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78R7360 AJA-D
By: Smithee H.B. No. 1757
A BILL TO BE ENTITLED
AN ACT
relating to rate filing and rate rollbacks for professional
liability insurance for physicians and health care providers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter O, Chapter 5, Insurance Code, is
amended by adding Article 5.134 to read as follows:
Art. 5.134. RATE FILING AND RATE ROLLBACKS FOR PROFESSIONAL
LIABILITY INSURANCE FOR PHYSICIANS AND HEALTH CARE PROVIDERS
Sec. 1. FINDINGS. The legislature finds that:
(1) the cost of professional liability insurance for
physicians and health care providers has been a significant factor
in the reduced availability of health care in this state;
(2) legislation under consideration by the regular
session of the 78th Legislature will eliminate or significantly
reduce the cost of claims under policies of professional liability
insurance for physicians and health care providers, and legislation
by future legislatures may have the same effect;
(3) while the monetary effect of these legislative
changes can be actuarially determined within a reasonable degree of
certainty, insurers will delay implementation of rate reductions
until they have data evidencing actual loss experience;
(4) delay in implementation of rate reductions will
result in a windfall for the insurers benefited by the changes
described by this section, and this benefit should be passed on to
insureds; and
(5) legislative action in the public interest and
within the police power of the state is required to eliminate
unnecessary delays to pass these benefits on to the insured
physicians and health care providers of this state.
Sec. 2. SCOPE OF ARTICLE. (a) This article applies to any
insurer that is authorized to engage in business in this state and
that is authorized to write professional liability insurance for
physicians and health care providers, including:
(1) a Lloyd's plan;
(2) a reciprocal or interinsurance exchange;
(3) the joint underwriting association established
under Article 21.49-3 of this code; and
(4) a self-insurance trust established under Article
21.49-4 of this code.
(b) It is the intent of the legislature that all insurers,
including insurers whose rates are not regulated, pass through the
savings that accrue from the changes described by Section 1 of this
article to their policyholders on a prospective basis. To monitor
compliance with this legislative directive, the commissioner may
require information in rate filings, special data calls,
informational hearings, and any other means consistent with other
provisions of this code applicable to the affected insurers.
Information provided under this subsection is privileged and
confidential to the same extent as the information is privileged
and confidential under this code or other laws for other insurers
licensed and writing the same line of insurance in this state. The
information remains privileged and confidential unless and until
introduced into evidence at an administrative hearing or in a court
of competent jurisdiction. Section 4 of this article does not apply
to the insurers that are not rate-regulated but that are covered by
this subsection.
(c) This article applies only to professional liability
insurance for physicians and health care providers.
Sec. 3. RATE ROLLBACK. (a) Not later than September 1 of
each year, the commissioner shall hold a rulemaking hearing under
Chapter 2001, Government Code, to determine the percentage of
equitable across-the-board reductions in insurance rates required
of insurers writing professional liability insurance for
physicians and health care providers.
(b) Not later than October 1 of each year, the commissioner
shall issue rules mandating the appropriate rate reductions to
rates for professional liability insurance for physicians and
health care providers and developed without consideration of the
effect of the changes described by Section 1 of this article.
(c) The commissioner shall set the percentage of the rate
reduction for professional liability insurance for physicians and
health care providers and may set different rate reductions for
different types of policies. The commissioner's order establishing
the rate reductions must be based on the evidence adduced at the
rulemaking hearing. Rates resulting from the rate reductions
imposed by this article must comply with Section 3(d), Article
5.15-1, of this code.
(d) The rate reductions adopted under this section are
applicable to each policy or coverage delivered, issued for
delivery, or renewed on and after January 1, 2004, and to each
policy or coverage delivered, issued for delivery, or renewed on
and after the 90th day after the date of each subsequent rule
adopted under this section. An insurer that is not otherwise
rate-regulated but that is subject to this article shall apply the
rate reduction to the rates used by the insurer.
(e) Any rule or order of the commissioner that determines,
approves, or sets a rate reduction under this section and is
appealed or challenged remains in effect during the pendency of the
appeal or challenge. During the pendency of the appeal or
challenge, an insurer shall use rates that reflect the rate
reduction provided in the order being appealed or challenged. The
rate reduction is lawful and valid during the appeal or challenge.
Sec. 4. ADMINISTRATIVE RELIEF. (a) Except as provided by
Subsection (b) of this section, a rate filed under Articles 5.13-2
and 5.15-1 of this code for professional liability insurance for
physicians and health care providers on and after January 1, 2004,
and a rate filed under those articles on and after the 90th day
following the effective date of a subsequent rule adopted under
Section 3(a) of this article, shall reflect each rate reduction
imposed under Section 3 of this article.
(b) Notwithstanding Articles 5.13-2 and 5.15-1 of this
code, the commissioner shall, after notice and opportunity for
hearing, disapprove a filed rate, without regard to whether the
rate complies with Articles 5.13-2 and 5.15-1 of this code, if the
commissioner finds that the filed rate does not reflect the rate
reduction imposed under Section 3 of this article. A proceeding
under this section is a contested case under Chapter 2001,
Government Code.
(c) The commissioner is not required to disapprove a filed
rate that reflects less than the full amount of the rate reduction
imposed by Section 3 of this article if:
(1) the commissioner determines that based on clear
and convincing evidence an insurer will be financially unable in a
particular line of insurance to continue writing that line; or
(2) the rate reduction required by Section 3 of this
article would likely result in placing the insurer in a hazardous
financial condition described by Section 2, Article 1.32, of this
code.
Sec. 5. DURATION OF REDUCTION. Unless the commissioner
grants relief under Section 4 of this article, each rate reduction
required under Section 3 of this article remains in effect for the
period specified in the commissioner's rule or order.
Sec. 6. MODIFICATION. The commissioner may, by bulletin or
directive, based on the evidence accumulated by the commissioner
before the bulletin or directive is issued, modify a rate reduction
mandated by the commissioner under this article if a final,
unappealable judgment of a court with appropriate jurisdiction
stays the effect of, enjoins, or otherwise modifies or declares
unconstitutional any legislation described by Section 1 of this
article on which the commissioner based the rate reduction.
Sec. 7. HEARINGS AND ORDERS. Notwithstanding Chapter 40 of
this code, a rulemaking hearing under this article shall be held
before the commissioner or the commissioner's designee. The
rulemaking procedures established by this section do not apply to
any other rate promulgation proceeding.
Sec. 8. PENDING RATE MATTERS. A rate filed pursuant to a
commissioner's order issued before May 1, 2003, is not subject to
the rate reductions required by this article before January 1,
2004.
Sec. 9. RECOMMENDATIONS TO LEGISLATURE. The commissioner
shall assemble information, conduct hearings, and take other
appropriate measures to assess and evaluate changes in the
marketplace resulting from the implementation of this article and
to report findings and recommendations to the legislature.
SECTION 2. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.