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. SHORT TITLE. This Act may be cited as the
1-6 Long-Term Care Facility Improvement Act.
1-7 SECTION 1.02. LEGISLATIVE INTENT; PURPOSE. (a) The
1-8 legislature specifically acknowledges an existing crisis
1-9 confronting long-term care facilities in Texas and the critical
1-10 importance of the services provided to Texans by these facilities,
1-11 and in particular to the growing population of older Texans.
1-12 (b) In response to this crisis, this Act is intended to
1-13 ensure that long-term care facilities continue to be available to
1-14 provide care to Texans, that this care be of the highest quality,
1-15 and that the residents of these facilities be financially protected
1-16 by available and affordable professional liability insurance.
1-17 (c) This Act includes extraordinary measures that are
1-18 necessary to address an emergency in long-term care in this state.
1-19 These measures are intended as temporary solutions that will
1-20 facilitate the efficient recovery of both for-profit and
1-21 not-for-profit private long-term care facilities so that, in the
1-22 future, these facilities will be financially sound and capable of
1-23 providing high-quality care.
1-24 (d) With respect to the legal concepts incorporated in the
1-25 measures contained in this Act, the legislature does not intend for
2-1 these concepts to be applied outside the realm of long-term care.
2-2 Because the application of the measures contained in this Act in
2-3 relation to these legal concepts is temporary and because of the
2-4 extraordinary complexity and uniqueness of the crisis facing
2-5 nursing homes, these measures should not be construed as the
2-6 legislature's interpretation of the current law applicable to these
2-7 legal concepts. In enacting the extraordinary measures contained
2-8 in this Act, the legislature specifically rejects any suggestion
2-9 that these measures represent solutions that are appropriate for
2-10 any area involving liability insurance, insurance practices, or
2-11 medical care other than long-term care facilities.
2-12 ARTICLE 2. NOTICE OF EXEMPLARY DAMAGES IN CERTAIN ACTIONS
2-13 SECTION 2.01. Subchapter B, Chapter 242, Health and Safety
2-14 Code, is amended by adding Section 242.051 to read as follows:
2-15 Sec. 242.051. NOTIFICATION OF AWARD OF EXEMPLARY DAMAGES.
2-16 (a) If exemplary damages are awarded under Chapter 41, Civil
2-17 Practice and Remedies Code, against an institution or an officer,
2-18 employee, or agent of an institution, the court shall notify the
2-19 department.
2-20 (b) If the department receives notice under Subsection (a),
2-21 the department shall maintain the information contained in the
2-22 notice in the records of the department relating to the history of
2-23 the institution.
2-24 SECTION 2.02. This article applies only to an award of
2-25 exemplary damages in a cause of action that accrues on or after
2-26 September 1, 2001.
3-1 ARTICLE 3. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL ACTION
3-2 SECTION 3.01. Subsections (i) and (k), Section 32.021, Human
3-3 Resources Code, are amended to read as follows:
3-4 (i) A record of the department, including a record of
3-5 [Except as provided by Subsections (j) and (k),] a department
3-6 survey, complaint investigation, incident investigation, or survey
3-7 report, that relates to [documents that] an institution, including
3-8 an intermediate care facility for the mentally retarded, may be
3-9 introduced into evidence in a civil action, enforcement action, or
3-10 related proceeding if the record is admissible under the Texas
3-11 Rules of Evidence [has violated a standard for participation in the
3-12 state Medicaid program, or the assessment of a monetary penalty by
3-13 the department or the payment of a monetary penalty by the
3-14 institution, is not admissible as evidence in a civil action to
3-15 prove that the institution has committed a violation].
3-16 (k) A department surveyor or investigator may testify in a
3-17 civil action as to observations, factual findings, conclusions, or
3-18 violations of requirements for licensure or for certification for
3-19 participation in the state Medicaid program that were made in the
3-20 discharge of official duties for the department, if the testimony
3-21 is admissible under [in accordance with] the Texas Rules of [Civil]
3-22 Evidence.
3-23 SECTION 3.02. Subchapter B, Chapter 242, Health and Safety
3-24 Code, is amended by adding Section 242.050 to read as follows:
3-25 Sec. 242.050. ADMISSIBILITY OF CERTAIN DOCUMENTS OR
3-26 TESTIMONY. Sections 32.021(i) and (k), Human Resources Code,
4-1 govern the admissibility in a civil action against an institution
4-2 of:
4-3 (1) a record of the department described by Section
4-4 32.021(i), Human Resources Code; or
4-5 (2) the testimony of a department surveyor or
4-6 investigator described by Section 32.021(k), Human Resources Code.
4-7 SECTION 3.03. Subchapter B, Chapter 252, Health and Safety
4-8 Code, is amended by adding Section 252.045 to read as follows:
4-9 Sec. 252.045. ADMISSIBILITY OF CERTAIN DOCUMENTS OR
4-10 TESTIMONY. Sections 32.021(i) and (k), Human Resources Code,
4-11 govern the admissibility in a civil action against a facility of:
4-12 (1) a record of the department described by Section
4-13 32.021(i), Human Resources Code; or
4-14 (2) the testimony of a department surveyor or
4-15 investigator described by Section 32.021(k), Human Resources Code.
4-16 SECTION 3.04. Subsection (j), Section 32.021, Human
4-17 Resources Code, is repealed.
4-18 SECTION 3.05. This article applies only to a civil action,
4-19 enforcement action, or related proceeding that is commenced on or
4-20 after the effective date of this Act. A civil action, enforcement
4-21 action, or related proceeding that is commenced before the
4-22 effective date of this Act is governed by the law applicable to the
4-23 action or proceeding immediately before the effective date of this
4-24 Act, and that law is continued in effect for that purpose.
4-25 ARTICLE 4. DATA REPORTING FOR CERTAIN LIABILITY INSURANCE COVERAGE
4-26 SECTION 4.01. Chapter 38, Insurance Code, is amended by
5-1 adding Subchapter F to read as follows:
5-2 SUBCHAPTER F. DATA REPORTING BY CERTAIN LIABILITY INSURERS
5-3 Sec. 38.251. INSURER DATA REPORTING. (a) Each insurer that
5-4 writes professional liability insurance policies for nursing
5-5 institutions licensed under Chapter 242, Health and Safety Code,
5-6 including an insurer whose rates are not regulated, shall, as a
5-7 condition of writing those policies in this state, comply with a
5-8 request for information from the commissioner under this section.
5-9 (b) The commissioner may require information in rate
5-10 filings, special data calls, or informational hearings or by any
5-11 other means consistent with this code applicable to the affected
5-12 insurer that the commissioner believes will allow the commissioner
5-13 to:
5-14 (1) determine whether insurers writing insurance
5-15 coverage described by Subsection (a) are passing to insured nursing
5-16 institutions on a prospective basis the savings that accrue as a
5-17 result of the reduction in risk to insurers writing that coverage
5-18 that will result from legislation enacted by the 77th Legislature,
5-19 Regular Session, including legislation that:
5-20 (A) amended Article 5.15-1 to limit the exposure
5-21 of an insurer to exemplary damages for certain claims against a
5-22 nursing institution; and
5-23 (B) amended Sections 32.021(i) and (k), Human
5-24 Resources Code, added Section 242.050, Health and Safety Code, and
5-25 repealed Section 32.021(j), Human Resources Code, to clarify the
5-26 admissibility of certain documents in a civil action against a
6-1 nursing institution; or
6-2 (2) prepare the report required of the commissioner
6-3 under Section 38.252 or any other report the commissioner is
6-4 required to submit to the legislature in connection with the
6-5 legislation described by Subdivision (1).
6-6 (c) Information provided under this section is privileged
6-7 and confidential to the same extent as the information is
6-8 privileged and confidential under this code or any other law
6-9 governing an insurer described by Subsection (a). The information
6-10 remains privileged and confidential unless and until introduced
6-11 into evidence at an administrative hearing or in a court of
6-12 competent jurisdiction.
6-13 Sec. 38.252. RECOMMENDATIONS TO LEGISLATURE. The
6-14 commissioner shall assemble information and take other appropriate
6-15 measures to assess and evaluate changes in the marketplace
6-16 resulting from the implementation of the legislation described by
6-17 Section 38.251 and shall report the commissioner's findings and
6-18 recommendations to the legislature.
6-19 ARTICLE 5. AVAILABILITY OF AND COVERAGE UNDER CERTAIN
6-20 PROFESSIONAL LIABILITY INSURANCE
6-21 SECTION 5.01. Subdivision (2), Section 2, Article 5.15-1,
6-22 Insurance Code, is amended to read as follows:
6-23 (2) "Health care provider" means any person,
6-24 partnership, professional association, corporation, facility, or
6-25 institution licensed or chartered by the State of Texas to provide
6-26 health care as a registered nurse, hospital, dentist, podiatrist,
7-1 chiropractor, optometrist, pharmacist, veterinarian, not-for-profit
7-2 kidney dialysis center, blood bank that is a nonprofit corporation
7-3 chartered to operate a blood bank and which is accredited by the
7-4 American Association of Blood Banks, for-profit nursing home or
7-5 not-for-profit nursing home, or an officer, employee, or agent of
7-6 any of them acting in the course and scope of his employment.
7-7 SECTION 5.02. Section 8, Article 5.15-1, Insurance Code, is
7-8 amended to read as follows:
7-9 Sec. 8. EXEMPLARY [PUNITIVE] DAMAGES UNDER MEDICAL
7-10 PROFESSIONAL LIABILITY INSURANCE. No policy of medical
7-11 professional liability insurance issued to or renewed for a health
7-12 care provider or physician in this state may include coverage for
7-13 exemplary [punitive] damages that may be assessed against the
7-14 health care provider or physician; provided, however, that the
7-15 commissioner may approve an endorsement form that provides for
7-16 coverage for exemplary [punitive] damages to be used on a policy of
7-17 medical professional liability insurance issued to a hospital, as
7-18 the term "hospital" is defined in this article, or to a for-profit
7-19 or not-for-profit nursing home.
7-20 SECTION 5.03. Subchapter B, Chapter 5, Insurance Code, is
7-21 amended by adding Article 5.15-4 to read as follows:
7-22 Art. 5.15-4. BEST PRACTICES FOR NURSING HOMES. (a) The
7-23 commissioner shall adopt best practices for risk management and
7-24 loss control that may be used by for-profit and not-for-profit
7-25 nursing homes.
7-26 (b) In determining rates for professional liability
8-1 insurance applicable to a for-profit or not-for-profit nursing
8-2 home, an insurance company or the Texas Medical Liability Insurance
8-3 Underwriting Association may consider whether the nursing home
8-4 adopts and implements the best practices adopted by the
8-5 commissioner under Subsection (a) of this article.
8-6 (c) In developing or amending best practices for for-profit
8-7 and not-for-profit nursing homes, the commissioner shall consult
8-8 with the Health and Human Services Commission and a task force
8-9 appointed by the commissioner. The task force must be composed of
8-10 representatives of:
8-11 (1) insurance companies that write professional
8-12 liability insurance for nursing homes;
8-13 (2) the Texas Medical Liability Insurance Underwriting
8-14 Association;
8-15 (3) nursing homes; and
8-16 (4) consumers.
8-17 (d) The best practices for risk management and loss control
8-18 adopted under this article do not establish standards of care for
8-19 nursing homes applicable in a civil action against a nursing home.
8-20 SECTION 5.04. Subdivision (6), Section 2, Article 21.49-3,
8-21 Insurance Code, is amended to read as follows:
8-22 (6) "Health care provider" means:
8-23 (A) any person, partnership, professional
8-24 association, corporation, facility, or institution duly licensed or
8-25 chartered by the State of Texas to provide health care as defined
8-26 in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance
9-1 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
9-2 Statutes), as:
9-3 (i) a registered nurse, hospital, dentist,
9-4 podiatrist, pharmacist, chiropractor, or optometrist;
9-5 (ii) a for-profit[,] or not-for-profit
9-6 nursing home;
9-7 (iii) [, or] a radiation therapy center
9-8 that is independent of any other medical treatment facility and
9-9 which is licensed by the Texas Department of Health in that
9-10 agency's capacity as the Texas [State] Radiation Control Agency
9-11 pursuant to the provisions of Chapter 401, Health and Safety Code,
9-12 and which is in compliance with the regulations promulgated under
9-13 that chapter;
9-14 (iv) [by the Texas State Radiation Control
9-15 Agency,] a blood bank that is a nonprofit corporation chartered to
9-16 operate a blood bank and which is accredited by the American
9-17 Association of Blood Banks;
9-18 (v) [,] a nonprofit corporation which is
9-19 organized for the delivery of health care to the public and which
9-20 is certified under Chapter 162, Occupations Code; [Article 4509a,
9-21 Revised Civil Statutes of Texas, 1925,] or
9-22 (vi) a [migrant] health center as defined
9-23 by 42 U.S.C. Section 254b [P.L. 94-63], as amended; [(42 U.S.C.
9-24 Section 254b), or a community health center as defined by P.L.
9-25 94-63, as amended (42 U.S.C. Section 254c), that is receiving
9-26 federal funds under an application approved under either Title IV,
10-1 P.L. 94-63, as amended (42 U.S.C. Section 254b), or Title V, P.L.
10-2 94-63, as amended (42 U.S.C. Section 254c),] or
10-3 (B) an officer, employee, or agent of any of
10-4 them acting in the course and scope of that person's [his]
10-5 employment.
10-6 SECTION 5.05. Section 3A, Article 21.49-3, Insurance Code,
10-7 is amended by adding Subsection (c) to read as follows:
10-8 (c) A for-profit or not-for-profit nursing home not
10-9 otherwise eligible under this section for coverage from the
10-10 association is eligible for coverage if the nursing home
10-11 demonstrates, in accordance with the requirements of the
10-12 association, that the nursing home made a verifiable effort to
10-13 obtain coverage from authorized insurers and eligible surplus lines
10-14 insurers and was unable to obtain substantially equivalent coverage
10-15 and rates.
10-16 SECTION 5.06. Subsection (b), Section 4, Article 21.49-3,
10-17 Insurance Code, is amended by amending Subdivisions (1) and (3) and
10-18 adding Subdivision (6) to read as follows:
10-19 (1) Subject to Subdivision (6) of this subsection, the
10-20 [The] rates, rating plans, rating rules, rating classification,
10-21 territories, and policy forms applicable to the insurance written
10-22 by the association and statistics relating thereto shall be subject
10-23 to Subchapter B of Chapter 5 of the Insurance Code, as amended,
10-24 giving due consideration to the past and prospective loss and
10-25 expense experience for medical professional liability insurance
10-26 within and without this state of all of the member companies of the
11-1 association, trends in the frequency and severity of losses, the
11-2 investment income of the association, and such other information as
11-3 the commissioner [board] may require; provided, that if any article
11-4 of the above subchapter is in conflict with any provision of this
11-5 Act, this Act shall prevail. For purposes of this article, rates,
11-6 rating plans, rating rules, rating classifications, territories,
11-7 and policy forms for for-profit nursing homes are subject to the
11-8 requirements of Article 5.15-1 of this code to the same extent as
11-9 not-for-profit nursing homes.
11-10 (3) Any deficit sustained by the association with
11-11 respect to physicians and health care providers, other than
11-12 for-profit and not-for-profit nursing homes, or by for-profit and
11-13 not-for-profit nursing homes in any one year shall be recouped,
11-14 pursuant to the plan of operation and the rating plan then in
11-15 effect, by one or more of the following procedures in this
11-16 sequence:
11-17 First, a contribution from the policyholder's
11-18 stabilization reserve fund for physicians and health care
11-19 providers, other than for-profit and not-for-profit nursing homes,
11-20 established under Section 4A of this article or from the
11-21 stabilization reserve fund for for-profit and not-for-profit
11-22 nursing homes, established under Section 4B of this article, as
11-23 appropriate, until the respective fund [same] is exhausted;
11-24 Second, an assessment upon the policyholders pursuant
11-25 to Section 5(a) of this article;
11-26 Third, an assessment upon the members pursuant to
12-1 Section 5(b) of this article. To the extent a member has paid one
12-2 or more assessments and has not received reimbursement from the
12-3 association in accordance with Subdivision (5) of this subsection,
12-4 a credit against premium taxes under Article 4.10 of this code
12-5 [7064, Revised Civil Statutes of Texas, 1925], as amended, shall be
12-6 allowed. The tax credit shall be allowed at a rate of 20 percent
12-7 per year for five successive years following the year in which said
12-8 deficit was sustained and at the option of the insurer may be taken
12-9 over an additional number of years.
12-10 (6) The rates applicable to professional liability
12-11 insurance provided by the association that cover nursing homes that
12-12 are not for profit must reflect a discount of 30 percent from the
12-13 rates for the same coverage provided to others in the same category
12-14 of insureds. The commissioner shall ensure compliance with this
12-15 subdivision.
12-16 SECTION 5.07. Section 4A, Article 21.49-3, Insurance Code,
12-17 is amended to read as follows:
12-18 Sec. 4A. POLICYHOLDER'S STABILIZATION RESERVE FUND FOR
12-19 PHYSICIANS AND HEALTH CARE PROVIDERS OTHER THAN FOR-PROFIT AND
12-20 NOT-FOR-PROFIT NURSING HOMES. (a) There is hereby created a
12-21 policyholder's stabilization reserve fund for physicians and health
12-22 care providers, other than for-profit and not-for-profit nursing
12-23 homes, which shall be administered as provided herein and in the
12-24 plan of operation of the association. The stabilization reserve
12-25 fund created by this section is separate and distinct from the
12-26 stabilization reserve fund for for-profit and not-for-profit
13-1 nursing homes created by Section 4B of this article.
13-2 (b) Each policyholder shall pay annually into the
13-3 stabilization reserve fund a charge, the amount of which shall be
13-4 established annually by advisory directors chosen by health care
13-5 providers, other than for-profit and not-for-profit nursing homes,
13-6 and physicians eligible for insurance in the association in
13-7 accordance with the plan of operation. The charge shall be in
13-8 proportion to each premium payment due for liability insurance
13-9 through the association. Such charge shall be separately stated in
13-10 the policy, but shall not constitute a part of premiums or be
13-11 subject to premium taxation, servicing fees, acquisition costs, or
13-12 any other such charges.
13-13 (c) The [policyholder's] stabilization reserve fund shall be
13-14 collected and administered by the association and shall be treated
13-15 as a liability of the association along with and in the same manner
13-16 as premium and loss reserves. The fund shall be valued annually by
13-17 the board of directors as of the close of the last preceding year.
13-18 (d) Collections of the stabilization reserve fund charge
13-19 shall continue until such time as the net balance of the
13-20 stabilization reserve fund is not less than the projected sum of
13-21 premiums for physicians and health care providers, other than
13-22 for-profit and not-for-profit nursing homes, to be written in the
13-23 year following valuation date.
13-24 (e) The stabilization reserve fund shall be credited with
13-25 all stabilization reserve fund charges collected from physicians
13-26 and health care providers, other than for-profit and not-for-profit
14-1 nursing homes, [policyholders] and shall be charged with any
14-2 deficit sustained by physicians and health care providers, other
14-3 than for-profit and not-for-profit nursing homes, from the prior
14-4 year's operation of the association.
14-5 SECTION 5.08. Article 21.49-3, Insurance Code, is amended by
14-6 adding Sections 4B and 4C to read as follows:
14-7 Sec. 4B. STABILIZATION RESERVE FUND FOR FOR-PROFIT AND
14-8 NOT-FOR-PROFIT NURSING HOMES. (a) There is hereby created a
14-9 stabilization reserve fund for for-profit and not-for-profit
14-10 nursing homes that shall be administered as provided in this
14-11 section and in the plan of operation of the association. The
14-12 stabilization reserve fund created by this section is separate and
14-13 distinct from the policyholder's stabilization reserve fund for
14-14 physicians and health care providers, other than for-profit and
14-15 not-for-profit nursing homes, created by Section 4A of this
14-16 article.
14-17 (b) Each policyholder shall pay annually into the
14-18 stabilization reserve fund a charge, the amount of which shall be
14-19 established annually by advisory directors chosen by for-profit and
14-20 not-for-profit nursing homes eligible for insurance in the
14-21 association in accordance with the plan of operation. The charge
14-22 shall be in proportion to each premium payment due for liability
14-23 insurance through the association. The charge shall be separately
14-24 stated in the policy, but shall not constitute a part of premiums
14-25 or be subject to premium taxation, servicing fees, acquisition
14-26 costs, or any other similar charges.
15-1 (c) The stabilization reserve fund shall be collected and
15-2 administered by the association and shall be treated as a liability
15-3 of the association along with and in the same manner as premium and
15-4 loss reserves. The fund shall be valued annually by the board of
15-5 directors as of the close of the last preceding year.
15-6 (d) Collections of the stabilization reserve fund charge
15-7 shall continue only until such time as the net balance of the
15-8 stabilization reserve fund is not less than the projected sum of
15-9 premiums for for-profit and not-for-profit nursing homes to be
15-10 written in the year following the valuation date.
15-11 (e) The stabilization reserve fund shall be credited with
15-12 all stabilization reserve fund charges collected from for-profit
15-13 and not-for-profit nursing homes and the net earnings on liability
15-14 insurance policies issued to for-profit and not-for-profit nursing
15-15 homes and shall be charged with any deficit sustained by for-profit
15-16 and not-for-profit nursing homes from the prior year's operation of
15-17 the association.
15-18 (f) The stabilization reserve fund established under this
15-19 section, and any earnings of the fund, are state funds and shall be
15-20 held by the comptroller outside the state treasury on behalf of,
15-21 and with legal title in, the department. No part of the fund, or
15-22 the earnings of the fund, may inure to the benefit of a member of
15-23 the association, a policyholder, or any other individual, and the
15-24 assets of the fund may be used in accordance with the association's
15-25 plan of operation only to implement this article and for the
15-26 purposes of the association, including making payment to satisfy,
16-1 in whole or in part, the liability of the association regarding a
16-2 claim made on a policy written by the association.
16-3 (g) Notwithstanding Sections 11, 12, and 13 of this article,
16-4 the stabilization reserve fund established under this section may
16-5 be terminated only by law.
16-6 (h) Notwithstanding Section 11 of this article, on
16-7 termination of the stabilization reserve fund established under
16-8 this section, all assets of the fund shall be transferred to the
16-9 general revenue fund to be appropriated for purposes related to
16-10 ensuring the kinds of liability insurance coverage that may be
16-11 provided by the association under this article for for-profit and
16-12 not-for-profit nursing homes.
16-13 Sec. 4C. LIABILITY FOR EXEMPLARY DAMAGES; EXPIRATION.
16-14 (a) The association is not liable for exemplary damages under a
16-15 professional liability insurance policy that covers a for-profit
16-16 and not-for-profit nursing home and that excludes coverage for
16-17 exemplary damages awarded in relation to a covered claim awarded
16-18 under Chapter 41, Civil Practice and Remedies Code, or any other
16-19 law. This subsection applies without regard to the application of
16-20 the common law theory of recovery commonly known in Texas as the
16-21 "Stowers Doctrine." This subsection does not affect the
16-22 application of that doctrine to the liability of the association
16-23 for compensatory damages.
16-24 (b) This section does not affect the contractual duties
16-25 imposed under an insurance policy.
16-26 (c) This section does not prohibit a for-profit or
17-1 not-for-profit nursing home from purchasing a policy to cover
17-2 exemplary damages.
17-3 (d) This section applies only to the liability of the
17-4 association for exemplary damages under an insurance policy
17-5 delivered, issued for delivery, or renewed by the association to a
17-6 for-profit or not-for-profit nursing home on or after January 1,
17-7 2002, and applies only to coverage provided under the policy for
17-8 any portion of the term of the policy that occurs before January 1,
17-9 2006. This section applies only to the liability of the
17-10 association for exemplary damages with respect to a claim for which
17-11 a notice of loss or notice of occurrence was made, or should have
17-12 been made, in accordance with the terms of the policy, on or after
17-13 January 1, 2002, but before January 1, 2006.
17-14 (e) This section expires January 1, 2007.
17-15 SECTION 5.09. Section 5, Article 21.49-3, Insurance Code, is
17-16 amended to read as follows:
17-17 Sec. 5. PARTICIPATION. (a) Each policyholder within the
17-18 group of physicians and health care providers, other than
17-19 for-profit and not-for-profit nursing homes, or within the group of
17-20 for-profit and not-for-profit nursing homes shall have contingent
17-21 liability for a proportionate share of any assessment of
17-22 policyholders in the applicable group made under the authority of
17-23 this article. Whenever a deficit, as calculated pursuant to the
17-24 plan of operation, is sustained with respect to the group of
17-25 physicians and health care providers, other than for-profit and
17-26 not-for-profit nursing homes, or the group of for-profit and
18-1 not-for-profit nursing homes [by the association] in any one year,
18-2 its directors shall levy an assessment only upon those
18-3 policyholders in the applicable group who held policies in force at
18-4 any time within the two most recently completed calendar years in
18-5 which the association was issuing policies preceding the date on
18-6 which the assessment was levied. The aggregate amount of the
18-7 assessment shall be equal to that part of the deficit not recouped
18-8 from the applicable stabilization reserve fund. The maximum
18-9 aggregate assessment per policyholder in the applicable group shall
18-10 not exceed the annual premium for the liability policy most
18-11 recently in effect. Subject to such maximum limitation, each
18-12 policyholder in the applicable group shall be assessed for that
18-13 portion of the deficit reflecting the proportion which the earned
18-14 premium on the policies of such policyholder bears to the total
18-15 earned premium for all policies of the association in the
18-16 applicable group in the two most recently completed calendar years.
18-17 (b) All insurers which are members of the association shall
18-18 participate in its writings, expenses, and losses in the proportion
18-19 that the net direct premiums, as defined herein, of each such
18-20 member, excluding that portion of premiums attributable to the
18-21 operation of the association, written during the preceding calendar
18-22 year bears to the aggregate net direct premiums written in this
18-23 state by all members of the association. Each insurer's
18-24 participation in the association shall be determined annually on
18-25 the basis of such net direct premiums written during the preceding
18-26 calendar year, as reported in the annual statements and other
19-1 reports filed by the insurer that may be required by the board. No
19-2 member shall be obligated in any one year to reimburse the
19-3 association on account of its proportionate share in the deficits
19-4 [deficit] from operations of the association in that year in excess
19-5 of one percent of its surplus to policyholders and the aggregate
19-6 amount not so reimbursed shall be reallocated among the remaining
19-7 members in accordance with the method of determining participation
19-8 prescribed in this subdivision, after excluding from the
19-9 computation the total net direct premiums of all members not
19-10 sharing in such excess deficits [deficit]. In the event that the
19-11 deficits [deficit] from operations allocated to all members of the
19-12 association in any calendar year shall exceed one percent of their
19-13 respective surplus to policyholders, the amount of such deficits
19-14 [deficit] shall be allocated to each member in accordance with the
19-15 method of determining participation prescribed in this subdivision.
19-16 SECTION 5.10. Subchapter E, Chapter 21, Insurance Code, is
19-17 amended by adding Article 21.49-3d to read as follows:
19-18 Art. 21.49-3d. REVENUE BOND PROGRAM AND PROCEDURES FOR
19-19 CERTAIN LIABILITY INSURANCE
19-20 Sec. 1. LEGISLATIVE FINDING; PURPOSE. The legislature finds
19-21 that the issuance of bonds to provide a method to raise funds to
19-22 provide professional liability insurance through the association
19-23 for nursing homes in this state is for the benefit of the public
19-24 and in furtherance of a public purpose.
19-25 Sec. 2. DEFINITIONS. In this article:
19-26 (1) "Association" means the joint underwriting
20-1 association established under Article 21.49-3 of this code.
20-2 (2) "Bond resolution" means the resolution or order
20-3 authorizing the bonds to be issued under this article.
20-4 (3) "Board" means the board of directors of the Texas
20-5 Public Finance Authority.
20-6 (4) "Insurer" means any insurer required to be a
20-7 member of the association under Section 3, Article 21.49-3 of this
20-8 code.
20-9 Sec. 3. BONDS AUTHORIZED; APPLICATION OF TEXAS PUBLIC
20-10 FINANCE AUTHORITY ACT. (a) On behalf of the association, the
20-11 Texas Public Finance Authority shall issue revenue bonds to:
20-12 (1) fund the stabilization reserve fund for for-profit
20-13 and not-for-profit nursing homes established under Section 4B,
20-14 Article 21.49-3 of this code;
20-15 (2) pay costs related to issuance of the bonds; and
20-16 (3) pay other costs related to the bonds as may be
20-17 determined by the board.
20-18 (b) To the extent not inconsistent with this article,
20-19 Chapter 1232, Government Code, applies to bonds issued under this
20-20 article. In the event of a conflict, this article controls.
20-21 Sec. 4. APPLICABILITY OF OTHER STATUTES. The following laws
20-22 apply to bonds issued under this article to the extent consistent
20-23 with this article:
20-24 (1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371,
20-25 Government Code; and
20-26 (2) Subchapter A, Chapter 1206, Government Code.
21-1 Sec. 5. LIMITS. The Texas Public Finance Authority may
21-2 issue, on behalf of the association, bonds in a total amount not to
21-3 exceed $75 million.
21-4 Sec. 6. CONDITIONS. (a) Bonds may be issued at public or
21-5 private sale.
21-6 (b) Bonds may mature not more than 10 years after the date
21-7 issued.
21-8 (c) Bonds must be issued in the name of the association.
21-9 Sec. 7. ADDITIONAL COVENANTS. In a bond resolution, the
21-10 board may make additional covenants with respect to the bonds and
21-11 the designated income and receipts of the association pledged to
21-12 their payment and may provide for the flow of funds and the
21-13 establishment, maintenance, and investment of funds and accounts
21-14 with respect to the bonds.
21-15 Sec. 8. SPECIAL ACCOUNTS. (a) A bond resolution may
21-16 establish special accounts, including an interest and sinking fund
21-17 account, reserve account, and other accounts.
21-18 (b) The association shall administer the accounts in
21-19 accordance with Article 21.49-3 of this code.
21-20 Sec. 9. SECURITY. (a) Bonds are payable only from the
21-21 surcharge fee established in Section 10 of this article or other
21-22 sources the association is authorized to levy, charge, and collect
21-23 in connection with paying any portion of the bonds.
21-24 (b) Bonds are obligations solely of the association. Bonds
21-25 do not create a pledging, giving, or lending of the faith, credit,
21-26 or taxing authority of this state.
22-1 (c) Each bond must include a statement that the state is not
22-2 obligated to pay any amount on the bond and that the faith, credit,
22-3 and taxing authority of this state are not pledged, given, or lent
22-4 to those payments.
22-5 (d) Each bond issued under this article must state on its
22-6 face that the bond is payable solely from the revenues pledged for
22-7 that purpose and that the bond does not and may not constitute a
22-8 legal or moral obligation of the state.
22-9 Sec. 10. SURCHARGE FEE. (a) A surcharge fee is assessed
22-10 against:
22-11 (1) each insurer; and
22-12 (2) the association.
22-13 (b) The surcharge fee shall be set by the commissioner in an
22-14 amount sufficient to pay all debt service on the bonds. The
22-15 surcharge shall be paid by each insurer and the association as
22-16 required by commissioner rule.
22-17 (c) The comptroller shall collect the surcharge fee and the
22-18 department shall reimburse the comptroller in the manner described
22-19 by Article 4.19 of this code.
22-20 (d) The commissioner, in consultation with the comptroller,
22-21 may coordinate payment and collection of the surcharge fee with
22-22 other payments made by insurers and collected by the comptroller.
22-23 (e) As a condition of engaging in the business of insurance
22-24 in this state, an insurer agrees that if the company leaves the
22-25 market for liability insurance in this state the insurer remains
22-26 obligated to pay, until the bonds are retired, the insurer's share
23-1 of the surcharge fee assessed under this section in an amount
23-2 proportionate to that insurer's share of the market for liability
23-3 insurance, including motor vehicle liability insurance, in this
23-4 state as of the last complete reporting period before the date on
23-5 which the insurer ceases to engage in that insurance business in
23-6 this state. The proportion assessed against the insurer shall be
23-7 based on the insurer's gross premiums for liability insurance,
23-8 including motor vehicle liability insurance, for the insurer's last
23-9 reporting period. However, an insurer is not required to pay the
23-10 proportionate amount in any year in which the surcharge fee
23-11 assessed against insurers continuing to write liability insurance
23-12 in this state is sufficient to service the bond obligation.
23-13 Sec. 11. TAX EXEMPT. The bonds issued under this article,
23-14 and any interest from the bonds, and all assets pledged to secure
23-15 the payment of the bonds are free from taxation by the state or a
23-16 political subdivision of this state.
23-17 Sec. 12. AUTHORIZED INVESTMENTS. The bonds issued under
23-18 this article constitute authorized investments under Article 2.10
23-19 and Subpart A, Part I, Article 3.39, of this code.
23-20 Sec. 13. STATE PLEDGE. The state pledges to and agrees with
23-21 the owners of any bonds issued in accordance with this article that
23-22 the state will not limit or alter the rights vested in the
23-23 association to fulfill the terms of any agreements made with the
23-24 owners of the bonds or in any way impair the rights and remedies of
23-25 those owners until the bonds, any premium or interest, and all
23-26 costs and expenses in connection with any action or proceeding by
24-1 or on behalf of those owners are fully met and discharged. The
24-2 association may include this pledge and agreement of the state in
24-3 any agreement with the owners of the bonds.
24-4 Sec. 14. ENFORCEMENT BY MANDAMUS. A writ of mandamus and
24-5 all other legal and equitable remedies are available to any party
24-6 at interest to require the association and any other party to carry
24-7 out agreements and to perform functions and duties under this
24-8 article, the Texas Constitution, or a bond resolution.
24-9 SECTION 5.11. Not later than December 1, 2001, the
24-10 commissioner of insurance shall adopt the initial best practices
24-11 for for-profit and not-for-profit nursing homes adopted as required
24-12 by Article 5.15-4, Insurance Code, as added by this article.
24-13 SECTION 5.12. Sections 2, 3A, and 4, Article 21.49-3,
24-14 Insurance Code, as amended by this article, apply only to an
24-15 insurance policy delivered, issued for delivery, or renewed on or
24-16 after January 1, 2002. A policy delivered, issued for delivery,
24-17 or renewed before January 1, 2002, is governed by the law as it
24-18 existed immediately before the effective date of this Act, and that
24-19 law is continued in effect for that purpose.
24-20 ARTICLE 6. MANDATORY LIABILITY INSURANCE FOR
24-21 NURSING INSTITUTIONS
24-22 SECTION 6.01. Subchapter B, Chapter 242, Health and Safety
24-23 Code, is amended by adding Section 242.0372 to read as follows:
24-24 Sec. 242.0372. LIABILITY INSURANCE COVERAGE. (a) In this
24-25 section, "health care liability claim" has the meaning assigned by
24-26 the Medical Liability and Insurance Improvement Act of Texas
25-1 (Article 4590i, Vernon's Texas Civil Statutes).
25-2 (b) To hold a license under this chapter, an institution
25-3 must maintain professional liability insurance coverage against the
25-4 liability of the institution for a health care liability claim.
25-5 (c) The insurance coverage maintained by an institution
25-6 under this section must:
25-7 (1) provide coverage annually in the minimum amount of
25-8 $1 million per occurrence and $3 million aggregate, except as
25-9 provided by Subsection (d);
25-10 (2) be written on a claims-made basis;
25-11 (3) be issued by:
25-12 (A) an admitted insurer authorized to write
25-13 professional liability insurance in this state;
25-14 (B) the Texas Medical Liability Insurance
25-15 Underwriting Association established under Article 21.49-3,
25-16 Insurance Code; or
25-17 (C) an eligible surplus lines insurer in
25-18 accordance with Article 1.14-2, Insurance Code; and
25-19 (4) be in a form acceptable to the department.
25-20 (d) For an institution that is owned and operated by a
25-21 governmental unit, as that term is defined by Section 101.001,
25-22 Civil Practice and Remedies Code, the insurance coverage maintained
25-23 by the institution must provide coverage only to the extent of the
25-24 governmental unit's liability under Section 101.023, Civil Practice
25-25 and Remedies Code.
25-26 (e) To the extent permitted by federal law and applicable
26-1 state and federal rules, the cost of insurance coverage required to
26-2 be maintained under this section is an allowable cost for
26-3 reimbursement under the state Medicaid program.
26-4 SECTION 6.02. This Article takes effect September 1, 2003.
26-5 ARTICLE 7. SURVEYS AND RELATED PROCESSES
26-6 SECTION 7.01. Chapter 22, Human Resources Code, is amended
26-7 by adding Section 22.037 to read as follows:
26-8 Sec. 22.037. TRAINING AND CONTINUING EDUCATION RELATED TO
26-9 CERTAIN LONG-TERM CARE FACILITIES. (a) In this section:
26-10 (1) "Long-term care facility" means a nursing
26-11 institution, an assisted living facility, or an intermediate care
26-12 facility for the mentally retarded licensed under Chapter 242, 247,
26-13 or 252, Health and Safety Code.
26-14 (2) "Provider" means an employee or agent of a
26-15 long-term care facility.
26-16 (3) "Surveyor" means an employee or agent of the
26-17 department or another state agency responsible for licensing,
26-18 inspecting, surveying, or investigating a long-term care facility
26-19 in relation to:
26-20 (A) licensing under Chapter 242, 247, or 252,
26-21 Health and Safety Code; or
26-22 (B) certification for participation in the
26-23 medical assistance program in accordance with Chapter 32.
26-24 (b) The department shall require a surveyor to complete a
26-25 basic training program before the surveyor inspects, surveys, or
26-26 investigates a long-term care facility. The training must include
27-1 observation of the operations of a long-term care facility
27-2 unrelated to the survey, inspection, or investigation process for a
27-3 minimum of 10 working days within a 14-day period.
27-4 (c) The department shall semiannually provide training for
27-5 surveyors and providers on subjects that address at least one of
27-6 the 10 most common violations by long-term care facilities under
27-7 federal or state law.
27-8 (d) Except as provided by Subsection (e), a surveyor who is
27-9 a health care professional licensed under the laws of this state
27-10 must receive a minimum of 50 percent of the professional's required
27-11 continuing education credits, if any, in gerontology or care for
27-12 individuals with cognitive or physical disabilities, as
27-13 appropriate.
27-14 (e) A surveyor who is a pharmacist must receive a minimum of
27-15 30 percent of the pharmacist's required continuing education
27-16 credits in gerontology or care for individuals with cognitive or
27-17 physical disabilities, as appropriate.
27-18 SECTION 7.02. Subchapter B, Chapter 531, Government Code, is
27-19 amended by adding Sections 531.056 and 531.058 to read as follows:
27-20 Sec. 531.056. REVIEW OF SURVEY PROCESS IN CERTAIN
27-21 INSTITUTIONS AND FACILITIES. (a) The commission shall adopt
27-22 procedures to review:
27-23 (1) citations or penalties assessed for a violation of
27-24 a rule or law against an institution or facility licensed under
27-25 Chapter 242, 247, or 252, Health and Safety Code, or certified in
27-26 accordance with Chapter 32, Human Resources Code, considering:
28-1 (A) the number of violations by geographic
28-2 region;
28-3 (B) the patterns of violations in each region;
28-4 and
28-5 (C) the outcomes following the assessment of a
28-6 penalty or citation; and
28-7 (2) the performance of duties by employees and agents
28-8 of the Texas Department of Human Services or another state agency
28-9 responsible for licensing, inspecting, surveying, or investigating
28-10 institutions and facilities licensed under Chapter 242, 247, or
28-11 252, Health and Safety Code, or certified in accordance with
28-12 Chapter 32, Human Resources Code, related to:
28-13 (A) complaints received by the commission; or
28-14 (B) any standards or rules violated by an
28-15 employee or agent of a state agency.
28-16 (b) The commission shall annually report to the speaker of
28-17 the house of representatives, the lieutenant governor, and the
28-18 governor on the findings of the review conducted under Subsection
28-19 (a).
28-20 Sec. 531.058. INFORMAL DISPUTE RESOLUTION FOR CERTAIN
28-21 LONG-TERM CARE FACILITIES. (a) The commission by rule shall
28-22 establish an informal dispute resolution process in accordance with
28-23 this section. The process must provide for adjudication by an
28-24 appropriate disinterested person of disputes relating to a proposed
28-25 enforcement action or related proceeding of the Texas Department of
28-26 Human Services under Section 32.021(d), Human Resources Code, or
29-1 Chapter 242, 247, or 252, Health and Safety Code. The informal
29-2 dispute resolution process must require:
29-3 (1) the institution or facility to request informal
29-4 dispute resolution not later than the 10th calendar day after
29-5 notification by the department of the violation of a standard or
29-6 standards;
29-7 (2) the commission to complete the process not later
29-8 than the 30th calendar day after receipt of a request from the
29-9 institution or facility for informal dispute resolution; and
29-10 (3) any individual representing an institution or
29-11 facility in an informal dispute resolution process to register with
29-12 the commission and disclose the following:
29-13 (A) the individual's employment history during
29-14 the preceding five years, including employment in regulatory
29-15 agencies of this state and other states;
29-16 (B) ownership, including the identity of the
29-17 controlling person or persons, of the institution or facility the
29-18 individual is representing before the commission; and
29-19 (C) the identity of other entities the
29-20 individual represents or has represented before the commission
29-21 during the previous 24 months.
29-22 (b) The commission shall adopt rules to adjudicate claims in
29-23 contested cases.
29-24 (c) The commission may not delegate its responsibility to
29-25 administer the informal dispute resolution process established by
29-26 this section to another state agency.
30-1 SECTION 7.03. Subtitle B, Title 4, Health and Safety Code,
30-2 is amended by adding Chapter 255 to read as follows:
30-3 CHAPTER 255. QUALITY ASSURANCE EARLY WARNING SYSTEM FOR
30-4 LONG-TERM CARE FACILITIES; RAPID RESPONSE TEAMS
30-5 Sec. 255.001. DEFINITIONS. In this chapter:
30-6 (1) "Department" means the Texas Department of Human
30-7 Services.
30-8 (2) "Long-term care facility" means a nursing
30-9 institution, an assisted living facility, or an intermediate care
30-10 facility for the mentally retarded licensed under Chapter 242, 247,
30-11 or 252, or certified under Chapter 32, Human Resources Code.
30-12 (3) "Quality-of-care monitor" means a registered
30-13 nurse, pharmacist, or nutritionist who:
30-14 (A) is employed by the department;
30-15 (B) is trained and experienced in long-term care
30-16 facility regulation, standards of practice in long-term care, and
30-17 evaluation of patient care; and
30-18 (C) functions independently of other divisions
30-19 of the department.
30-20 Sec. 255.002. EARLY WARNING SYSTEM. The department shall
30-21 establish an early warning system to detect conditions that could
30-22 be detrimental to the health, safety, and welfare of residents.
30-23 The early warning system shall include analysis of financial and
30-24 quality-of-care indicators that would predict the need for the
30-25 department to take action.
30-26 Sec. 255.003. QUALITY-OF-CARE MONITORS. (a) The department
31-1 shall establish regional offices with one or more quality-of-care
31-2 monitors, based on the number of long-term care facilities in the
31-3 region, to monitor the facilities in the region on a regular,
31-4 unannounced, aperiodic basis, including nights, evenings, weekends,
31-5 and holidays.
31-6 (b) Priority for monitoring visits shall be given to
31-7 long-term care facilities with a history of patient care
31-8 deficiencies.
31-9 (c) Quality-of-care monitors may not be deployed by the
31-10 department as a part of the regional survey team in the conduct of
31-11 routine, scheduled surveys.
31-12 (d) A quality-of-care monitor may not interfere with,
31-13 impede, or otherwise adversely affect the performance of the duties
31-14 of a surveyor, inspector, or investigator of the department.
31-15 (e) Quality-of-care monitors shall assess:
31-16 (1) the overall quality of life in the long-term care
31-17 facility; and
31-18 (2) specific conditions in the facility directly
31-19 related to patient care.
31-20 (f) The quality-of-care monitor shall include in an
31-21 assessment visit:
31-22 (1) observation of the care and services rendered to
31-23 residents; and
31-24 (2) formal and informal interviews with residents,
31-25 family members, facility staff, resident guests, volunteers, other
31-26 regulatory staff, and representatives of a human rights advocacy
32-1 committee.
32-2 (g) The identity of a resident or a family member of a
32-3 resident interviewed by a quality-of-care monitor as provided by
32-4 Subsection (f)(2) shall remain confidential and may not be
32-5 disclosed to any person under any other provision of this section.
32-6 (h) The findings of a monitoring visit, both positive and
32-7 negative, shall be provided orally and in writing to the long-term
32-8 care facility administrator or, in the absence of the facility
32-9 administrator, to the administrator on duty or the director of
32-10 nursing.
32-11 (i) The quality-of-care monitor may recommend to the
32-12 long-term care facility administrator procedural and policy changes
32-13 and staff training to improve the care or quality of life of
32-14 facility residents.
32-15 (j) Conditions observed by the quality-of-care monitor that
32-16 create an immediate threat to the health or safety of a resident
32-17 shall be reported immediately to the regional office supervisor for
32-18 appropriate action and, as appropriate or as required by law, to
32-19 law enforcement, adult protective services, other divisions of the
32-20 department, or other responsible agencies.
32-21 Sec. 255.004. RAPID RESPONSE TEAMS. (a) The department
32-22 shall create rapid response teams composed of health care experts
32-23 that can visit long-term care facilities identified through the
32-24 department's early warning system.
32-25 (b) Rapid response teams may visit long-term care facilities
32-26 that request the department's assistance. A visit under this
33-1 subsection may not occur before the 60th day after the date of an
33-2 exit interview following an annual or follow-up survey or
33-3 inspection.
33-4 (c) The rapid response teams may not be deployed for the
33-5 purpose of helping a long-term care facility prepare for a regular
33-6 inspection or survey conducted under Chapter 242, 247, or 252 or in
33-7 accordance with Chapter 32, Human Resources Code.
33-8 Sec. 255.005. REPORT. The department shall assess and
33-9 evaluate the effectiveness of the quality assurance early warning
33-10 system and shall report its findings annually to the governor, the
33-11 lieutenant governor, and the speaker of the house of
33-12 representatives.
33-13 SECTION 7.04. Subsection (d), Section 32.021, Human
33-14 Resources Code, is amended to read as follows:
33-15 (d) The department shall include in its contracts for the
33-16 delivery of medical assistance by nursing facilities provisions for
33-17 monetary penalties to be assessed for violations as required by 42
33-18 U.S.C. Section 1396r, including without limitation the Omnibus
33-19 Budget Reconciliation Act (OBRA), P.L. 100-203, Nursing Home Reform
33-20 Amendments of 1987, provided that the department shall:
33-21 (1) provide for an informal dispute resolution process
33-22 in the Health and Human Services Commission as provided by Section
33-23 531.058, Government Code [department's central office; the informal
33-24 dispute resolution process shall:]
33-25 [(A) require the institution to request informal
33-26 dispute resolution no later than the 10th calendar day after
34-1 notification by the department of a violation of a standard or
34-2 standards;]
34-3 [(B) require the department to complete the
34-4 process no later than the 30th calendar day after receipt of a
34-5 request from the institution for informal dispute resolution; and]
34-6 [(C) require any individual representing an
34-7 institution in an informal dispute resolution process to register
34-8 with the department and disclose the following:]
34-9 [(i) the individual's five-year employment
34-10 history during the preceding five years, including employment in
34-11 regulatory agencies of this state and other states;]
34-12 [(ii) ownership, including the identity of
34-13 the controlling person or persons, of the institution the person is
34-14 representing before the department; and]
34-15 [(iii) the identity of other entities the
34-16 person represents or has represented before the agency during the
34-17 previous 24 months]; and
34-18 (2) develop rules to adjudicate claims in contested
34-19 cases, including claims unresolved by the informal dispute
34-20 resolution process of the Health and Human Services Commission.
34-21 SECTION 7.05. (a) Section 242.0335, Health and Safety Code,
34-22 as added by S.B. No. 772, Acts of the 77th Legislature, Regular
34-23 Session, 2001, is amended by adding Subsection (d) to read as
34-24 follows:
34-25 (d) Subsection (c) applies only to a license holder
34-26 designated as eligible for and placed on the list maintained under
35-1 Subsection (a).
35-2 (b) This section takes effect only if S.B. No. 772, as
35-3 enacted by the 77th Legislature, Regular Session, 2001, becomes
35-4 law. If S.B. No. 772 does not become law, this section has no
35-5 effect.
35-6 SECTION 7.06. Not later than January 1, 2002, the
35-7 commissioner of health and human services shall adopt any rules
35-8 necessary to implement Sections 531.056 and 531.058, Government
35-9 Code, as added by this article.
35-10 SECTION 7.07. Not later than January 1, 2002, the Texas
35-11 Board of Human Services shall adopt any rules necessary to
35-12 implement Chapter 255, Health and Safety Code, as added by this
35-13 article.
35-14 SECTION 7.08. Not later than January 1, 2002, the Texas
35-15 Department of Human Services shall develop training necessary to
35-16 implement Section 22.037, Human Resources Code, as added by this
35-17 article.
35-18 SECTION 7.09. Effective January 1, 2002:
35-19 (1) all property and records in the custody of the
35-20 Texas Department of Human Services related to the informal dispute
35-21 resolution function under Subsection (d), Section 32.021, Human
35-22 Resources Code, as it existed before amendment by this article, and
35-23 all funds appropriated by the legislature to the Texas Department
35-24 of Human Services for the function are transferred to the Health
35-25 and Human Services Commission;
35-26 (2) a rule or form adopted by the Texas Department of
36-1 Human Services that relates to the informal dispute resolution
36-2 function under Subsection (d), Section 32.021, Human Resources
36-3 Code, as it existed before amendment by this article, is a rule or
36-4 form of the Health and Human Services Commission and remains in
36-5 effect until altered by that agency;
36-6 (3) the assumption of the informal dispute resolution
36-7 function by the Health and Human Services Commission does not
36-8 affect or impair any act done, any obligation, right, order,
36-9 license, permit, rule, criterion, standard, or requirement
36-10 existing, any investigation begun, or any penalty accrued under
36-11 former law, and that law remains in effect for any action
36-12 concerning those matters; and
36-13 (4) an action brought or proceeding commenced before
36-14 the assumption by the Health and Human Services Commission of the
36-15 informal dispute resolution function under this article is
36-16 effected, including a contested case or a remand of an action or
36-17 proceeding by a reviewing court, is governed by the law and rules
36-18 applicable to the action or proceeding before the date of the
36-19 assumption of the function by the Health and Human Services
36-20 Commission.
36-21 ARTICLE 8. AMELIORATION OF VIOLATIONS
36-22 SECTION 8.01. Section 242.071, Health and Safety Code, is
36-23 amended to read as follows:
36-24 Sec. 242.071. AMELIORATION OF VIOLATION. (a) In lieu of
36-25 demanding [ordering] payment of an [the] administrative penalty
36-26 assessed under Section 242.066 [242.069], the commissioner may, in
37-1 accordance with this section, allow [require] the person to use,
37-2 under the supervision of the department, any portion of the penalty
37-3 to ameliorate the violation or to improve services, other than
37-4 administrative services, in the institution affected by the
37-5 violation.
37-6 (b) The department shall offer amelioration to a person for
37-7 a charged violation if the department determines that the violation
37-8 does not constitute immediate jeopardy to the health and safety of
37-9 an institution resident.
37-10 (c) The department may not offer amelioration to a person
37-11 if:
37-12 (1) the person has been charged with a violation which
37-13 is subject to correction under Section 242.0665; or
37-14 (2) the department determines that the charged
37-15 violation constitutes immediate jeopardy to the health and safety
37-16 of an institution resident.
37-17 (d) The department shall offer amelioration to a person
37-18 under this section not later than the 10th day after the date the
37-19 person receives from the department a final notification of
37-20 assessment of administrative penalty that is sent to the person
37-21 after an informal dispute resolution process but before an
37-22 administrative hearing under Section 242.068.
37-23 (e) A person to whom amelioration has been offered must file
37-24 a plan for amelioration not later than the 45th day after the date
37-25 the person receives the offer of amelioration from the department.
37-26 In submitting the plan, the person must agree to waive the person's
38-1 right to an administrative hearing under Section 242.068 if the
38-2 department approves the plan.
38-3 (f) At a minimum, a plan for amelioration must:
38-4 (1) propose changes to the management or operation of
38-5 the institution that will improve services to or quality of care of
38-6 residents of the institution;
38-7 (2) identify, through measurable outcomes, the ways in
38-8 which and the extent to which the proposed changes will improve
38-9 services to or quality of care of residents of the institution;
38-10 (3) establish clear goals to be achieved through the
38-11 proposed changes;
38-12 (4) establish a timeline for implementing the proposed
38-13 changes; and
38-14 (5) identify specific actions necessary to implement
38-15 the proposed changes.
38-16 (g) The department may require that an amelioration plan
38-17 propose changes that would result in conditions that exceed the
38-18 requirements of this chapter or the rules adopted under this
38-19 chapter.
38-20 (h) The department shall approve or deny an amelioration
38-21 plan not later than the 45th day after the date the department
38-22 receives the plan. On approval of a person's plan, the department
38-23 shall deny a pending request for a hearing submitted by the person
38-24 under Section 242.067(d).
38-25 (i) The department may not offer amelioration to a person:
38-26 (1) more than three times in a two-year period; or
39-1 (2) more than one time in a two-year period for the
39-2 same or similar violation.
39-3 (j) In this section, "immediate jeopardy to health and
39-4 safety" means a situation in which immediate corrective action is
39-5 necessary because the institution's noncompliance with one or more
39-6 requirements has caused, or is likely to cause, serious injury,
39-7 harm, impairment, or death to a resident receiving care in the
39-8 institution.
39-9 SECTION 8.02. Section 252.071, Health and Safety Code, is
39-10 amended to read as follows:
39-11 Sec. 252.071. AMELIORATION OF VIOLATION. (a) In lieu of
39-12 demanding [ordering] payment of an administrative penalty
39-13 authorized by this subchapter, the department may allow [require] a
39-14 person subject to the penalty to use, under the supervision of the
39-15 department, all or part of the amount of the penalty to ameliorate
39-16 the violation or to improve services, other than administrative
39-17 services, in the facility affected by the violation.
39-18 (b) The department shall offer amelioration to a person for
39-19 a charged violation if the department determines that the violation
39-20 does not constitute immediate jeopardy to the health and safety of
39-21 a facility resident.
39-22 (c) The department may not offer amelioration to a person if
39-23 the department determines that the charged violation constitutes
39-24 immediate jeopardy to the health and safety of a facility resident.
39-25 (d) The department shall offer amelioration to a person
39-26 under this section not later than the 10th day after the date the
40-1 person receives from the department a final notification of
40-2 assessment of administrative penalty that is sent to the person
40-3 after an informal dispute resolution process but before an
40-4 administrative hearing under Section 252.067.
40-5 (e) A person to whom amelioration has been offered must file
40-6 a plan for amelioration not later than the 45th day after the date
40-7 the person receives the offer of amelioration from the department.
40-8 In submitting the plan, the person must agree to waive the person's
40-9 right to an administrative hearing under Section 252.067 if the
40-10 department approves the plan.
40-11 (f) At a minimum, a plan for amelioration must:
40-12 (1) propose changes to the management or operation of
40-13 the facility that will improve services to or quality of care of
40-14 residents of the facility;
40-15 (2) identify, through measurable outcomes, the ways in
40-16 which and the extent to which the proposed changes will improve
40-17 services to or quality of care of residents of the facility;
40-18 (3) establish clear goals to be achieved through the
40-19 proposed changes;
40-20 (4) establish a timeline for implementing the proposed
40-21 changes; and
40-22 (5) identify specific actions necessary to implement
40-23 the proposed changes.
40-24 (g) The department may require that an amelioration plan
40-25 propose changes that would result in conditions that exceed the
40-26 requirements of this chapter or the rules adopted under this
41-1 chapter.
41-2 (h) The department shall approve or deny an amelioration
41-3 plan not later than the 45th day after the date the department
41-4 receives the plan. On approval of a person's plan, the department
41-5 shall deny a pending request for a hearing submitted by the person
41-6 under Section 252.066(b).
41-7 (i) The department may not offer amelioration to a person:
41-8 (1) more than three times in a two-year period; or
41-9 (2) more than one time in a two-year period for the
41-10 same or similar violation.
41-11 (j) In this section, "immediate jeopardy to health and
41-12 safety" means a situation in which immediate corrective action is
41-13 necessary because the facility's noncompliance with one or more
41-14 requirements has caused, or is likely to cause, serious injury,
41-15 harm, impairment, or death to a resident receiving care in the
41-16 facility.
41-17 SECTION 8.03. This article applies only to a violation that
41-18 occurs on or after the effective date of this Act. A violation
41-19 that occurs before that date is covered by the law in effect on the
41-20 date the violation occurred, and the former law is continued in
41-21 effect for that purpose.
41-22 ARTICLE 9. QUALITY ASSURANCE FEE
41-23 SECTION 9.01. Chapter 252, Health and Safety Code, is
41-24 amended by adding Subchapter H to read as follows:
41-25 SUBCHAPTER H. QUALITY ASSURANCE FEE
41-26 Sec. 252.201. DEFINITION. In this subchapter, "gross
42-1 receipts" means money paid as compensation for services provided to
42-2 residents, including client participation. The term does not
42-3 include charitable contributions to a facility.
42-4 Sec. 252.202. COMPUTING QUALITY ASSURANCE FEE. (a) A
42-5 quality assurance fee is imposed on each facility for which a
42-6 license fee must be paid under Section 252.034 and on each facility
42-7 owned by a community mental health and mental retardation center,
42-8 as described by Subchapter A, Chapter 534. The fee:
42-9 (1) is an amount established under Subsection (b)
42-10 multiplied by the number of patient days as determined in
42-11 accordance with Section 252.203;
42-12 (2) is payable monthly; and
42-13 (3) is in addition to other fees imposed under this
42-14 chapter.
42-15 (b) The Health and Human Services Commission or the
42-16 department at the direction of the commission shall set the quality
42-17 assurance fee for each day in the amount necessary to produce
42-18 annual revenues equal to an amount that is not more than six
42-19 percent of the facility's total annual gross receipts in this
42-20 state. The fee is subject to a prospective adjustment as
42-21 necessary.
42-22 (c) The amount of the quality assurance fee must be
42-23 determined using patient days and gross receipts reported to the
42-24 department and covering a period of at least six months.
42-25 (d) The quality assurance fee is an allowable cost for
42-26 reimbursement under the Medicaid program.
43-1 Sec. 252.203. PATIENT DAYS. For each calendar day, a
43-2 facility shall determine the number of patient days by adding the
43-3 following:
43-4 (1) the number of patients occupying a facility bed
43-5 immediately before midnight of that day;
43-6 (2) the number of beds that are on hold on that day
43-7 and that have been placed on hold for a period not to exceed three
43-8 consecutive calendar days during which a patient is in a hospital;
43-9 and
43-10 (3) the number of beds that are on hold on that day
43-11 and that have been placed on hold for a period not to exceed three
43-12 consecutive calendar days during which a patient is on therapeutic
43-13 home leave.
43-14 Sec. 252.204. REPORTING AND COLLECTION. (a) The Health and
43-15 Human Services Commission or the department at the direction of the
43-16 commission shall collect the quality assurance fee.
43-17 (b) Each facility shall:
43-18 (1) not later than the 10th day after the last day of
43-19 a month file a report with the Health and Human Services Commission
43-20 or the department, as appropriate, stating the total patient days
43-21 for the month; and
43-22 (2) not later than the 30th day after the last day of
43-23 the month pay the quality assurance fee.
43-24 Sec. 252.205. RULES; ADMINISTRATIVE PENALTY. (a) The
43-25 Health and Human Services Commission shall adopt rules for the
43-26 administration of this subchapter, including rules related to the
44-1 imposition and collection of the quality assurance fee.
44-2 (b) The Health and Human Services Commission may not adopt
44-3 rules granting any exceptions from the quality assurance fee.
44-4 (c) An administrative penalty assessed under this subchapter
44-5 in accordance with Section 252.065 may not exceed one-half of the
44-6 amount of the outstanding quality assurance fee or $20,000,
44-7 whichever is greater.
44-8 Sec. 252.206. QUALITY ASSURANCE FUND. (a) The quality
44-9 assurance fund is a fund outside the state treasury held by the
44-10 Texas Treasury Safekeeping Trust Company. Notwithstanding any
44-11 other law, the comptroller shall deposit fees collected under this
44-12 subchapter to the credit of the fund.
44-13 (b) The quality assurance fund is composed of:
44-14 (1) fees deposited to the credit of the fund under
44-15 this subchapter; and
44-16 (2) the earnings of the fund.
44-17 (c) Money deposited to the quality assurance fund remains
44-18 the property of the fund and may be used only for the purposes of
44-19 this subchapter.
44-20 (d) Subject to legislative appropriation and this
44-21 subchapter, quality assurance fees collected under this subchapter,
44-22 combined with federal matching funds, will support or maintain an
44-23 increase in Medicaid reimbursement for facilities. The Health and
44-24 Human Services Commission, after reimbursement rates have been
44-25 established for the biennium and money is allocated from the fund
44-26 for that purpose, may allocate any money remaining in the fund to
45-1 the Home and Community-Based Services and Mental Retardation Local
45-2 Authority waiver programs for persons with mental retardation
45-3 adopted in accordance with 42 U.S.C. Section 1396n(c).
45-4 Sec. 252.207. REIMBURSEMENT OF FACILITIES. (a) The Health
45-5 and Human Services Commission shall use money in the quality
45-6 assurance fund, together with any federal money available to match
45-7 that money, to:
45-8 (1) offset allowable expenses to administer the fee
45-9 under this chapter under the Medicaid program; or
45-10 (2) increase reimbursement rates paid under the
45-11 Medicaid program to facilities, subject to Section 252.206(d).
45-12 (b) The Health and Human Services Commission or the
45-13 department at the direction of the commission shall by rule adopt
45-14 the formula by which amounts received under this section increase
45-15 the reimbursement rates paid to facilities and Home and
45-16 Community-Based Services and Mental Retardation Local Authority
45-17 waiver programs under the Medicaid program.
45-18 (c) The Health and Human Services Commission shall ensure
45-19 that the formula devised under Subsection (b) provides incentives
45-20 to increase direct care staffing and direct care wages and
45-21 benefits.
45-22 (d) The increased Medicaid reimbursement paid to a facility
45-23 under this section may not be based solely on the amount of the
45-24 quality assurance fee paid by that facility unless authorized by 42
45-25 C.F.R. Section 433.68 or other federal law.
45-26 Sec. 252.208. INVALIDITY; FEDERAL FUNDS. If any portion of
46-1 this subchapter is held invalid by a final order of a court that is
46-2 not subject to appeal, or if the Health and Human Services
46-3 Commission determines that the imposition of the fee and the
46-4 expenditure as prescribed by this subchapter of amounts collected
46-5 will not entitle the state to receive additional federal funds
46-6 under the Medicaid program, the commission shall stop collection of
46-7 the quality assurance fee and shall return, not later than the 30th
46-8 day after the date collection is stopped, any money collected, but
46-9 not spent, under this subchapter to the facilities that paid the
46-10 fees in proportion to the total amount paid by those facilities.
46-11 Sec. 252.209. LEGISLATIVE REVIEW; EXPIRATION. The 79th
46-12 Legislature shall review the operation and effectiveness of this
46-13 subchapter. Unless continued in effect by the 79th Legislature,
46-14 this subchapter expires September 1, 2005.
46-15 SECTION 9.02. Notwithstanding Section 252.202, Health and
46-16 Safety Code, as added by this article, the quality assurance fee
46-17 imposed under Subchapter H, Chapter 252, Health and Safety Code, as
46-18 added by this article, that is effective for the first month
46-19 following the effective date of this Act is equal to $5.25
46-20 multiplied by the number of patient days as determined under that
46-21 subchapter. The quality assurance fee established under this
46-22 section remains in effect until the Health and Human Services
46-23 Commission, or the Texas Department of Human Services at the
46-24 direction of the commission, obtains the information necessary to
46-25 set the fee under Section 252.202, Health and Safety Code, as added
46-26 by this article.
47-1 SECTION 9.03. As soon as practicable after the effective
47-2 date of this Act, the Health and Human Services Commission shall
47-3 adopt rules as necessary to implement Subchapter H, Chapter 252,
47-4 Health and Safety Code, as added by this article.
47-5 SECTION 9.04. If before implementing any provision of this
47-6 article a state agency determines a waiver or authorization from a
47-7 federal agency is necessary for implementation of that provision,
47-8 the agency affected by the provision shall request the waiver or
47-9 authorization and may delay implementing that provision until the
47-10 waiver or authorization is granted.
47-11 ARTICLE 10. RATES PAID FOR NURSING HOME SERVICES
47-12 SECTION 10.01. Section 32.028, Human Resources Code, is
47-13 amended by adding Subsection (g) to read as follows:
47-14 (g) The Health and Human Services Commission shall ensure
47-15 that the rules governing the determination of rates paid for
47-16 nursing home services improve the quality of care by:
47-17 (1) providing incentives for increasing direct care
47-18 staff and direct care wages and benefits; and
47-19 (2) if appropriated funds are available after money is
47-20 allocated for payment of incentive-based rates under Subdivision
47-21 (1), providing incentives that incorporate the use of a quality of
47-22 care index, a customer satisfaction index, and a resolved
47-23 complaints index developed by the commission.
47-24 ARTICLE 11. TEXAS DEPARTMENT OF INSURANCE STUDY AND REPORT
47-25 SECTION 11.01. DEFINITIONS. In this article:
47-26 (1) "Commissioner" means the commissioner of
48-1 insurance.
48-2 (2) "Department" means the Texas Department of
48-3 Insurance.
48-4 SECTION 11.02. STUDY. The department shall study the
48-5 implementation of Articles 3, 5, and 6 of this Act and, in
48-6 particular, shall study:
48-7 (1) the effect of the changes in law made by Articles
48-8 5 and 6 of this Act on:
48-9 (A) fostering the development of a competitive
48-10 market for professional liability insurance for nursing
48-11 institutions; and
48-12 (B) improving the availability and affordability
48-13 of professional liability insurance for nursing institutions;
48-14 (2) whether the Medicaid rate component applicable to
48-15 institutions' reimbursement for professional liability insurance
48-16 costs is adequate; and
48-17 (3) the impact of awards of exemplary damages on rates
48-18 for professional liability insurance for nursing homes.
48-19 SECTION 11.03. REPORTS. (a) Not later than December 1,
48-20 2002, the commissioner shall submit an interim report on the study
48-21 conducted under Section 11.02 of this Act to the governor, the
48-22 lieutenant governor, and the speaker of the house of
48-23 representatives.
48-24 (b) Not later than December 1, 2004, the commissioner shall
48-25 submit a final report on the study to the governor, the lieutenant
48-26 governor, and the speaker of the house of representatives.
49-1 SECTION 11.04. EXPIRATION. This article expires September
49-2 1, 2005.
49-3 ARTICLE 12. EFFECT OF ACT; EFFECTIVE DATE
49-4 SECTION 12.01. To the extent of any conflict, this Act
49-5 prevails over any other Act of the 77th Legislature, Regular
49-6 Session, 2001, regardless of the relative dates of enactment,
49-7 including an Act that purports to:
49-8 (1) affect the admissibility in a civil action,
49-9 enforcement action, or related proceeding of evidence subject to
49-10 Subsections (i) and (k), Section 32.021, Human Resources Code, as
49-11 amended by this Act, or Sections 242.050 or 252.045, Health and
49-12 Safety Code, as added by this Act;
49-13 (2) affect coverage for for-profit or not-for-profit
49-14 nursing homes under Articles 5.15-1 and 21.49-3, Insurance Code, or
49-15 funding for the joint underwriting association under Article
49-16 21.49-3, Insurance Code;
49-17 (3) affect the liability of the joint underwriting
49-18 association established under Article 21.49-3, Insurance Code, for
49-19 exemplary damages awarded under Chapter 41, Civil Practice and
49-20 Remedies Code;
49-21 (4) require a nursing home to maintain liability
49-22 insurance coverage;
49-23 (5) require training for surveyors of long-term care
49-24 facilities, as described by Section 22.037, Human Resources Code,
49-25 as added by this Act;
49-26 (6) require review of the survey process for certain
50-1 long-term care facilities, as described by Section 531.056,
50-2 Government Code, as added by this Act;
50-3 (7) establish a quality assurance early warning system
50-4 for certain long-term care facilities, as described by Chapter 255,
50-5 Health and Safety Code, as added by this Act;
50-6 (8) affect informal dispute resolution of disputes
50-7 subject to Section 531.058, Government Code, as added by this Act;
50-8 (9) affect amelioration of violations subject to
50-9 Sections 242.071 and 252.071, Health and Safety Code; or
50-10 (10) establish a quality assurance fee for certain
50-11 facilities, as described by Subchapter H, Chapter 252, Health and
50-12 Safety Code, as added by this Act.
50-13 SECTION 12.02. Except as provided by Section 6.02 of this
50-14 Act, this Act takes effect immediately if it receives a vote of
50-15 two-thirds of all the members elected to each house, as provided by
50-16 Section 39, Article III, Texas Constitution. If this Act does not
50-17 receive the vote necessary for immediate effect, this Act takes
50-18 effect September 1, 2001, except as provided by Section 6.02 of
50-19 this Act.
S.B. No. 1839
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1839 passed the Senate on
May 10, 2001, by the following vote: Yeas 18, Nays 11, one present
not voting; May 24, 2001, Senate refused to concur in House
amendments and requested appointment of Conference Committee;
May 25, 2001, House granted request of the Senate; May 27, 2001,
Senate adopted Conference Committee Report by the following vote:
Yeas 30, Nays 0, one present not voting.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1839 passed the House, with
amendments, on May 23, 2001, by the following vote: Yeas 142,
Nays 0, one present not voting; May 25, 2001, House granted request
of the Senate for appointment of Conference Committee;
May 27, 2001, House adopted Conference Committee Report by the
following vote: Yeas 111, Nays 28, one present not voting.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor