funds under an application approved under either Title IV,
14-17 P.L. 94-63, as amended (42 U.S.C. Section 254b), or Title V, P.L.
14-18 94-63, as amended (42 U.S.C. Section 254c),] or
14-19 (B) an officer, employee, or agent of an entity
14-20 listed in Paragraph (A) of this subdivision [any of them] acting in
14-21 the course and scope of that person's [his] employment.
14-22 SECTION 5.06. Section 3A, Article 21.49-3, Insurance Code,
14-23 is amended by adding Subsection (c) to read as follows:
14-24 (c) A for-profit or not-for-profit nursing home not
14-25 otherwise eligible under this section for coverage from the
14-26 association is eligible for coverage if the nursing home
15-1 demonstrates, in accordance with the requirements of the
15-2 association, that the nursing home made a bona fide effort to
15-3 obtain coverage from authorized insurers and eligible surplus lines
15-4 insurers and was unable to obtain coverage.
15-5 SECTION 5.07. Subdivision (1), Subsection (b), Section 4,
15-6 Article 21.49-3, Insurance Code, is amended to read as follows:
15-7 (1) The rates, rating plans, rating rules, rating
15-8 classification, territories, and policy forms applicable to the
15-9 insurance written by the association and statistics relating
15-10 thereto shall be subject to Subchapter B of Chapter 5 of the
15-11 Insurance Code, as amended, giving due consideration to the past
15-12 and prospective loss and expense experience for medical
15-13 professional liability insurance within and without this state of
15-14 all of the member companies of the association, trends in the
15-15 frequency and severity of losses, the investment income of the
15-16 association, and such other information as the commissioner [board]
15-17 may require; provided, that if any article of the above subchapter
15-18 is in conflict with any provision of this Act, this Act shall
15-19 prevail. For purposes of this article, rates, rating plans, rating
15-20 rules, rating classifications, territories, and policy forms for
15-21 for-profit nursing homes are subject to the requirements of Article
15-22 5.15-1 of this code to the same extent as not-for-profit nursing
15-23 homes.
15-24 SECTION 5.08. Section 4A, Article 21.49-3, Insurance Code,
15-25 is amended to read as follows:
15-26 Sec. 4A. POLICYHOLDER'S STABILIZATION RESERVE FUND.
16-1 (a) There is hereby created a policyholder's stabilization reserve
16-2 fund which shall be administered as provided herein and in the plan
16-3 of operation of the association.
16-4 (b) Each policyholder shall pay annually into the
16-5 stabilization reserve fund a charge, the amount of which shall be
16-6 established annually by advisory directors chosen by health care
16-7 providers and physicians eligible for insurance in the association
16-8 in accordance with the plan of operation. The charge shall be in
16-9 proportion to each premium payment due for liability insurance
16-10 through the association. Such charge shall be separately stated in
16-11 the policy, but shall not constitute a part of premiums or be
16-12 subject to premium taxation, servicing fees, acquisition costs, or
16-13 any other such charges.
16-14 (c) The [policyholder's] stabilization reserve fund shall be
16-15 collected and administered by the association and shall be treated
16-16 as a liability of the association along with and in the same manner
16-17 as premium and loss reserves. The fund shall be valued annually by
16-18 the board of directors as of the close of the last preceding year.
16-19 (d) Except as provided by Subsection (e) of this section,
16-20 collections [Collections] of the stabilization reserve fund charge
16-21 shall continue only until such time as the net balance of the
16-22 stabilization reserve fund is not less than the projected sum of
16-23 premiums to be written in the year following valuation date.
16-24 (e) If in any fiscal year the incurred losses and defense
16-25 and cost-containment expenses from physicians or any single
16-26 category of health care provider result in a net underwriting loss
17-1 and exceed 25 percent of the stabilization reserve fund, as valued
17-2 for that year, the commissioner may by order direct the initiation
17-3 or continuation of the stabilization reserve fund charge for
17-4 physicians or that category of health care provider until the fund
17-5 recovers the amount by which those losses and cost-containment
17-6 expenses exceed 25 percent of the fund.
17-7 (f) The stabilization reserve fund shall be credited with
17-8 all stabilization reserve fund charges collected from policyholders
17-9 and shall be charged with any deficit from the prior year's
17-10 operation of the association.
17-11 SECTION 5.09. Subchapter E, Chapter 21, Insurance Code, is
17-12 amended by adding Article 21.49-3d to read as follows:
17-13 Art. 21.49-3d. REVENUE BOND PROGRAM AND PROCEDURES FOR
17-14 CERTAIN LIABILITY INSURANCE
17-15 Sec. 1. LEGISLATIVE FINDING; PURPOSE. The legislature finds
17-16 that the issuance of bonds to provide a method to raise funds to
17-17 provide professional liability insurance through the association
17-18 for nursing homes in this state is for the benefit of the public
17-19 and in furtherance of a public purpose.
17-20 Sec. 2. DEFINITIONS. In this article:
17-21 (1) "Association" means the joint underwriting
17-22 association established under Article 21.49-3 of this code.
17-23 (2) "Bond resolution" means the resolution or order
17-24 authorizing the bonds to be issued under this article.
17-25 (3) "Board" means the board of directors of the Texas
17-26 Public Finance Authority.
18-1 (4) "Insurer" means any insurer required to be a
18-2 member of the association under Section 3, Article 21.49-3 of this
18-3 code.
18-4 Sec. 3. BONDS AUTHORIZED; APPLICATION OF TEXAS PUBLIC
18-5 FINANCE AUTHORITY ACT. (a) On behalf of the fund, the Texas
18-6 Public Finance Authority shall issue revenue bonds to:
18-7 (1) fund the policyholder's stabilization reserve fund
18-8 established under Section 4A, Article 21.49-3 of this code;
18-9 (2) pay costs related to issuance of the bonds; and
18-10 (3) pay other costs related to the bonds as may be
18-11 determined by the board.
18-12 (b) To the extent not inconsistent with this article,
18-13 Chapter 1232, Government Code, applies to bonds issued under this
18-14 article. In the event of a conflict, this article controls.
18-15 Sec. 4. APPLICABILITY OF OTHER STATUTES. The following laws
18-16 apply to bonds issued under this article to the extent consistent
18-17 with this article:
18-18 (1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371,
18-19 Government Code; and
18-20 (2) Subchapter A, Chapter 1206, Government Code.
18-21 Sec. 5. LIMITS. The Texas Public Finance Authority may
18-22 issue, on behalf of the association, bonds in a total amount not to
18-23 exceed $75 million.
18-24 Sec. 6. CONDITIONS. (a) Bonds may be issued at public or
18-25 private sale.
18-26 (b) Bonds may mature not more than 10 years after the date
19-1 issued.
19-2 (c) Bonds must be issued in the name of the association.
19-3 Sec. 7. ADDITIONAL COVENANTS. In a bond resolution, the
19-4 board may make additional covenants with respect to the bonds and
19-5 the designated income and receipts of the association pledged to
19-6 their payment and may provide for the flow of funds and the
19-7 establishment, maintenance, and investment of funds and accounts
19-8 with respect to the bonds.
19-9 Sec. 8. SPECIAL ACCOUNTS. (a) A bond resolution may
19-10 establish special accounts, including an interest and sinking fund
19-11 account, reserve account, and other accounts.
19-12 (b) The association shall administer the accounts in
19-13 accordance with Article 21.49-3 of this code.
19-14 Sec. 9. SECURITY. (a) Bonds are payable only from the
19-15 maintenance tax surcharge established in Section 10 of this article
19-16 or other sources the fund is authorized to levy, charge, and
19-17 collect in connection with paying any portion of the bonds.
19-18 (b) Bonds are obligations solely of the association. Bonds
19-19 do not create a pledging, giving, or lending of the faith, credit,
19-20 or taxing authority of this state.
19-21 (c) Each bond must include a statement that the state is not
19-22 obligated to pay any amount on the bond and that the faith, credit,
19-23 and taxing authority of this state are not pledged, given, or lent
19-24 to those payments.
19-25 (d) Each bond issued under this article must state on its
19-26 face that the bond is payable solely from the revenues pledged for
20-1 that purpose and that the bond does not and may not constitute a
20-2 legal or moral obligation of the state.
20-3 Sec. 10. MAINTENANCE TAX SURCHARGE. (a) A maintenance tax
20-4 surcharge is assessed against:
20-5 (1) each insurer; and
20-6 (2) the association.
20-7 (b) The maintenance tax surcharge shall be set in an amount
20-8 sufficient to pay all debt service on the bonds. The maintenance
20-9 tax surcharge is set by the commissioner in the same time and shall
20-10 be collected by the comptroller on behalf of the association in the
20-11 same manner as applicable maintenance taxes are collected under
20-12 Article 5.24 of this code.
20-13 (c) On determining the rate of assessment, the department
20-14 shall increase the maintenance tax rate applicable to correctly
20-15 reported gross premiums for liability insurance to a rate
20-16 sufficient to pay all debt service on the bonds, subject to the
20-17 maximum maintenance tax rate applicable to the insurer under
20-18 Article 5.24 of this code. If the resulting tax rate is
20-19 insufficient to pay all debt service on the bonds, the department
20-20 may assess an additional surcharge not to exceed one percent of
20-21 correctly reported gross premiums for liability insurance to cover
20-22 all debt service on the bonds. In this code, the maintenance tax
20-23 surcharge includes the additional maintenance tax assessed under
20-24 this subsection and the surcharge assessed under this subsection to
20-25 pay all debt service of the bonds.
20-26 (d) The association and each insurer may pass through the
21-1 maintenance tax surcharge to each of its policyholders.
21-2 (e) As a condition of engaging in the business of insurance
21-3 in this state, an insurer agrees that if the company leaves the
21-4 market for liability insurance in this state the insurer remains
21-5 obligated to pay, until the bonds are retired, the insurer's share
21-6 of the maintenance tax surcharge assessed under this section in an
21-7 amount proportionate to that insurer's share of the market for
21-8 liability insurance in this state as of the last complete reporting
21-9 period before the date on which the insurer ceases to engage in
21-10 that insurance business in this state. The proportion assessed
21-11 against the insurer shall be based on the insurer's gross premiums
21-12 for liability insurance for the insurer's last reporting period.
21-13 However, an insurer is not required to pay the proportionate amount
21-14 in any year in which the surcharge assessed against insurers
21-15 continuing to write liability insurance in this state is sufficient
21-16 to service the bond obligation.
21-17 Sec. 11. TAX EXEMPT. The bonds issued under this article,
21-18 and any interest from the bonds, and all assets pledged to secure
21-19 the payment of the bonds are free from taxation by the state or a
21-20 political subdivision of this state.
21-21 Sec. 12. AUTHORIZED INVESTMENTS. The bonds issued under
21-22 this article constitute authorized investments under Article 2.10
21-23 and Subpart A, Part I, Article 3.39 of this code.
21-24 Sec. 13. STATE PLEDGE. The state pledges to and agrees with
21-25 the owners of any bonds issued in accordance with this article that
21-26 the state will not limit or alter the rights vested in the
22-1 association to fulfill the terms of any agreements made with the
22-2 owners of the bonds or in any way impair the rights and remedies of
22-3 those owners until the bonds, any premium or interest, and all
22-4 costs and expenses in connection with any action or proceeding by
22-5 or on behalf of those owners are fully met and discharged. The
22-6 association may include this pledge and agreement of the state in
22-7 any agreement with the owners of the bonds.
22-8 Sec. 14. ENFORCEMENT BY MANDAMUS. A writ of mandamus and
22-9 all other legal and equitable remedies are available to any party
22-10 at interest to require the association and any other party to carry
22-11 out agreements and to perform functions and duties under this
22-12 article, the Texas Constitution, or a bond resolution.
22-13 SECTION 5.10. Not later than December 1, 2001, the
22-14 commissioner of insurance shall adopt the initial best practices
22-15 for for-profit and not-for-profit nursing homes adopted as required
22-16 by Article 5.15-4, Insurance Code, as added by this article.
22-17 SECTION 5.11. Section 11, Article 5.15-1, Insurance Code, as
22-18 added by this article, and Sections 2, 3A, and 4, Article 21.49-3,
22-19 Insurance Code, as amended by this article, apply only to an
22-20 insurance policy delivered, issued for delivery, or renewed on or
22-21 after January 1, 2002. A policy delivered, issued for delivery, or
22-22 renewed before January 1, 2002, is governed by the law as it
22-23 existed immediately before the effective date of this Act, and that
22-24 law is continued in effect for that purpose.
23-1 ARTICLE 6. MANDATORY LIABILITY INSURANCE FOR
23-2 NURSING INSTITUTIONS
23-3 SECTION 6.01. Subchapter B, Chapter 242, Health and Safety
23-4 Code, is amended by adding Section 242.0372 to read as follows:
23-5 Sec. 242.0372. LIABILITY INSURANCE COVERAGE. (a) In this
23-6 section, "health care liability claim" has the meaning assigned by
23-7 the Medical Liability and Insurance Improvement Act of Texas
23-8 (Article 4590i, Vernon's Texas Civil Statutes).
23-9 (b) To hold a license under this chapter, an institution
23-10 must maintain professional liability insurance coverage against the
23-11 liability of the institution for a health care liability claim.
23-12 (c) The insurance coverage maintained by an institution
23-13 under this section must:
23-14 (1) provide coverage in the minimum amount of
23-15 $________ per occurrence and $________ aggregate;
23-16 (2) be written on a claims-made basis;
23-17 (3) be issued by:
23-18 (A) an admitted insurer authorized to write
23-19 professional liability insurance in this state;
23-20 (B) the Texas Medical Liability Insurance
23-21 Underwriting Association established under Article 21.49-3,
23-22 Insurance Code; or
23-23 (C) an eligible surplus lines insurer in
23-24 accordance with Article 1.14-2, Insurance Code; and
23-25 (4) be in a form acceptable to the department.
23-26 (d) To the extent permitted by federal law and applicable
24-1 state and federal rules, the cost of insurance coverage required to
24-2 be maintained under this section is an allowable cost for
24-3 reimbursement under the state Medicaid program.
24-4 SECTION 6.02. Notwithstanding Section 242.0372, Health and
24-5 Safety Code, as added by this article, an institution licensed
24-6 under Chapter 242, Health and Safety Code, is not required to
24-7 maintain professional liability insurance as required by that
24-8 section before September 1, 2003.
24-9 ARTICLE 7. SURVEYS AND RELATED PROCESSES
24-10 SECTION 7.01. Chapter 22, Human Resources Code, is amended
24-11 by adding Section 22.037 to read as follows:
24-12 Sec. 22.037. TRAINING AND CONTINUING EDUCATION RELATED TO
24-13 CERTAIN LONG-TERM CARE FACILITIES. (a) In this section:
24-14 (1) "Long-term care facility" means a nursing
24-15 institution, an assisted living facility, or an intermediate care
24-16 facility for the mentally retarded licensed under Chapter 242, 247,
24-17 or 252, Health and Safety Code.
24-18 (2) "Provider" means an employee or agent of a
24-19 long-term care facility.
24-20 (3) "Surveyor" means an employee or agent of the
24-21 department or another state agency responsible for licensing,
24-22 inspecting, surveying, or investigating a long-term care facility
24-23 in relation to:
24-24 (A) licensing under Chapter 242, 247, or 252,
24-25 Health and Safety Code; or
24-26 (B) certification for participation in the
25-1 medical assistance program in accordance with Chapter 32.
25-2 (b) The department shall require a surveyor to complete a
25-3 basic training program before the surveyor inspects, surveys, or
25-4 investigates a long-term care facility. The training must include
25-5 observation of the operations of a long-term care facility
25-6 unrelated to the survey, inspection, or investigation process for a
25-7 minimum of 10 working days within a 14-day period.
25-8 (c) The department shall semiannually provide training for
25-9 surveyors and providers on subjects that address at least one of
25-10 the 10 most common violations by long-term care facilities under
25-11 federal or state law.
25-12 (d) Except as provided by Subsection (e), a surveyor who is
25-13 a health care professional licensed under the laws of this state
25-14 must receive a minimum of 50 percent of the professional's required
25-15 continuing education credits, if any, in gerontology or care for
25-16 individuals with cognitive or physical disabilities, as
25-17 appropriate.
25-18 (e) A surveyor who is a pharmacist must receive a minimum of
25-19 30 percent of the pharmacist's required continuing education
25-20 credits in gerontology or care for individuals with cognitive or
25-21 physical disabilities, as appropriate.
25-22 SECTION 7.02. Subchapter B, Chapter 531, Government Code, is
25-23 amended by adding Sections 531.056, 531.057, and 531.058 to read as
25-24 follows:
25-25 Sec. 531.056. REVIEW OF SURVEY PROCESS IN CERTAIN
25-26 INSTITUTIONS AND FACILITIES. (a) The commission shall adopt
26-1 procedures to review:
26-2 (1) citations or penalties assessed for a violation of
26-3 a rule or law against an institution or facility licensed under
26-4 Chapter 242, 247, or 252, Health and Safety Code, or certified in
26-5 accordance with Chapter 32, Human Resources Code, considering:
26-6 (A) the number of violations by geographic
26-7 region;
26-8 (B) the patterns of violations in each region;
26-9 and
26-10 (C) the outcomes following the assessment of a
26-11 penalty or citation; and
26-12 (2) the performance of duties by employees and agents
26-13 of the Texas Department of Human Services or another state agency
26-14 responsible for licensing, inspecting, surveying, or investigating
26-15 institutions and facilities licensed under Chapter 242, 247, or
26-16 252, Health and Safety Code, or certified in accordance with
26-17 Chapter 32, Human Resources Code, related to:
26-18 (A) complaints received by the commission; or
26-19 (B) any standards or rules violated by an
26-20 employee or agent of a state agency.
26-21 (b) The commission shall annually report to the speaker of
26-22 the house of representatives, the lieutenant governor, and the
26-23 governor on the findings of the review conducted under Subsection
26-24 (a).
26-25 Sec. 531.057. QUALITY ASSURANCE EARLY WARNING SYSTEM FOR
26-26 LONG-TERM CARE FACILITIES; RAPID RESPONSE TEAMS. (a) In this
27-1 section:
27-2 (1) "Long-term care facility" means a nursing
27-3 institution, an assisted living facility, or an intermediate care
27-4 facility for the mentally retarded licensed under Chapter 242, 247,
27-5 or 252, Health and Safety Code, or certified under Chapter 32,
27-6 Human Resources Code.
27-7 (2) "Quality-of-care monitor" means a registered
27-8 nurse, pharmacist, or nutritionist who:
27-9 (A) is employed by the commission;
27-10 (B) is trained and experienced in long-term care
27-11 facility regulation, standards of practice in long-term care, and
27-12 evaluation of patient care; and
27-13 (C) functions independently of the Texas
27-14 Department of Human Services.
27-15 (b) The commission shall establish an early warning system
27-16 to detect conditions that could be detrimental to the health,
27-17 safety, and welfare of residents. The early warning system shall
27-18 include analysis of financial and quality-of-care indicators that
27-19 would predict the need for the commission to take action.
27-20 (c) The commission shall establish regional offices with one
27-21 or more quality-of-care monitors, based on the number of long-term
27-22 care facilities in the region, to monitor the facilities in the
27-23 region on a regular, unannounced, aperiodic basis, including
27-24 nights, evenings, weekends, and holidays.
27-25 (d) Priority for monitoring visits shall be given to
27-26 long-term care facilities with a history of patient care
28-1 deficiencies.
28-2 (e) Quality-of-care monitors may not be deployed by the
28-3 commission as a part of the regional survey team in the conduct of
28-4 routine, scheduled surveys.
28-5 (f) Quality-of-care monitors shall assess:
28-6 (1) the overall quality of life in the long-term care
28-7 facility; and
28-8 (2) specific conditions in the facility directly
28-9 related to patient care.
28-10 (g) The quality-of-care monitor shall include in an
28-11 assessment visit:
28-12 (1) observation of the care and services rendered to
28-13 residents; and
28-14 (2) formal and informal interviews with residents,
28-15 family members, facility staff, resident guests, volunteers, other
28-16 regulatory staff, and representatives of a human rights advocacy
28-17 committee.
28-18 (h) The identity of a resident or a family member of a
28-19 resident interviewed by a quality-of-care monitor as provided by
28-20 Subsection (g)(2) shall remain confidential and may not be
28-21 disclosed to any person under any other provision of this section.
28-22 (i) The findings of a monitoring visit, both positive and
28-23 negative, shall be provided orally and in writing to the long-term
28-24 care facility administrator or, in the absence of the facility
28-25 administrator, to the administrator on duty or the director of
28-26 nursing.
29-1 (j) The quality-of-care monitor may recommend to the
29-2 long-term care facility administrator procedural and policy changes
29-3 and staff training to improve the care or quality of life of
29-4 facility residents.
29-5 (k) Conditions observed by the quality-of-care monitor that
29-6 create an immediate threat to the health or safety of a resident
29-7 shall be reported immediately to the regional office supervisor for
29-8 appropriate action and, as appropriate or as required by law, to
29-9 law enforcement, adult protective services, or other responsible
29-10 agencies.
29-11 (l) Except as provided by Subsections (m), (n), and (o), any
29-12 record, whether written or oral, or any written or oral
29-13 communication may not be subject to discovery or introduction into
29-14 evidence in any civil or administrative action against a long-term
29-15 care facility arising out of matters that are the subject of
29-16 quality-of-care monitoring, and a person who was in attendance at a
29-17 monitoring visit or evaluation may not be permitted or required to
29-18 testify in any civil or administrative action as to any evidence or
29-19 other matters produced or presented during the monitoring visits or
29-20 evaluations.
29-21 (m) Information, documents, or records otherwise available
29-22 from other sources are not immune from discovery or use in a civil
29-23 or administrative action solely because the information, document,
29-24 or record was reviewed in connection with quality-of-care
29-25 monitoring.
29-26 (n) A person who participates in quality-of-care monitoring
30-1 visits or evaluations may not be prevented from testifying as to
30-2 matters within the person's knowledge, but may not be asked about
30-3 the person's participation in the activities.
30-4 (o) The exclusion from discovery or introduction of evidence
30-5 under this section in any civil or administrative action does not
30-6 apply when the quality-of-care monitor makes a report to the
30-7 appropriate authorities regarding a threat to the health or safety
30-8 of a resident.
30-9 (p) The commission shall create rapid response teams
30-10 composed of health care experts that can visit long-term care
30-11 facilities identified through the commission's early warning
30-12 system.
30-13 (q) Rapid response teams may visit long-term care facilities
30-14 that request the commission's assistance.
30-15 (r) The rapid response teams may not be deployed for the
30-16 purpose of helping a long-term care facility prepare for a regular
30-17 inspection or survey conducted under Chapter 242, 247, or 252,
30-18 Health and Safety Code, or in accordance with Chapter 32, Human
30-19 Resources Code.
30-20 Sec. 531.058. INFORMAL DISPUTE RESOLUTION FOR CERTAIN
30-21 LONG-TERM CARE FACILITIES. (a) The commission by rule shall
30-22 establish an informal dispute resolution process in accordance with
30-23 this section. The process must provide for adjudication by an
30-24 appropriate disinterested person of disputes relating to a proposed
30-25 enforcement action or related proceeding of the Texas Department of
30-26 Human Services under Section 32.021(d), Human Resources Code, or
31-1 Chapter 242, 247, or 252, Health and Safety Code. The informal
31-2 dispute resolution process must require:
31-3 (1) the institution or facility to request informal
31-4 dispute resolution not later than the 10th calendar day after
31-5 notification by the department of the violation of a standard or
31-6 standards;
31-7 (2) the commission to complete the process not later
31-8 than the 30th calendar day after receipt of a request from the
31-9 institution or facility for informal dispute resolution; and
31-10 (3) any individual representing an institution or
31-11 facility in an informal dispute resolution process to register with
31-12 the commission and disclose the following:
31-13 (A) the individual's employment history during
31-14 the preceding five years, including employment in regulatory
31-15 agencies of this state and other states;
31-16 (B) ownership, including the identity of the
31-17 controlling person or persons, of the institution or facility the
31-18 individual is representing before the commission; and
31-19 (C) the identity of other entities the
31-20 individual represents or has represented before the commission
31-21 during the previous 24 months.
31-22 (b) The commission shall adopt rules to adjudicate claims in
31-23 contested cases.
31-24 (c) The commission may not delegate its responsibility to
31-25 administer the informal dispute resolution process established by
31-26 this section to another state agency.
32-1 SECTION 7.03. Subsection (d), Section 32.021, Human
32-2 Resources Code, is amended to read as follows:
32-3 (d) The department shall include in its contracts for the
32-4 delivery of medical assistance by nursing facilities provisions for
32-5 monetary penalties to be assessed for violations as required by 42
32-6 U.S.C. Section 1396r, including without limitation the Omnibus
32-7 Budget Reconciliation Act (OBRA), P.L. 100-203, Nursing Home Reform
32-8 Amendments of 1987, provided that the department shall:
32-9 (1) provide for an informal dispute resolution process
32-10 in the Health and Human Services Commission as provided by Section
32-11 531.058, Government Code [department's central office; the informal
32-12 dispute resolution process shall:]
32-13 [(A) require the institution to request informal
32-14 dispute resolution no later than the 10th calendar day after
32-15 notification by the department of a violation of a standard or
32-16 standards;]
32-17 [(B) require the department to complete the
32-18 process no later than the 30th calendar day after receipt of a
32-19 request from the institution for informal dispute resolution; and]
32-20 [(C) require any individual representing an
32-21 institution in an informal dispute resolution process to register
32-22 with the department and disclose the following:]
32-23 [(i) the individual's five-year employment
32-24 history during the preceding five years, including employment in
32-25 regulatory agencies of this state and other states;]
32-26 [(ii) ownership, including the identity of
33-1 the controlling person or persons, of the institution the person is
33-2 representing before the department; and]
33-3 [(iii) the identity of other entities the
33-4 person represents or has represented before the agency during the
33-5 previous 24 months]; and
33-6 (2) develop rules to adjudicate claims in contested
33-7 cases, including claims unresolved by the informal dispute
33-8 resolution process of the Health and Human Services Commission.
33-9 SECTION 7.04. Not later than January 1, 2002, the
33-10 commissioner of health and human services shall adopt any rules
33-11 necessary to implement Sections 531.056, 531.057, and 531.058,
33-12 Government Code, as added by this article.
33-13 SECTION 7.05. Not later than January 1, 2002, the Texas
33-14 Department of Human Services shall develop training necessary to
33-15 implement Section 22.037, Human Resources Code, as added by this
33-16 article.
33-17 SECTION 7.06. Effective January 1, 2002:
33-18 (1) all property and records in the custody of the
33-19 Texas Department of Human Services related to the informal dispute
33-20 resolution function under Subsection (d), Section 32.021, Human
33-21 Resources Code, as it existed before amendment by this Act, and all
33-22 funds appropriated by the legislature to the Texas Department of
33-23 Human Services for the function are transferred to the Health and
33-24 Human Services Commission;
33-25 (2) a rule or form adopted by the Texas Department of
33-26 Human Services that relates to the informal dispute resolution
34-1 function under Subsection (d), Section 32.021, Human Resources
34-2 Code, as it existed before amendment by this Act, is a rule or form
34-3 of the Health and Human Services Commission and remains in effect
34-4 until altered by that agency;
34-5 (3) the assumption of the informal dispute resolution
34-6 function by the Health and Human Services Commission does not
34-7 affect or impair any act done, any obligation, right, order,
34-8 license, permit, rule, criterion, standard, or requirement
34-9 existing, any investigation begun, or any penalty accrued under
34-10 former law, and that law remains in effect for any action
34-11 concerning those matters; and
34-12 (4) an action brought or proceeding commenced before
34-13 the assumption by the Health and Human Services Commission of the
34-14 informal dispute resolution function under this Act is effected,
34-15 including a contested case or a remand of an action or proceeding
34-16 by a reviewing court, is governed by the law and rules applicable
34-17 to the action or proceeding before the date of the assumption of
34-18 the function by the Health and Human Services Commission.
34-19 ARTICLE 8. AMELIORATION OF VIOLATIONS
34-20 SECTION 8.01. Section 242.071, Health and Safety Code, is
34-21 amended to read as follows:
34-22 Sec. 242.071. AMELIORATION OF VIOLATION. (a) In lieu of
34-23 demanding [ordering] payment of an [the] administrative penalty
34-24 assessed under Section 242.066 [242.069], the commissioner may, in
34-25 accordance with this section, allow [require] the person to use,
34-26 under the supervision of the department, any portion of the penalty
35-1 to ameliorate the violation or to improve services, other than
35-2 administrative services, in the institution affected by the
35-3 violation.
35-4 (b) The department shall offer amelioration to a person for
35-5 a charged violation if the department determines that the violation
35-6 does not constitute immediate jeopardy to the health and safety of
35-7 an institution resident.
35-8 (c) The department may not offer amelioration to a person
35-9 if:
35-10 (1) the person has been charged with a violation which
35-11 is subject to correction under Section 242.0665; or
35-12 (2) the department determines that the charged
35-13 violation constitutes immediate jeopardy to the health and safety
35-14 of an institution resident.
35-15 (d) The department shall offer amelioration to a person
35-16 under this section not later than the 10th day after the date the
35-17 person receives from the department a final notification of
35-18 assessment of administrative penalty that is sent to the person
35-19 after an informal dispute resolution process but before an
35-20 administrative hearing under Section 242.068.
35-21 (e) A person to whom amelioration has been offered must file
35-22 a plan for amelioration not later than the 45th day after the date
35-23 the person receives the offer of amelioration from the department.
35-24 In submitting the plan, the person must agree to waive the person's
35-25 right to an administrative hearing under Section 242.068 if the
35-26 department approves the plan.
36-1 (f) At a minimum, a plan for amelioration must:
36-2 (1) propose changes to the management or operation of
36-3 the institution that will improve services to or quality of care of
36-4 residents of the institution;
36-5 (2) identify, through measurable outcomes, the ways in
36-6 which and the extent to which the proposed changes will improve
36-7 services to or quality of care of residents of the institution;
36-8 (3) establish clear goals to be achieved through the
36-9 proposed changes;
36-10 (4) establish a timeline for implementing the proposed
36-11 changes; and
36-12 (5) identify specific actions necessary to implement
36-13 the proposed changes.
36-14 (g) The department may require that an amelioration plan
36-15 propose changes that would result in conditions that exceed the
36-16 requirements of this chapter or the rules adopted under this
36-17 chapter.
36-18 (h) The department shall approve or deny an amelioration
36-19 plan not later than the 45th day after the date the department
36-20 receives the plan. On approval of a person's plan, the department
36-21 shall deny a pending request for a hearing submitted by the person
36-22 under Section 242.067(d).
36-23 (i) The department may not offer amelioration to a person:
36-24 (1) more than three times in a two-year period; or
36-25 (2) more than one time in a two-year period for the
36-26 same or similar violation.
37-1 (j) In this section, "immediate jeopardy to health and
37-2 safety" means a situation in which there is a high probability that
37-3 serious harm or injury to a resident could occur at any time or
37-4 already has occurred and may occur again if the resident is not
37-5 protected from the harm or if the threat is not removed.
37-6 SECTION 8.02. Section 252.071, Health and Safety Code, is
37-7 amended to read as follows:
37-8 Sec. 252.071. AMELIORATION OF VIOLATION. (a) In lieu of
37-9 demanding [ordering] payment of an administrative penalty
37-10 authorized by this subchapter, the department may allow [require] a
37-11 person subject to the penalty to use, under the supervision of the
37-12 department, all or part of the amount of the penalty to ameliorate
37-13 the violation or to improve services, other than administrative
37-14 services, in the facility affected by the violation.
37-15 (b) The department shall offer amelioration to a person for
37-16 a charged violation if the department determines that the violation
37-17 does not constitute immediate jeopardy to the health and safety of
37-18 a facility resident.
37-19 (c) The department may not offer amelioration to a person if
37-20 the department determines that the charged violation constitutes
37-21 immediate jeopardy to the health and safety of a facility resident.
37-22 (d) The department shall offer amelioration to a person
37-23 under this section not later than the 10th day after the date the
37-24 person receives from the department a final notification of
37-25 assessment of administrative penalty that is sent to the person
37-26 after an informal dispute resolution process but before an
38-1 administrative hearing under Section 252.067.
38-2 (e) A person to whom amelioration has been offered must file
38-3 a plan for amelioration not later than the 45th day after the date
38-4 the person receives the offer of amelioration from the department.
38-5 In submitting the plan, the person must agree to waive the person's
38-6 right to an administrative hearing under Section 252.067 if the
38-7 department approves the plan.
38-8 (f) At a minimum, a plan for amelioration must:
38-9 (1) propose changes to the management or operation of
38-10 the facility that will improve services to or quality of care of
38-11 residents of the facility;
38-12 (2) identify, through measurable outcomes, the ways in
38-13 which and the extent to which the proposed changes will improve
38-14 services to or quality of care of residents of the facility;
38-15 (3) establish clear goals to be achieved through the
38-16 proposed changes;
38-17 (4) establish a timeline for implementing the proposed
38-18 changes; and
38-19 (5) identify specific actions necessary to implement
38-20 the proposed changes.
38-21 (g) The department may require that an amelioration plan
38-22 propose changes that would result in conditions that exceed the
38-23 requirements of this chapter or the rules adopted under this
38-24 chapter.
38-25 (h) The department shall approve or deny an amelioration
38-26 plan not later than the 45th day after the date the department
39-1 receives the plan. On approval of a person's plan, the department
39-2 shall deny a pending request for a hearing submitted by the person
39-3 under Section 252.066(b).
39-4 (i) The department may not offer amelioration to a person:
39-5 (1) more than three times in a two-year period; or
39-6 (2) more than one time in a two-year period for the
39-7 same or similar violation.
39-8 (j) In this section, "immediate jeopardy to health and
39-9 safety" means a situation in which there is a high probability that
39-10 serious harm or injury to a resident could occur at any time or
39-11 already has occurred and may occur again if the resident is not
39-12 protected from the harm or if the threat is not removed.
39-13 SECTION 8.03. This article applies only to a violation that
39-14 occurs on or after the effective date of this Act. A violation
39-15 that occurs before that date is covered by the law in effect on the
39-16 date the violation occurred, and the former law is continued in
39-17 effect for that purpose.
39-18 ARTICLE 9. QUALITY ASSURANCE FEE
39-19 SECTION 9.01. Chapter 242, Health and Safety Code, is
39-20 amended by adding Subchapter Q to read as follows:
39-21 SUBCHAPTER Q. QUALITY ASSURANCE FEE
39-22 Sec. 242.851. DEFINITION. In this subchapter, "gross
39-23 receipts" means money paid as compensation for services provided to
39-24 residents, including client participation. The term does not
39-25 include charitable contributions to an institution.
39-26 Sec. 242.852. COMPUTING QUALITY ASSURANCE FEE. (a) A
40-1 quality assurance fee is imposed on each institution for which a
40-2 license fee must be paid under Section 242.034. The fee is:
40-3 (1) an amount established under Subsection (b)
40-4 multiplied by the number of patient days as determined in
40-5 accordance with Section 242.853;
40-6 (2) payable monthly; and
40-7 (3) in addition to other fees imposed under this
40-8 chapter.
40-9 (b) The Health and Human Services Commission or the
40-10 department at the direction of the commission shall set the quality
40-11 assurance fee for each day in the amount necessary to produce
40-12 annual revenues equal to six percent of the total annual gross
40-13 receipts for institutions in this state. The fee is subject to a
40-14 prospective adjustment as necessary.
40-15 (c) The amount of the quality assurance fee must be
40-16 determined using patient days and gross receipts reported to the
40-17 department and covering a period of at least six months.
40-18 (d) The quality assurance fee is an allowable cost for
40-19 reimbursement under the state Medicaid program.
40-20 Sec. 242.853. PATIENT DAYS. For each calendar day, an
40-21 institution shall determine the number of patient days by adding
40-22 the following:
40-23 (1) the number of patients occupying an institution
40-24 bed immediately before midnight of that day;
40-25 (2) the number of beds that are on hold on that day
40-26 and that have been placed on hold for a period not to exceed five
41-1 consecutive calendar days during which a patient is in the
41-2 hospital; and
41-3 (3) the number of beds that are on hold on that day
41-4 and that have been placed on hold for a period not to exceed 14
41-5 consecutive calendar days during which a patient is on therapeutic
41-6 home leave.
41-7 Sec. 242.854. REPORTING AND COLLECTION. (a) The Health and
41-8 Human Services Commission or the department at the direction of the
41-9 commission shall collect the fee.
41-10 (b) Each institution shall:
41-11 (1) not later than the 10th day after the last day of
41-12 a month file a report with the Health and Human Services Commission
41-13 or the department, as appropriate, stating the total patient days
41-14 for the month; and
41-15 (2) not later than the 30th day after the last day of
41-16 the month pay the quality assurance fee.
41-17 Sec. 242.855. RULES; ADMINISTRATIVE PENALTY. (a) The
41-18 Health and Human Services Commission shall adopt rules for the
41-19 administration of this subchapter, including rules related to the
41-20 imposition and collection of the quality assurance fee.
41-21 (b) The Health and Human Services Commission may not adopt
41-22 rules granting any exceptions from the quality assurance fee.
41-23 (c) An administrative penalty assessed under this subchapter
41-24 in accordance with Section 242.066 may not exceed one-half of the
41-25 amount of the outstanding quality assurance fee or $20,000,
41-26 whichever is greater.
42-1 Sec. 242.856. QUALITY ASSURANCE FUND. (a) The quality
42-2 assurance fund is a fund outside the state treasury held by the
42-3 Texas Treasury Safekeeping Trust Company. Notwithstanding any
42-4 other law, the comptroller shall deposit fees collected under this
42-5 subchapter to the credit of the fund.
42-6 (b) The fund is composed of:
42-7 (1) fees deposited to the credit of the fund under
42-8 this subchapter; and
42-9 (2) the earnings of the fund.
42-10 (c) Money deposited to the fund remains the property of the
42-11 fund and may be used only for the purposes of this subchapter.
42-12 (d) Subject to legislative appropriation, quality assurance
42-13 fees collected under this chapter, combined with federal matching
42-14 funds, will support or maintain an increase in Medicaid
42-15 reimbursement for institutions.
42-16 Sec. 242.857. REIMBURSEMENT OF INSTITUTIONS. (a) The
42-17 Health and Human Services Commission shall use money in the quality
42-18 assurance fund, together with any federal money available to match
42-19 that money, to:
42-20 (1) offset allowable expenses under the state Medicaid
42-21 program; or
42-22 (2) increase reimbursement rates paid under the
42-23 Medicaid program to institutions.
42-24 (b) The Health and Human Services Commission or the
42-25 department at the direction of the commission shall devise the
42-26 formula by which amounts received under this section increase the
43-1 reimbursement rates paid to institutions under the state Medicaid
43-2 program.
43-3 Sec. 242.858. INVALIDITY; FEDERAL FUNDS. If any portion of
43-4 this subchapter is held invalid by a final order of a court that is
43-5 not subject to appeal, or if the Health and Human Services
43-6 Commission determines that the imposition of the fee and the
43-7 expenditure as prescribed by this subchapter of amounts collected
43-8 will not entitle the state to receive additional federal funds
43-9 under the Medicaid program, the commission shall stop collection of
43-10 the quality assurance fee and shall return, not later than the 30th
43-11 day after the date collection is stopped, any money collected, but
43-12 not spent, under this subchapter to the institutions that paid the
43-13 fees in proportion to the total amount paid by those institutions.
43-14 Sec. 242.859. LEGISLATIVE REVIEW; EXPIRATION. The 79th
43-15 Legislature shall review the operation and effectiveness of this
43-16 subchapter. Unless continued in effect by the 79th Legislature,
43-17 this subchapter expires effective September 1, 2005.
43-18 SECTION 9.02. Notwithstanding Section 242.852, Health and
43-19 Safety Code, as added by this article, the quality assurance fee
43-20 imposed under Subchapter Q, Chapter 242, Health and Safety Code, as
43-21 added by this article, that is effective for the first month
43-22 following the effective date of this Act is equal to $5.25
43-23 multiplied by the number of patient days as determined under that
43-24 subchapter. The quality assurance fee established under this
43-25 section remains in effect until the Health and Human Services
43-26 Commission, or the Texas Department of Human Services at the
44-1 direction of the commission, obtains the information necessary to
44-2 set the fee under Section 242.852, Health and Safety Code, as added
44-3 by this Act.
44-4 SECTION 9.03. As soon as practicable after the effective
44-5 date of this Act, the Health and Human Services Commission shall
44-6 adopt rules as necessary to implement Subchapter Q, Chapter 242,
44-7 Health and Safety Code, as added by this Act.
44-8 SECTION 9.04. If before implementing any provision of this
44-9 article a state agency determines a waiver or authorization from a
44-10 federal agency is necessary for implementation of that provision,
44-11 the agency affected by the provision shall request the waiver or
44-12 authorization and may delay implementing that provision until the
44-13 waiver or authorization is granted.
44-14 ARTICLE 10. TEXAS DEPARTMENT OF INSURANCE STUDY AND REPORT
44-15 SECTION 10.01. DEFINITIONS. In this article:
44-16 (1) "Commissioner" means the commissioner of
44-17 insurance.
44-18 (2) "Department" means the Texas Department of
44-19 Insurance.
44-20 SECTION 10.02. STUDY. The department shall study the
44-21 implementation of Articles 2, 3, 4, 5, and 6 of this Act and, in
44-22 particular, shall study:
44-23 (1) the effect of the changes in law made by Articles
44-24 5 and 6 of this Act on:
44-25 (A) fostering the development of a competitive
44-26 market for professional liability insurance for nursing
45-1 institutions; and
45-2 (B) improving the availability and affordability
45-3 of professional liability insurance for nursing institutions; and
45-4 (2) the impact of awards of exemplary damages on rates
45-5 for professional liability insurance for nursing homes.
45-6 SECTION 10.03. REPORTS. (a) Not later than December 1,
45-7 2002, the commissioner shall submit an interim report on the study
45-8 conducted under Section 10.02 of this Act to the governor,
45-9 lieutenant governor, and speaker of the house of representatives.
45-10 (b) Not later than December 1, 2004, the commissioner shall
45-11 submit a final report on the study to the governor, lieutenant
45-12 governor, and speaker of the house of representatives. The final
45-13 report must include a recommendation as to whether the changes in
45-14 law made by Articles 5 and 6 of this Act should be repealed,
45-15 continued, or modified.
45-16 SECTION 10.04. EXPIRATION. This article expires September
45-17 1, 2005.
45-18 ARTICLE 11. EFFECTIVE DATE
45-19 SECTION 11.01. This Act takes effect immediately if it
45-20 receives a vote of two-thirds of all the members elected to each
45-21 house, as provided by Section 39, Article III, Texas Constitution.
45-22 If this Act does not receive the vote necessary for immediate
45-23 effect, this Act takes effect September 1, 2001.