1-1 By: Moncrief, Duncan S.B. No. 1839
1-2 (In the Senate - Filed May 4, 2001; May 4, 2001, read first
1-3 time and referred to Committee on Health and Human Services;
1-4 May 8, 2001, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 6, Nays 1; May 8, 2001,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1839 By: Moncrief
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to certain long-term care facilities.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 ARTICLE 1. SHORT TITLE; PURPOSE
1-13 SECTION 1.01. SHORT TITLE. This Act may be cited as the
1-14 Long-Term Care Facility Improvement Act.
1-15 SECTION 1.02. LEGISLATIVE INTENT; PURPOSE. (a) The
1-16 legislature specifically acknowledges an existing crisis
1-17 confronting long-term care facilities in Texas and the critical
1-18 importance of the services provided to Texans by these facilities,
1-19 and in particular to the growing population of older Texans.
1-20 (b) In response to this crisis, this Act is intended to
1-21 ensure that long-term care facilities continue to be available to
1-22 provide care to Texans, that this care be of the highest quality,
1-23 and that the residents of these facilities be financially protected
1-24 by available and affordable professional liability insurance.
1-25 (c) This Act includes extraordinary measures that are
1-26 necessary to address an emergency in long-term care in this state.
1-27 These measures are intended as temporary solutions that will
1-28 facilitate the efficient recovery of both for-profit and
1-29 not-for-profit private long-term care facilities so that, in the
1-30 future, these facilities will be financially sound and capable of
1-31 providing high-quality care.
1-32 (d) With respect to the legal concepts incorporated in the
1-33 measures contained in this Act, the legislature does not intend for
1-34 these concepts to be applied outside the realm of long-term care.
1-35 Because the application of the measures contained in this Act in
1-36 relation to these legal concepts is temporary and because of the
1-37 extraordinary complexity and uniqueness of the crisis facing
1-38 nursing homes, these measures should not be construed as the
1-39 legislature's interpretation of the current law applicable to these
1-40 legal concepts. In enacting the extraordinary measures contained
1-41 in this Act, the legislature specifically rejects any suggestion
1-42 that these measures represent solutions that are appropriate for
1-43 any area involving liability insurance, insurance practices, or
1-44 medical care other than long-term care facilities.
1-45 ARTICLE 2. NOTICE OF EXEMPLARY DAMAGES IN CERTAIN ACTIONS
1-46 SECTION 2.01. Subchapter B, Chapter 242, Health and Safety
1-47 Code, is amended by adding Section 242.051 to read as follows:
1-48 Sec. 242.051. NOTIFICATION OF AWARD OF EXEMPLARY DAMAGES.
1-49 (a) If exemplary damages are awarded under Chapter 41, Civil
1-50 Practice and Remedies Code, against an institution or an officer,
1-51 employee, or agent of an institution, the court shall notify the
1-52 department.
1-53 (b) If the department receives notice under Subsection (a),
1-54 the department shall maintain the information contained in the
1-55 notice in the records of the department relating to the history of
1-56 the institution.
1-57 SECTION 2.02. This article applies only to an award of
1-58 exemplary damages in a cause of action that accrues on or after
1-59 September 1, 2001.
1-60 ARTICLE 3. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL ACTION
1-61 SECTION 3.01. Subsections (i) and (k), Section 32.021, Human
1-62 Resources Code, are amended to read as follows:
1-63 (i) A record of the department, including a record of
1-64 [Except as provided by Subsections (j) and (k),] a department
2-1 survey, complaint investigation, incident investigation, or survey
2-2 report, that relates to [documents that] an institution, including
2-3 an intermediate care facility for the mentally retarded, may be
2-4 introduced into evidence in a civil action, enforcement action, or
2-5 related proceeding if the record is admissible under the Texas
2-6 Rules of Evidence [has violated a standard for participation in the
2-7 state Medicaid program, or the assessment of a monetary penalty by
2-8 the department or the payment of a monetary penalty by the
2-9 institution, is not admissible as evidence in a civil action to
2-10 prove that the institution has committed a violation].
2-11 (k) A department surveyor or investigator may testify in a
2-12 civil action as to observations, factual findings, conclusions, or
2-13 violations of requirements for licensure or for certification for
2-14 participation in the state Medicaid program that were made in the
2-15 discharge of official duties for the department, if the testimony
2-16 is admissible under [in accordance with] the Texas Rules of [Civil]
2-17 Evidence.
2-18 SECTION 3.02. Subchapter B, Chapter 242, Health and Safety
2-19 Code, is amended by adding Section 242.050 to read as follows:
2-20 Sec. 242.050. ADMISSIBILITY OF CERTAIN DOCUMENTS OR
2-21 TESTIMONY. Sections 32.021(i) and (k), Human Resources Code,
2-22 govern the admissibility in a civil action against an institution
2-23 of:
2-24 (1) a record of the department described by Section
2-25 32.021(i), Human Resources Code; or
2-26 (2) the testimony of a department surveyor or
2-27 investigator described by Section 32.021(k), Human Resources Code.
2-28 SECTION 3.03. Subchapter B, Chapter 252, Health and Safety
2-29 Code, is amended by adding Section 252.045 to read as follows:
2-30 Sec. 252.045. ADMISSIBILITY OF CERTAIN DOCUMENTS OR
2-31 TESTIMONY. Sections 32.021(i) and (k), Human Resources Code,
2-32 govern the admissibility in a civil action against a facility of:
2-33 (1) a record of the department described by Section
2-34 32.021(i), Human Resources Code; or
2-35 (2) the testimony of a department surveyor or
2-36 investigator described by Section 32.021(k), Human Resources Code.
2-37 SECTION 3.04. Subsection (j), Section 32.021, Human
2-38 Resources Code, is repealed.
2-39 SECTION 3.05. This article applies only to a civil action,
2-40 enforcement action, or related proceeding that is commenced on or
2-41 after the effective date of this Act. A civil action, enforcement
2-42 action, or related proceeding that is commenced before the
2-43 effective date of this Act is governed by the law applicable to the
2-44 action or proceeding immediately before the effective date of this
2-45 Act, and that law is continued in effect for that purpose.
2-46 ARTICLE 4. DATA REPORTING FOR CERTAIN LIABILITY INSURANCE COVERAGE
2-47 SECTION 4.01. Chapter 38, Insurance Code, is amended by
2-48 adding Subchapter F to read as follows:
2-49 SUBCHAPTER F. DATA REPORTING BY CERTAIN LIABILITY INSURERS
2-50 Sec. 38.251. INSURER DATA REPORTING. (a) Each insurer that
2-51 writes professional liability insurance policies for nursing
2-52 institutions licensed under Chapter 242, Health and Safety Code,
2-53 including an insurer whose rates are not regulated, shall, as a
2-54 condition of writing those policies in this state, comply with a
2-55 request for information from the commissioner under this section.
2-56 (b) The commissioner may require information in rate
2-57 filings, special data calls, or informational hearings or by any
2-58 other means consistent with this code applicable to the affected
2-59 insurer that the commissioner believes will allow the commissioner
2-60 to:
2-61 (1) determine whether insurers writing insurance
2-62 coverage described by Subsection (a) are passing to insured nursing
2-63 institutions on a prospective basis the savings that accrue as a
2-64 result of the reduction in risk to insurers writing that coverage
2-65 that will result from legislation enacted by the 77th Legislature,
2-66 Regular Session, including legislation that:
2-67 (A) amended Article 5.15-1 to limit the exposure
2-68 of an insurer to exemplary damages for certain claims against a
2-69 nursing institution; and
3-1 (B) amended Sections 32.021(i) and (k), Human
3-2 Resources Code, added Section 242.050, Health and Safety Code, and
3-3 repealed Section 32.021(j), Human Resources Code, to clarify the
3-4 admissibility of certain documents in a civil action against a
3-5 nursing institution; or
3-6 (2) prepare the report required of the commissioner
3-7 under Section 38.252 or any other report the commissioner is
3-8 required to submit to the legislature in connection with the
3-9 legislation described by Subdivision (1).
3-10 (c) Information provided under this section is privileged
3-11 and confidential to the same extent as the information is
3-12 privileged and confidential under this code or any other law
3-13 governing an insurer described by Subsection (a). The information
3-14 remains privileged and confidential unless and until introduced
3-15 into evidence at an administrative hearing or in a court of
3-16 competent jurisdiction.
3-17 Sec. 38.252. RECOMMENDATIONS TO LEGISLATURE. The
3-18 commissioner shall assemble information and take other appropriate
3-19 measures to assess and evaluate changes in the marketplace
3-20 resulting from the implementation of the legislation described by
3-21 Section 38.251 and shall report the commissioner's findings and
3-22 recommendations to the legislature.
3-23 ARTICLE 5. AVAILABILITY OF AND COVERAGE UNDER CERTAIN
3-24 PROFESSIONAL LIABILITY INSURANCE
3-25 SECTION 5.01. Subdivision (2), Section 2, Article 5.15-1,
3-26 Insurance Code, is amended to read as follows:
3-27 (2) "Health care provider" means any person,
3-28 partnership, professional association, corporation, facility, or
3-29 institution licensed or chartered by the State of Texas to provide
3-30 health care as a registered nurse, hospital, dentist, podiatrist,
3-31 chiropractor, optometrist, pharmacist, veterinarian, not-for-profit
3-32 kidney dialysis center, blood bank that is a nonprofit corporation
3-33 chartered to operate a blood bank and which is accredited by the
3-34 American Association of Blood Banks, for-profit nursing home or
3-35 not-for-profit nursing home, or an officer, employee, or agent of
3-36 any of them acting in the course and scope of his employment.
3-37 SECTION 5.02. Section 8, Article 5.15-1, Insurance Code, is
3-38 amended to read as follows:
3-39 Sec. 8. EXEMPLARY [PUNITIVE] DAMAGES UNDER MEDICAL
3-40 PROFESSIONAL LIABILITY INSURANCE. No policy of medical
3-41 professional liability insurance issued to or renewed for a health
3-42 care provider or physician in this state may include coverage for
3-43 exemplary [punitive] damages that may be assessed against the
3-44 health care provider or physician; provided, however, that the
3-45 commissioner may approve an endorsement form that provides for
3-46 coverage for exemplary [punitive] damages to be used on a policy of
3-47 medical professional liability insurance issued to a hospital, as
3-48 the term "hospital" is defined in this article, or to a for-profit
3-49 or not-for-profit nursing home.
3-50 SECTION 5.03. Subchapter B, Chapter 5, Insurance Code, is
3-51 amended by adding Article 5.15-4 to read as follows:
3-52 Art. 5.15-4. BEST PRACTICES FOR NURSING HOMES. (a) The
3-53 commissioner shall adopt best practices for risk management and
3-54 loss control that may be used by for-profit and not-for-profit
3-55 nursing homes.
3-56 (b) In determining rates for professional liability
3-57 insurance applicable to a for-profit or not-for-profit nursing
3-58 home, an insurance company or the Texas Medical Liability Insurance
3-59 Underwriting Association may consider whether the nursing home
3-60 adopts and implements the best practices adopted by the
3-61 commissioner under Subsection (a) of this article.
3-62 (c) In developing or amending best practices for for-profit
3-63 and not-for-profit nursing homes, the commissioner shall consult
3-64 with the Health and Human Services Commission and a task force
3-65 appointed by the commissioner. The task force must be composed of
3-66 representatives of:
3-67 (1) insurance companies that write professional
3-68 liability insurance for nursing homes;
3-69 (2) the Texas Medical Liability Insurance Underwriting
4-1 Association;
4-2 (3) nursing homes; and
4-3 (4) consumers.
4-4 (d) The best practices for risk management and loss control
4-5 adopted under this article do not establish standards of care for
4-6 nursing homes applicable in a civil action against a nursing home.
4-7 SECTION 5.04. Subdivision (6), Section 2, Article 21.49-3,
4-8 Insurance Code, is amended to read as follows:
4-9 (6) "Health care provider" means:
4-10 (A) any person, partnership, professional
4-11 association, corporation, facility, or institution duly licensed or
4-12 chartered by the State of Texas to provide health care as defined
4-13 in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance
4-14 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
4-15 Statutes), as:
4-16 (i) a registered nurse, hospital, dentist,
4-17 podiatrist, pharmacist, chiropractor, or optometrist;
4-18 (ii) a for-profit[,] or not-for-profit
4-19 nursing home;
4-20 (iii) [, or] a radiation therapy center
4-21 that is independent of any other medical treatment facility and
4-22 which is licensed by the Texas Department of Health in that
4-23 agency's capacity as the Texas [State] Radiation Control Agency
4-24 pursuant to the provisions of Chapter 401, Health and Safety Code,
4-25 and which is in compliance with the regulations promulgated under
4-26 that chapter;
4-27 (iv) [by the Texas State Radiation Control
4-28 Agency,] a blood bank that is a nonprofit corporation chartered to
4-29 operate a blood bank and which is accredited by the American
4-30 Association of Blood Banks;
4-31 (v) [,] a nonprofit corporation which is
4-32 organized for the delivery of health care to the public and which
4-33 is certified under Chapter 162, Occupations Code; [Article 4509a,
4-34 Revised Civil Statutes of Texas, 1925,] or
4-35 (vi) a [migrant] health center as defined
4-36 by 42 U.S.C. Section 254b [P.L. 94-63], as amended; [(42 U.S.C.
4-37 Section 254b), or a community health center as defined by P.L.
4-38 94-63, as amended (42 U.S.C. Section 254c), that is receiving
4-39 federal funds under an application approved under either Title IV,
4-40 P.L. 94-63, as amended (42 U.S.C. Section 254b), or Title V, P.L.
4-41 94-63, as amended (42 U.S.C. Section 254c),] or
4-42 (B) an officer, employee, or agent of any of
4-43 them acting in the course and scope of that person's [his]
4-44 employment.
4-45 SECTION 5.05. Section 3A, Article 21.49-3, Insurance Code,
4-46 is amended by adding Subsection (c) to read as follows:
4-47 (c) A for-profit or not-for-profit nursing home not
4-48 otherwise eligible under this section for coverage from the
4-49 association is eligible for coverage if the nursing home
4-50 demonstrates, in accordance with the requirements of the
4-51 association, that the nursing home made a verifiable effort to
4-52 obtain coverage from authorized insurers and eligible surplus lines
4-53 insurers and was unable to obtain substantially equivalent coverage
4-54 and rates.
4-55 SECTION 5.06. Subdivision (1), Subsection (b), Section 4,
4-56 Article 21.49-3, Insurance Code, is amended to read as follows:
4-57 (1) The rates, rating plans, rating rules, rating
4-58 classification, territories, and policy forms applicable to the
4-59 insurance written by the association and statistics relating
4-60 thereto shall be subject to Subchapter B of Chapter 5 of the
4-61 Insurance Code, as amended, giving due consideration to the past
4-62 and prospective loss and expense experience for medical
4-63 professional liability insurance within and without this state of
4-64 all of the member companies of the association, trends in the
4-65 frequency and severity of losses, the investment income of the
4-66 association, and such other information as the commissioner [board]
4-67 may require; provided, that if any article of the above subchapter
4-68 is in conflict with any provision of this Act, this Act shall
4-69 prevail. For purposes of this article, rates, rating plans, rating
5-1 rules, rating classifications, territories, and policy forms for
5-2 for-profit nursing homes are subject to the requirements of Article
5-3 5.15-1 of this code to the same extent as not-for-profit nursing
5-4 homes.
5-5 SECTION 5.07. Section 4A, Article 21.49-3, Insurance Code,
5-6 is amended to read as follows:
5-7 Sec. 4A. POLICYHOLDER'S STABILIZATION RESERVE FUND.
5-8 (a) There is hereby created a policyholder's stabilization reserve
5-9 fund which shall be administered as provided herein and in the plan
5-10 of operation of the association. The purpose of the fund is to
5-11 ensure the financial soundness of the association. The fund may be
5-12 used only for the purposes of this article.
5-13 (b) Each policyholder shall pay annually into the
5-14 stabilization reserve fund a charge, the amount of which shall be
5-15 established annually by advisory directors chosen by health care
5-16 providers and physicians eligible for insurance in the association
5-17 in accordance with the plan of operation. The charge shall be in
5-18 proportion to each premium payment due for liability insurance
5-19 through the association. Such charge shall be separately stated in
5-20 the policy, but shall not constitute a part of premiums or be
5-21 subject to premium taxation, servicing fees, acquisition costs, or
5-22 any other such charges.
5-23 (c) The [policyholder's] stabilization reserve fund shall be
5-24 collected and administered by the association and shall be treated
5-25 as a liability of the association along with and in the same manner
5-26 as premium and loss reserves. The fund shall be valued annually by
5-27 the board of directors as of the close of the last preceding year.
5-28 (d) Except as provided by Subsection (e) of this section,
5-29 collections [Collections] of the stabilization reserve fund charge
5-30 shall continue only until such time as the net balance of the
5-31 stabilization reserve fund is not less than the projected sum of
5-32 premiums to be written in the year following valuation date.
5-33 (e) If in any fiscal year the incurred losses and defense
5-34 and cost containment expenses from physicians or any single
5-35 category of health care provider result in a net underwriting loss
5-36 and exceed 25 percent of the stabilization reserve fund, as valued
5-37 for that year, the commissioner may by order direct the initiation
5-38 or continuation of the stabilization reserve fund charge for
5-39 physicians or that category of health care provider until the fund
5-40 recovers the amount by which those losses and cost containment
5-41 expenses exceed 25 percent of the fund.
5-42 (f) The stabilization reserve fund shall be credited with
5-43 all stabilization reserve fund charges collected from policyholders
5-44 and shall be charged with any deficit from the prior year's
5-45 operation of the association.
5-46 (g) The stabilization reserve fund, and any earnings of the
5-47 fund, are state funds and shall be held by the comptroller outside
5-48 the state treasury on behalf of, and with legal title in, the
5-49 department. No part of the fund, or the earnings of the fund, may
5-50 inure to the benefit of a member of the association, a
5-51 policyholder, or any other individual, and the assets of the fund
5-52 may be used in accordance with the association's plan of operation
5-53 only to implement this article and for the purposes of the
5-54 association, including making payment to satisfy, in whole or in
5-55 part, the liability of the association regarding a claim made on a
5-56 policy written by the association.
5-57 (h) Notwithstanding Sections 11, 12, and 13 of this article,
5-58 the stabilization reserve fund may be terminated only by law.
5-59 (i) Notwithstanding Section 11 of this article, on
5-60 termination of the stabilization reserve fund, all assets of the
5-61 fund shall be transferred to the general revenue fund to be
5-62 appropriated for purposes related to ensuring the kinds of
5-63 liability insurance coverage that may be provided by the
5-64 association under this article.
5-65 SECTION 5.08. Article 21.49-3, Insurance Code, is amended by
5-66 adding Section 4B to read as follows:
5-67 Sec. 4B. LIABILITY FOR EXEMPLARY DAMAGES; EXPIRATION.
5-68 (a) The association is not liable for exemplary damages under a
5-69 professional liability insurance policy that covers a for-profit or
6-1 not-for-profit nursing home and that excludes coverage for
6-2 exemplary damages awarded in relation to a covered claim awarded
6-3 under Chapter 41, Civil Practice and Remedies Code, or any other
6-4 law. This subsection applies without regard to the application of
6-5 the common law theory of recovery commonly known in Texas as the
6-6 "Stowers Doctrine." This subsection does not affect the application
6-7 of that doctrine to the liability of the association for
6-8 compensatory damages.
6-9 (b) This section does not affect the contractual duties
6-10 imposed under an insurance policy.
6-11 (c) This section does not prohibit a for-profit or
6-12 not-for-profit nursing home from purchasing a policy to cover
6-13 exemplary damages.
6-14 (d) This section applies only to the liability of the
6-15 association for exemplary damages under an insurance policy
6-16 delivered, issued for delivery, or renewed by the association to a
6-17 for-profit or not-for-profit nursing home on or after January 1,
6-18 2002, and applies only to coverage provided under the policy for
6-19 any portion of the term of the policy that occurs before January 1,
6-20 2006. This section applies only to the liability of the
6-21 association for exemplary damages with respect to a claim for which
6-22 a notice of loss or notice of occurrence was made, or should have
6-23 been made, in accordance with the terms of the policy, on or after
6-24 January 1, 2002, but before January 1, 2006.
6-25 (e) This section expires January 1, 2007.
6-26 SECTION 5.09. Subchapter E, Chapter 21, Insurance Code, is
6-27 amended by adding Article 21.49-3d to read as follows:
6-28 Art. 21.49-3d. REVENUE BOND PROGRAM AND PROCEDURES FOR
6-29 CERTAIN LIABILITY INSURANCE
6-30 Sec. 1. LEGISLATIVE FINDING; PURPOSE. The legislature finds
6-31 that the issuance of bonds to provide a method to raise funds to
6-32 provide professional liability insurance through the association
6-33 for nursing homes in this state is for the benefit of the public
6-34 and in furtherance of a public purpose.
6-35 Sec. 2. DEFINITIONS. In this article:
6-36 (1) "Association" means the joint underwriting
6-37 association established under Article 21.49-3 of this code.
6-38 (2) "Bond resolution" means the resolution or order
6-39 authorizing the bonds to be issued under this article.
6-40 (3) "Board" means the board of directors of the Texas
6-41 Public Finance Authority.
6-42 (4) "Insurer" means any insurer required to be a
6-43 member of the association under Section 3, Article 21.49-3 of this
6-44 code.
6-45 Sec. 3. BONDS AUTHORIZED; APPLICATION OF TEXAS PUBLIC
6-46 FINANCE AUTHORITY ACT. (a) On behalf of the fund, the Texas
6-47 Public Finance Authority shall issue revenue bonds to:
6-48 (1) fund the policyholder's stabilization reserve fund
6-49 established under Section 4A, Article 21.49-3 of this code;
6-50 (2) pay costs related to issuance of the bonds; and
6-51 (3) pay other costs related to the bonds as may be
6-52 determined by the board.
6-53 (b) To the extent not inconsistent with this article,
6-54 Chapter 1232, Government Code, applies to bonds issued under this
6-55 article. In the event of a conflict, this article controls.
6-56 Sec. 4. APPLICABILITY OF OTHER STATUTES. The following laws
6-57 apply to bonds issued under this article to the extent consistent
6-58 with this article:
6-59 (1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371,
6-60 Government Code; and
6-61 (2) Subchapter A, Chapter 1206, Government Code.
6-62 Sec. 5. LIMITS. The Texas Public Finance Authority may
6-63 issue, on behalf of the association, bonds in a total amount not to
6-64 exceed $75 million.
6-65 Sec. 6. CONDITIONS. (a) Bonds may be issued at public or
6-66 private sale.
6-67 (b) Bonds may mature not more than 10 years after the date
6-68 issued.
6-69 (c) Bonds must be issued in the name of the association.
7-1 Sec. 7. ADDITIONAL COVENANTS. In a bond resolution, the
7-2 board may make additional covenants with respect to the bonds and
7-3 the designated income and receipts of the association pledged to
7-4 their payment and may provide for the flow of funds and the
7-5 establishment, maintenance, and investment of funds and accounts
7-6 with respect to the bonds.
7-7 Sec. 8. SPECIAL ACCOUNTS. (a) A bond resolution may
7-8 establish special accounts, including an interest and sinking fund
7-9 account, reserve account, and other accounts.
7-10 (b) The association shall administer the accounts in
7-11 accordance with Article 21.49-3 of this code.
7-12 Sec. 9. SECURITY. (a) Bonds are payable only from the
7-13 maintenance tax surcharge established in Section 10 of this article
7-14 or other sources the fund is authorized to levy, charge, and
7-15 collect in connection with paying any portion of the bonds.
7-16 (b) Bonds are obligations solely of the association. Bonds
7-17 do not create a pledging, giving, or lending of the faith, credit,
7-18 or taxing authority of this state.
7-19 (c) Each bond must include a statement that the state is not
7-20 obligated to pay any amount on the bond and that the faith, credit,
7-21 and taxing authority of this state are not pledged, given, or lent
7-22 to those payments.
7-23 (d) Each bond issued under this article must state on its
7-24 face that the bond is payable solely from the revenues pledged for
7-25 that purpose and that the bond does not and may not constitute a
7-26 legal or moral obligation of the state.
7-27 Sec. 10. MAINTENANCE TAX SURCHARGE. (a) A maintenance tax
7-28 surcharge is assessed against:
7-29 (1) each insurer; and
7-30 (2) the association.
7-31 (b) The maintenance tax surcharge shall be set in an amount
7-32 sufficient to pay all debt service on the bonds. The maintenance
7-33 tax surcharge is set by the commissioner in the same time and shall
7-34 be collected by the comptroller on behalf of the association in the
7-35 same manner as applicable maintenance taxes are collected under
7-36 Article 5.24 of this code.
7-37 (c) On determining the rate of assessment, the department
7-38 shall increase the maintenance tax rate applicable to correctly
7-39 reported gross premiums for liability insurance to a rate
7-40 sufficient to pay all debt service on the bonds, subject to the
7-41 maximum maintenance tax rate applicable to the insurer under
7-42 Article 5.24 of this code. If the resulting tax rate is
7-43 insufficient to pay all debt service on the bonds, the department
7-44 may assess an additional surcharge not to exceed one percent of
7-45 correctly reported gross premiums for liability insurance to cover
7-46 all debt service on the bonds. In this code, the maintenance tax
7-47 surcharge includes the additional maintenance tax assessed under
7-48 this subsection and the surcharge assessed under this subsection to
7-49 pay all debt service of the bonds.
7-50 (d) The association and each insurer may pass through the
7-51 maintenance tax surcharge to each of its policyholders.
7-52 (e) As a condition of engaging in the business of insurance
7-53 in this state, an insurer agrees that if the company leaves the
7-54 market for liability insurance in this state the insurer remains
7-55 obligated to pay, until the bonds are retired, the insurer's share
7-56 of the maintenance tax surcharge assessed under this section in an
7-57 amount proportionate to that insurer's share of the market for
7-58 liability insurance in this state as of the last complete reporting
7-59 period before the date on which the insurer ceases to engage in
7-60 that insurance business in this state. The proportion assessed
7-61 against the insurer shall be based on the insurer's gross premiums
7-62 for liability insurance for the insurer's last reporting period.
7-63 However, an insurer is not required to pay the proportionate amount
7-64 in any year in which the surcharge assessed against insurers
7-65 continuing to write liability insurance in this state is sufficient
7-66 to service the bond obligation.
7-67 Sec. 11. TAX EXEMPT. The bonds issued under this article,
7-68 and any interest from the bonds, and all assets pledged to secure
7-69 the payment of the bonds are free from taxation by the state or a
8-1 political subdivision of this state.
8-2 Sec. 12. AUTHORIZED INVESTMENTS. The bonds issued under
8-3 this article constitute authorized investments under Article 2.10
8-4 and Subpart A, Part I, Article 3.39 of this code.
8-5 Sec. 13. STATE PLEDGE. The state pledges to and agrees with
8-6 the owners of any bonds issued in accordance with this article that
8-7 the state will not limit or alter the rights vested in the
8-8 association to fulfill the terms of any agreements made with the
8-9 owners of the bonds or in any way impair the rights and remedies of
8-10 those owners until the bonds, any premium or interest, and all
8-11 costs and expenses in connection with any action or proceeding by
8-12 or on behalf of those owners are fully met and discharged. The
8-13 association may include this pledge and agreement of the state in
8-14 any agreement with the owners of the bonds.
8-15 Sec. 14. ENFORCEMENT BY MANDAMUS. A writ of mandamus and
8-16 all other legal and equitable remedies are available to any party
8-17 at interest to require the association and any other party to carry
8-18 out agreements and to perform functions and duties under this
8-19 article, the Texas Constitution, or a bond resolution.
8-20 SECTION 5.10. Not later than December 1, 2001, the
8-21 commissioner of insurance shall adopt the initial best practices
8-22 for for-profit and not-for-profit nursing homes adopted as required
8-23 by Article 5.15-4, Insurance Code, as added by this article.
8-24 SECTION 5.11. Sections 2, 3A, and 4, Article 21.49-3,
8-25 Insurance Code, as amended by this article, apply only to an
8-26 insurance policy delivered, issued for delivery, or renewed on or
8-27 after January 1, 2002. A policy delivered, issued for delivery, or
8-28 renewed before January 1, 2002, is governed by the law as it
8-29 existed immediately before the effective date of this Act, and that
8-30 law is continued in effect for that purpose.
8-31 ARTICLE 6. MANDATORY LIABILITY INSURANCE FOR
8-32 NURSING INSTITUTIONS
8-33 SECTION 6.01. Subchapter B, Chapter 242, Health and Safety
8-34 Code, is amended by adding Section 242.0372 to read as follows:
8-35 Sec. 242.0372. LIABILITY INSURANCE COVERAGE. (a) In this
8-36 section, "health care liability claim" has the meaning assigned by
8-37 the Medical Liability and Insurance Improvement Act of Texas
8-38 (Article 4590i, Vernon's Texas Civil Statutes).
8-39 (b) To hold a license under this chapter, an institution
8-40 must maintain professional liability insurance coverage against the
8-41 liability of the institution for a health care liability claim.
8-42 (c) The insurance coverage maintained by an institution
8-43 under this section must:
8-44 (1) provide coverage annually in the minimum amount of
8-45 $1 million per occurrence and $3 million aggregate;
8-46 (2) be written on a claims-made basis;
8-47 (3) be issued by:
8-48 (A) an admitted insurer authorized to write
8-49 professional liability insurance in this state;
8-50 (B) the Texas Medical Liability Insurance
8-51 Underwriting Association established under Article 21.49-3,
8-52 Insurance Code; or
8-53 (C) an eligible surplus lines insurer in
8-54 accordance with Article 1.14-2, Insurance Code; and
8-55 (4) be in a form acceptable to the department.
8-56 (d) To the extent permitted by federal law and applicable
8-57 state and federal rules, the cost of insurance coverage required to
8-58 be maintained under this section is an allowable cost for
8-59 reimbursement under the state Medicaid program.
8-60 SECTION 6.02. (a) Notwithstanding Section 242.0372, Health
8-61 and Safety Code, as added by this article, and subject to
8-62 Subsection (b) of this section, an institution licensed under
8-63 Chapter 242, Health and Safety Code, is not required to maintain
8-64 professional liability insurance as required by that section before
8-65 September 1, 2002.
8-66 (b) Before September 1, 2003, the Texas Department of Human
8-67 Services may not take any enforcement action, including an action
8-68 to suspend or revoke a license, because an institution fails to
8-69 maintain professional liability insurance as required by Section
9-1 242.0372, Health and Safety Code, as added by this article, if the
9-2 department determines, considering the totality of the
9-3 circumstances, that the institution does not have the financial
9-4 ability to obtain the insurance without jeopardizing the quality of
9-5 care to residents.
9-6 ARTICLE 7. SURVEYS AND RELATED PROCESSES
9-7 SECTION 7.01. Chapter 22, Human Resources Code, is amended
9-8 by adding Section 22.037 to read as follows:
9-9 Sec. 22.037. TRAINING AND CONTINUING EDUCATION RELATED TO
9-10 CERTAIN LONG-TERM CARE FACILITIES. (a) In this section:
9-11 (1) "Long-term care facility" means a nursing
9-12 institution, an assisted living facility, or an intermediate care
9-13 facility for the mentally retarded licensed under Chapter 242, 247,
9-14 or 252, Health and Safety Code.
9-15 (2) "Provider" means an employee or agent of a
9-16 long-term care facility.
9-17 (3) "Surveyor" means an employee or agent of the
9-18 department or another state agency responsible for licensing,
9-19 inspecting, surveying, or investigating a long-term care facility
9-20 in relation to:
9-21 (A) licensing under Chapter 242, 247, or 252,
9-22 Health and Safety Code; or
9-23 (B) certification for participation in the
9-24 medical assistance program in accordance with Chapter 32.
9-25 (b) The department shall require a surveyor to complete a
9-26 basic training program before the surveyor inspects, surveys, or
9-27 investigates a long-term care facility. The training must include
9-28 observation of the operations of a long-term care facility
9-29 unrelated to the survey, inspection, or investigation process for a
9-30 minimum of 10 working days within a 14-day period.
9-31 (c) The department shall semiannually provide training for
9-32 surveyors and providers on subjects that address at least one of
9-33 the 10 most common violations by long-term care facilities under
9-34 federal or state law.
9-35 (d) Except as provided by Subsection (e), a surveyor who is
9-36 a health care professional licensed under the laws of this state
9-37 must receive a minimum of 50 percent of the professional's required
9-38 continuing education credits, if any, in gerontology or care for
9-39 individuals with cognitive or physical disabilities, as
9-40 appropriate.
9-41 (e) A surveyor who is a pharmacist must receive a minimum of
9-42 30 percent of the pharmacist's required continuing education
9-43 credits in gerontology or care for individuals with cognitive or
9-44 physical disabilities, as appropriate.
9-45 SECTION 7.02. Subchapter B, Chapter 531, Government Code, is
9-46 amended by adding Sections 531.056, 531.057, and 531.058 to read as
9-47 follows:
9-48 Sec. 531.056. REVIEW OF SURVEY PROCESS IN CERTAIN
9-49 INSTITUTIONS AND FACILITIES. (a) The commission shall adopt
9-50 procedures to review:
9-51 (1) citations or penalties assessed for a violation of
9-52 a rule or law against an institution or facility licensed under
9-53 Chapter 242, 247, or 252, Health and Safety Code, or certified in
9-54 accordance with Chapter 32, Human Resources Code, considering:
9-55 (A) the number of violations by geographic
9-56 region;
9-57 (B) the patterns of violations in each region;
9-58 and
9-59 (C) the outcomes following the assessment of a
9-60 penalty or citation; and
9-61 (2) the performance of duties by employees and agents
9-62 of the Texas Department of Human Services or another state agency
9-63 responsible for licensing, inspecting, surveying, or investigating
9-64 institutions and facilities licensed under Chapter 242, 247, or
9-65 252, Health and Safety Code, or certified in accordance with
9-66 Chapter 32, Human Resources Code, related to:
9-67 (A) complaints received by the commission; or
9-68 (B) any standards or rules violated by an
9-69 employee or agent of a state agency.
10-1 (b) The commission shall annually report to the speaker of
10-2 the house of representatives, the lieutenant governor, and the
10-3 governor on the findings of the review conducted under Subsection
10-4 (a).
10-5 Sec. 531.057. QUALITY ASSURANCE EARLY WARNING SYSTEM FOR
10-6 LONG-TERM CARE FACILITIES; RAPID RESPONSE TEAMS. (a) In this
10-7 section:
10-8 (1) "Long-term care facility" means a nursing
10-9 institution, an assisted living facility, or an intermediate care
10-10 facility for the mentally retarded licensed under Chapter 242, 247,
10-11 or 252, Health and Safety Code, or certified under Chapter 32,
10-12 Human Resources Code.
10-13 (2) "Quality-of-care monitor" means a registered
10-14 nurse, pharmacist, or nutritionist who:
10-15 (A) is employed by the commission;
10-16 (B) is trained and experienced in long-term care
10-17 facility regulation, standards of practice in long-term care, and
10-18 evaluation of patient care; and
10-19 (C) functions independently of the Texas
10-20 Department of Human Services.
10-21 (b) The commission shall establish an early warning system
10-22 to detect conditions that could be detrimental to the health,
10-23 safety, and welfare of residents. The early warning system shall
10-24 include analysis of financial and quality-of-care indicators that
10-25 would predict the need for the commission to take action.
10-26 (c) The commission shall establish regional offices with one
10-27 or more quality-of-care monitors, based on the number of long-term
10-28 care facilities in the region, to monitor the facilities in the
10-29 region on a regular, unannounced, aperiodic basis, including
10-30 nights, evenings, weekends, and holidays.
10-31 (d) Priority for monitoring visits shall be given to
10-32 long-term care facilities with a history of patient care
10-33 deficiencies.
10-34 (e) Quality-of-care monitors may not be deployed by the
10-35 commission as a part of the regional survey team in the conduct of
10-36 routine, scheduled surveys.
10-37 (f) A quality-of-care monitor may not interfere with,
10-38 impede, or otherwise adversely affect the performance of the duties
10-39 of a surveyor, inspector, or investigator of the Texas Department
10-40 of Human Services.
10-41 (g) Quality-of-care monitors shall assess:
10-42 (1) the overall quality of life in the long-term care
10-43 facility; and
10-44 (2) specific conditions in the facility directly
10-45 related to patient care.
10-46 (h) The quality-of-care monitor shall include in an
10-47 assessment visit:
10-48 (1) observation of the care and services rendered to
10-49 residents; and
10-50 (2) formal and informal interviews with residents,
10-51 family members, facility staff, resident guests, volunteers, other
10-52 regulatory staff, and representatives of a human rights advocacy
10-53 committee.
10-54 (i) The identity of a resident or a family member of a
10-55 resident interviewed by a quality-of-care monitor as provided by
10-56 Subsection (h)(2) shall remain confidential and may not be
10-57 disclosed to any person under any other provision of this section.
10-58 (j) The findings of a monitoring visit, both positive and
10-59 negative, shall be provided orally and in writing to the long-term
10-60 care facility administrator or, in the absence of the facility
10-61 administrator, to the administrator on duty or the director of
10-62 nursing.
10-63 (k) The quality-of-care monitor may recommend to the
10-64 long-term care facility administrator procedural and policy changes
10-65 and staff training to improve the care or quality of life of
10-66 facility residents.
10-67 (l) Conditions observed by the quality-of-care monitor that
10-68 create an immediate threat to the health or safety of a resident
10-69 shall be reported immediately to the regional office supervisor for
11-1 appropriate action and, as appropriate or as required by law, to
11-2 law enforcement, adult protective services, or other responsible
11-3 agencies.
11-4 (m) The commission shall create rapid response teams
11-5 composed of health care experts that can visit long-term care
11-6 facilities identified through the commission's early warning
11-7 system.
11-8 (n) Rapid response teams may visit long-term care facilities
11-9 that request the commission's assistance. A visit under this
11-10 subsection may not occur before the 60th day after the date of an
11-11 exit interview following an annual or follow-up survey or
11-12 inspection.
11-13 (o) The rapid response teams may not be deployed for the
11-14 purpose of helping a long-term care facility prepare for a regular
11-15 inspection or survey conducted under Chapter 242, 247, or 252,
11-16 Health and Safety Code, or in accordance with Chapter 32, Human
11-17 Resources Code.
11-18 Sec. 531.058. INFORMAL DISPUTE RESOLUTION FOR CERTAIN
11-19 LONG-TERM CARE FACILITIES. (a) The commission by rule shall
11-20 establish an informal dispute resolution process in accordance with
11-21 this section. The process must provide for adjudication by an
11-22 appropriate disinterested person of disputes relating to a proposed
11-23 enforcement action or related proceeding of the Texas Department of
11-24 Human Services under Section 32.021(d), Human Resources Code, or
11-25 Chapter 242, 247, or 252, Health and Safety Code. The informal
11-26 dispute resolution process must require:
11-27 (1) the institution or facility to request informal
11-28 dispute resolution not later than the 10th calendar day after
11-29 notification by the department of the violation of a standard or
11-30 standards;
11-31 (2) the commission to complete the process not later
11-32 than the 30th calendar day after receipt of a request from the
11-33 institution or facility for informal dispute resolution; and
11-34 (3) any individual representing an institution or
11-35 facility in an informal dispute resolution process to register with
11-36 the commission and disclose the following:
11-37 (A) the individual's employment history during
11-38 the preceding five years, including employment in regulatory
11-39 agencies of this state and other states;
11-40 (B) ownership, including the identity of the
11-41 controlling person or persons, of the institution or facility the
11-42 individual is representing before the commission; and
11-43 (C) the identity of other entities the
11-44 individual represents or has represented before the commission
11-45 during the previous 24 months.
11-46 (b) The commission shall adopt rules to adjudicate claims in
11-47 contested cases.
11-48 (c) The commission may not delegate its responsibility to
11-49 administer the informal dispute resolution process established by
11-50 this section to another state agency.
11-51 SECTION 7.03. Subsection (d), Section 32.021, Human
11-52 Resources Code, is amended to read as follows:
11-53 (d) The department shall include in its contracts for the
11-54 delivery of medical assistance by nursing facilities provisions for
11-55 monetary penalties to be assessed for violations as required by 42
11-56 U.S.C. Section 1396r, including without limitation the Omnibus
11-57 Budget Reconciliation Act (OBRA), P.L. 100-203, Nursing Home Reform
11-58 Amendments of 1987, provided that the department shall:
11-59 (1) provide for an informal dispute resolution process
11-60 in the Health and Human Services Commission as provided by Section
11-61 531.058, Government Code [department's central office; the informal
11-62 dispute resolution process shall:]
11-63 [(A) require the institution to request informal
11-64 dispute resolution no later than the 10th calendar day after
11-65 notification by the department of a violation of a standard or
11-66 standards;]
11-67 [(B) require the department to complete the
11-68 process no later than the 30th calendar day after receipt of a
11-69 request from the institution for informal dispute resolution; and]
12-1 [(C) require any individual representing an
12-2 institution in an informal dispute resolution process to register
12-3 with the department and disclose the following:]
12-4 [(i) the individual's five-year employment
12-5 history during the preceding five years, including employment in
12-6 regulatory agencies of this state and other states;]
12-7 [(ii) ownership, including the identity of
12-8 the controlling person or persons, of the institution the person is
12-9 representing before the department; and]
12-10 [(iii) the identity of other entities the
12-11 person represents or has represented before the agency during the
12-12 previous 24 months]; and
12-13 (2) develop rules to adjudicate claims in contested
12-14 cases, including claims unresolved by the informal dispute
12-15 resolution process of the Health and Human Services Commission.
12-16 SECTION 7.04. Not later than January 1, 2002, the
12-17 commissioner of health and human services shall adopt any rules
12-18 necessary to implement Sections 531.056, 531.057, and 531.058,
12-19 Government Code, as added by this article.
12-20 SECTION 7.05. Not later than January 1, 2002, the Texas
12-21 Department of Human Services shall develop training necessary to
12-22 implement Section 22.037, Human Resources Code, as added by this
12-23 article.
12-24 SECTION 7.06. (a) Effective January 1, 2002:
12-25 (1) all property and records in the custody of the
12-26 Texas Department of Human Services related to the informal dispute
12-27 resolution function under Subsection (d), Section 32.021, Human
12-28 Resources Code, as it existed before amendment by this article, and
12-29 all funds appropriated by the legislature to the Texas Department
12-30 of Human Services for the function are transferred to the Health
12-31 and Human Services Commission;
12-32 (2) a rule or form adopted by the Texas Department of
12-33 Human Services that relates to the informal dispute resolution
12-34 function under Subsection (d), Section 32.021, Human Resources
12-35 Code, as it existed before amendment by this article, is a rule or
12-36 form of the Health and Human Services Commission and remains in
12-37 effect until altered by that agency;
12-38 (3) the assumption of the informal dispute resolution
12-39 function by the Health and Human Services Commission does not
12-40 affect or impair any act done, any obligation, right, order,
12-41 license, permit, rule, criterion, standard, or requirement
12-42 existing, any investigation begun, or any penalty accrued under
12-43 former law, and that law remains in effect for any action
12-44 concerning those matters; and
12-45 (4) an action brought or proceeding commenced before
12-46 the assumption by the Health and Human Services Commission of the
12-47 informal dispute resolution function under this article is
12-48 effected, including a contested case or a remand of an action or
12-49 proceeding by a reviewing court, is governed by the law and rules
12-50 applicable to the action or proceeding before the date of the
12-51 assumption of the function by the Health and Human Services
12-52 Commission.
12-53 (b) In implementing Section 531.057, Government Code, as
12-54 added by this article, the Health and Human Services Commission may
12-55 not transfer to the commission employees or funding from the
12-56 regulatory functions of the Texas Department of Human Services.
12-57 ARTICLE 8. AMELIORATION OF VIOLATIONS
12-58 SECTION 8.01. Section 242.071, Health and Safety Code, is
12-59 amended to read as follows:
12-60 Sec. 242.071. AMELIORATION OF VIOLATION. (a) In lieu of
12-61 demanding [ordering] payment of an [the] administrative penalty
12-62 assessed under Section 242.066 [242.069], the commissioner may, in
12-63 accordance with this section, allow [require] the person to use,
12-64 under the supervision of the department, any portion of the penalty
12-65 to ameliorate the violation or to improve services, other than
12-66 administrative services, in the institution affected by the
12-67 violation.
12-68 (b) The department shall offer amelioration to a person for
12-69 a charged violation if the department determines that the violation
13-1 does not constitute immediate jeopardy to the health and safety of
13-2 an institution resident.
13-3 (c) The department may not offer amelioration to a person
13-4 if:
13-5 (1) the person has been charged with a violation which
13-6 is subject to correction under Section 242.0665; or
13-7 (2) the department determines that the charged
13-8 violation constitutes immediate jeopardy to the health and safety
13-9 of an institution resident.
13-10 (d) The department shall offer amelioration to a person
13-11 under this section not later than the 10th day after the date the
13-12 person receives from the department a final notification of
13-13 assessment of administrative penalty that is sent to the person
13-14 after an informal dispute resolution process but before an
13-15 administrative hearing under Section 242.068.
13-16 (e) A person to whom amelioration has been offered must file
13-17 a plan for amelioration not later than the 45th day after the date
13-18 the person receives the offer of amelioration from the department.
13-19 In submitting the plan, the person must agree to waive the person's
13-20 right to an administrative hearing under Section 242.068 if the
13-21 department approves the plan.
13-22 (f) At a minimum, a plan for amelioration must:
13-23 (1) propose changes to the management or operation of
13-24 the institution that will improve services to or quality of care of
13-25 residents of the institution;
13-26 (2) identify, through measurable outcomes, the ways in
13-27 which and the extent to which the proposed changes will improve
13-28 services to or quality of care of residents of the institution;
13-29 (3) establish clear goals to be achieved through the
13-30 proposed changes;
13-31 (4) establish a timeline for implementing the proposed
13-32 changes; and
13-33 (5) identify specific actions necessary to implement
13-34 the proposed changes.
13-35 (g) The department may require that an amelioration plan
13-36 propose changes that would result in conditions that exceed the
13-37 requirements of this chapter or the rules adopted under this
13-38 chapter.
13-39 (h) The department shall approve or deny an amelioration
13-40 plan not later than the 45th day after the date the department
13-41 receives the plan. On approval of a person's plan, the department
13-42 shall deny a pending request for a hearing submitted by the person
13-43 under Section 242.067(d).
13-44 (i) The department may not offer amelioration to a person:
13-45 (1) more than three times in a two-year period; or
13-46 (2) more than one time in a two-year period for the
13-47 same or similar violation.
13-48 (j) In this section, "immediate jeopardy to health and
13-49 safety" means a situation in which there is a high probability that
13-50 serious harm or injury to a resident could occur at any time or
13-51 already has occurred and may occur again if the resident is not
13-52 protected from the harm or if the threat is not removed.
13-53 SECTION 8.02. Section 252.071, Health and Safety Code, is
13-54 amended to read as follows:
13-55 Sec. 252.071. AMELIORATION OF VIOLATION. (a) In lieu of
13-56 demanding [ordering] payment of an administrative penalty
13-57 authorized by this subchapter, the department may allow [require] a
13-58 person subject to the penalty to use, under the supervision of the
13-59 department, all or part of the amount of the penalty to ameliorate
13-60 the violation or to improve services, other than administrative
13-61 services, in the facility affected by the violation.
13-62 (b) The department shall offer amelioration to a person for
13-63 a charged violation if the department determines that the violation
13-64 does not constitute immediate jeopardy to the health and safety of
13-65 a facility resident.
13-66 (c) The department may not offer amelioration to a person if
13-67 the department determines that the charged violation constitutes
13-68 immediate jeopardy to the health and safety of a facility resident.
13-69 (d) The department shall offer amelioration to a person
14-1 under this section not later than the 10th day after the date the
14-2 person receives from the department a final notification of
14-3 assessment of administrative penalty that is sent to the person
14-4 after an informal dispute resolution process but before an
14-5 administrative hearing under Section 252.067.
14-6 (e) A person to whom amelioration has been offered must file
14-7 a plan for amelioration not later than the 45th day after the date
14-8 the person receives the offer of amelioration from the department.
14-9 In submitting the plan, the person must agree to waive the person's
14-10 right to an administrative hearing under Section 252.067 if the
14-11 department approves the plan.
14-12 (f) At a minimum, a plan for amelioration must:
14-13 (1) propose changes to the management or operation of
14-14 the facility that will improve services to or quality of care of
14-15 residents of the facility;
14-16 (2) identify, through measurable outcomes, the ways in
14-17 which and the extent to which the proposed changes will improve
14-18 services to or quality of care of residents of the facility;
14-19 (3) establish clear goals to be achieved through the
14-20 proposed changes;
14-21 (4) establish a timeline for implementing the proposed
14-22 changes; and
14-23 (5) identify specific actions necessary to implement
14-24 the proposed changes.
14-25 (g) The department may require that an amelioration plan
14-26 propose changes that would result in conditions that exceed the
14-27 requirements of this chapter or the rules adopted under this
14-28 chapter.
14-29 (h) The department shall approve or deny an amelioration
14-30 plan not later than the 45th day after the date the department
14-31 receives the plan. On approval of a person's plan, the department
14-32 shall deny a pending request for a hearing submitted by the person
14-33 under Section 252.066(b).
14-34 (i) The department may not offer amelioration to a person:
14-35 (1) more than three times in a two-year period; or
14-36 (2) more than one time in a two-year period for the
14-37 same or similar violation.
14-38 (j) In this section, "immediate jeopardy to health and
14-39 safety" means a situation in which there is a high probability that
14-40 serious harm or injury to a resident could occur at any time or
14-41 already has occurred and may occur again if the resident is not
14-42 protected from the harm or if the threat is not removed.
14-43 SECTION 8.03. This article applies only to a violation that
14-44 occurs on or after the effective date of this Act. A violation
14-45 that occurs before that date is covered by the law in effect on the
14-46 date the violation occurred, and the former law is continued in
14-47 effect for that purpose.
14-48 ARTICLE 9. QUALITY ASSURANCE FEE
14-49 SECTION 9.01. Chapter 242, Health and Safety Code, is
14-50 amended by adding Subchapter Q to read as follows:
14-51 SUBCHAPTER Q. QUALITY ASSURANCE FEE
14-52 Sec. 242.851. DEFINITION. In this subchapter, "gross
14-53 receipts" means money paid as compensation for services provided to
14-54 residents, including client participation. The term does not
14-55 include charitable contributions to an institution.
14-56 Sec. 242.852. COMPUTING QUALITY ASSURANCE FEE. (a) A
14-57 quality assurance fee is imposed on each institution for which a
14-58 license fee must be paid under Section 242.034. The fee is:
14-59 (1) an amount established under Subsection (b)
14-60 multiplied by the number of patient days as determined in
14-61 accordance with Section 242.853;
14-62 (2) payable monthly; and
14-63 (3) in addition to other fees imposed under this
14-64 chapter.
14-65 (b) The Health and Human Services Commission or the
14-66 department at the direction of the commission shall set the quality
14-67 assurance fee for each day in the amount necessary to produce
14-68 annual revenues equal to six percent of the institution's total
14-69 annual gross receipts in this state. The fee is subject to a
15-1 prospective adjustment as necessary.
15-2 (c) The amount of the quality assurance fee must be
15-3 determined using patient days and gross receipts reported to the
15-4 department and covering a period of at least six months.
15-5 (d) The quality assurance fee is an allowable cost for
15-6 reimbursement under the state Medicaid program.
15-7 Sec. 242.853. PATIENT DAYS. For each calendar day, an
15-8 institution shall determine the number of patient days by adding
15-9 the following:
15-10 (1) the number of patients occupying an institution
15-11 bed immediately before midnight of that day;
15-12 (2) the number of beds that are on hold on that day
15-13 and that have been placed on hold for a period not to exceed five
15-14 consecutive calendar days during which a patient is in the
15-15 hospital; and
15-16 (3) the number of beds that are on hold on that day
15-17 and that have been placed on hold for a period not to exceed 14
15-18 consecutive calendar days during which a patient is on therapeutic
15-19 home leave.
15-20 Sec. 242.854. REPORTING AND COLLECTION. (a) The Health and
15-21 Human Services Commission or the department at the direction of the
15-22 commission shall collect the quality assurance fee.
15-23 (b) Each institution shall:
15-24 (1) not later than the 10th day after the last day of
15-25 a month file a report with the Health and Human Services Commission
15-26 or the department, as appropriate, stating the total patient days
15-27 for the month; and
15-28 (2) not later than the 30th day after the last day of
15-29 the month pay the quality assurance fee.
15-30 Sec. 242.855. RULES; ADMINISTRATIVE PENALTY. (a) The
15-31 Health and Human Services Commission shall adopt rules for the
15-32 administration of this subchapter, including rules related to the
15-33 imposition and collection of the quality assurance fee.
15-34 (b) The Health and Human Services Commission may not adopt
15-35 rules granting any exceptions from the quality assurance fee.
15-36 (c) An administrative penalty assessed under this subchapter
15-37 in accordance with Section 242.066 may not exceed one-half of the
15-38 amount of the outstanding quality assurance fee or $20,000,
15-39 whichever is greater.
15-40 Sec. 242.856. QUALITY ASSURANCE FUND. (a) The quality
15-41 assurance fund is a fund outside the state treasury held by the
15-42 Texas Treasury Safekeeping Trust Company. Notwithstanding any
15-43 other law, the comptroller shall deposit fees collected under this
15-44 subchapter to the credit of the fund.
15-45 (b) The quality assurance fund is composed of:
15-46 (1) fees deposited to the credit of the fund under
15-47 this subchapter; and
15-48 (2) the earnings of the fund.
15-49 (c) Money deposited to the quality assurance fund remains
15-50 the property of the fund and may be used only for the purposes of
15-51 this subchapter.
15-52 (d) Subject to legislative appropriation and this
15-53 subchapter, quality assurance fees collected under this subchapter,
15-54 combined with federal matching funds, will support or maintain an
15-55 increase in Medicaid reimbursement for institutions.
15-56 Sec. 242.857. REIMBURSEMENT OF INSTITUTIONS. (a) The
15-57 Health and Human Services Commission shall use money in the quality
15-58 assurance fund, together with any federal money available to match
15-59 that money, to:
15-60 (1) offset allowable expenses under the state Medicaid
15-61 program; or
15-62 (2) increase reimbursement rates paid under the
15-63 Medicaid program to institutions.
15-64 (b) The Health and Human Services Commission or the
15-65 department at the direction of the commission shall devise the
15-66 formula by which amounts received under this section increase the
15-67 reimbursement rates paid to institutions under the state Medicaid
15-68 program.
15-69 (c) The Health and Human Services Commission shall ensure
16-1 that the formula devised under Subsection (b) provides incentives
16-2 for institutions to increase direct care staffing and direct care
16-3 wages and benefits.
16-4 Sec. 242.858. INVALIDITY; FEDERAL FUNDS. If any portion of
16-5 this subchapter is held invalid by a final order of a court that is
16-6 not subject to appeal, or if the Health and Human Services
16-7 Commission determines that the imposition of the fee and the
16-8 expenditure as prescribed by this subchapter of amounts collected
16-9 will not entitle the state to receive additional federal funds
16-10 under the Medicaid program, the commission shall stop collection of
16-11 the quality assurance fee and shall return, not later than the 30th
16-12 day after the date collection is stopped, any money collected, but
16-13 not spent, under this subchapter to the institutions that paid the
16-14 fees in proportion to the total amount paid by those institutions.
16-15 Sec. 242.859. LEGISLATIVE REVIEW; EXPIRATION. The 79th
16-16 Legislature shall review the operation and effectiveness of this
16-17 subchapter. Unless continued in effect by the 79th Legislature,
16-18 this subchapter expires effective September 1, 2005.
16-19 SECTION 9.02. Notwithstanding Section 242.852, Health and
16-20 Safety Code, as added by this article, the quality assurance fee
16-21 imposed under Subchapter Q, Chapter 242, Health and Safety Code, as
16-22 added by this article, that is effective for the first month
16-23 following the effective date of this Act is equal to $5.25
16-24 multiplied by the number of patient days as determined under that
16-25 subchapter. The quality assurance fee established under this
16-26 section remains in effect until the Health and Human Services
16-27 Commission, or the Texas Department of Human Services at the
16-28 direction of the commission, obtains the information necessary to
16-29 set the fee under Section 242.852, Health and Safety Code, as added
16-30 by this article.
16-31 SECTION 9.03. As soon as practicable after the effective
16-32 date of this Act, the Health and Human Services Commission shall
16-33 adopt rules as necessary to implement Subchapter Q, Chapter 242,
16-34 Health and Safety Code, as added by this article.
16-35 SECTION 9.04. If before implementing any provision of this
16-36 article a state agency determines a waiver or authorization from a
16-37 federal agency is necessary for implementation of that provision,
16-38 the agency affected by the provision shall request the waiver or
16-39 authorization and may delay implementing that provision until the
16-40 waiver or authorization is granted.
16-41 ARTICLE 10. TEXAS DEPARTMENT OF INSURANCE STUDY AND REPORT
16-42 SECTION 10.01. DEFINITIONS. In this article:
16-43 (1) "Commissioner" means the commissioner of
16-44 insurance.
16-45 (2) "Department" means the Texas Department of
16-46 Insurance.
16-47 SECTION 10.02. STUDY. The department shall study the
16-48 implementation of Articles 3, 5, and 6 of this Act and, in
16-49 particular, shall study:
16-50 (1) the effect of the changes in law made by Articles
16-51 5 and 6 of this Act on:
16-52 (A) fostering the development of a competitive
16-53 market for professional liability insurance for nursing
16-54 institutions; and
16-55 (B) improving the availability and affordability
16-56 of professional liability insurance for nursing institutions; and
16-57 (2) the impact of awards of exemplary damages on rates
16-58 for professional liability insurance for nursing homes.
16-59 SECTION 10.03. REPORTS. (a) Not later than December 1,
16-60 2002, the commissioner shall submit an interim report on the study
16-61 conducted under Section 10.02 of this Act to the governor,
16-62 lieutenant governor, and speaker of the house of representatives.
16-63 (b) Not later than December 1, 2004, the commissioner shall
16-64 submit a final report on the study to the governor, lieutenant
16-65 governor, and speaker of the house of representatives.
16-66 SECTION 10.04. EXPIRATION. This article expires September
16-67 1, 2005.
16-68 ARTICLE 11. EFFECT OF ACT; EFFECTIVE DATE
16-69 SECTION 11.01. To the extent of any conflict, this Act
17-1 prevails over any other Act of the 77th Legislature, Regular
17-2 Session, 2001, regardless of the relative dates of enactment,
17-3 including an Act that purports to:
17-4 (1) affect the admissibility in a civil action,
17-5 enforcement action, or related proceeding of evidence subject to
17-6 Subsections (i) and (k), Section 32.021, Human Resources Code, as
17-7 amended by this Act, or Sections 242.050 or 252.045, Health and
17-8 Safety Code, as added by this Act;
17-9 (2) affect coverage for for-profit or not-for-profit
17-10 nursing homes under Articles 5.15-1 and 21.49-3, Insurance Code, or
17-11 funding for the joint underwriting association under Article
17-12 21.49-3, Insurance Code;
17-13 (3) affect the liability of the joint underwriting
17-14 association established under Article 21.49-3, Insurance Code, for
17-15 exemplary damages awarded under Chapter 41, Civil Practice and
17-16 Remedies Code;
17-17 (4) require a nursing home to maintain liability
17-18 insurance coverage;
17-19 (5) require training for surveyors of long-term care
17-20 facilities, as described by Section 22.037, Human Resources Code,
17-21 as added by this Act;
17-22 (6) require review of the survey process for certain
17-23 long-term care facilities, as described by Section 531.056,
17-24 Government Code, as added by this Act;
17-25 (7) establish a quality assurance early warning system
17-26 for certain long-term care facilities, as described by Section
17-27 531.057, Government Code, as added by this Act;
17-28 (8) affect informal dispute resolution of disputes
17-29 subject to Section 531.058, Government Code, as added by this Act;
17-30 (9) affect amelioration of violations subject to
17-31 Sections 242.071 and 252.071, Health and Safety Code; or
17-32 (10) establish a quality assurance fee for nursing
17-33 homes, as described by Subchapter Q, Chapter 242, Health and Safety
17-34 Code, as added by this Act.
17-35 SECTION 11.02. This Act takes effect immediately if it
17-36 receives a vote of two-thirds of all the members elected to each
17-37 house, as provided by Section 39, Article III, Texas Constitution.
17-38 If this Act does not receive the vote necessary for immediate
17-39 effect, this Act takes effect September 1, 2001.
17-40 * * * * *