Senate Bill No. 27

(By Senator Kessler)

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[Introduced January 12, 2000; referred to the Committee on Banking and Insurance; and then to the Committee on the Judiciary.]
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A BILL to amend chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article five-r, relating to health care liability; providing definitions; stating the care required by health insurance carriers or health maintenance organizations and when liable for damages; and limitations on cause of action.

Be it enacted by the Legislature of West Virginia:
That chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article five-r, to read as follows:
ARTICLE 5R. HEALTH CARE LIABILITY.
§16-5R-1. Definitions.

 As used in this article:
(a) "Appropriate and medically necessary" means the standard
for health care services as determined by physicians and health care providers in accordance with the prevailing practices and standards of the medical profession and community.
(b) "Enrollee" means an individual who is enrolled in a health care plan, including covered dependents.
(c) "Health care plan" means any plan whereby any person undertakes to provide, arrange for, pay for, or reimburse any part of the cost of any health care services.
(d) "Health care provider" means a person or entity as defined in section two, article twenty-five-a, chapter thirty-three of this code, the health maintenance organization act or in section two, article seven-b, chapter fifty-five of this code, which is the medical professional liability act.
(e) "Health care treatment decision" means a determination made when medical services are actually provided by the health care plan and a decision which affects the quality of the diagnosis, care or treatment provided to the plan's insureds or enrollees.
(f) "Health insurance carrier" means an authorized insurance company that issues policies of accident and sickness insurance under chapter thirty-three of this code.
(g) "Health maintenance organization" means an organization as defined in section two, article twenty-five-a, chapter thirty-three of this code, the health maintenance organization act.
(h) "Managed care entity" means any entity which delivers, administers or assumes risk for health care services with systems or techniques to control or influence the quality, accessibility, utilization or costs and prices of the services to a defined enrollee population, but does not include an employer purchasing coverage or acting on behalf of its employees or the employees of one or more subsidiaries or affiliated corporations of the employer or a pharmacy licensed by the state board of pharmacy.
(i) "Physician" means:
(1) An individual licensed to practice medicine in this state;
(2) A professional association organized under the laws of this state; or
(3) Another person wholly owned by physicians.
(j) "Ordinary care" means, in the case of a health insurance carrier, health maintenance organization or managed care entity, that degree of care that a health insurance carrier, health maintenance organization or managed care entity of ordinary prudence would use under the same or similar circumstances. In the case of a person who is an employee, agent, ostensible agent or representative of a health insurance carrier, health maintenance organization or managed care entity, "ordinary care" means that degree of care that a person of ordinary prudence in the same profession, specialty, or area of practice as the person would use in the same or similar circumstances.
§16-5R-2. Application.

(a) A health insurance carrier, health maintenance organization or other managed care entity for a health care plan has the duty to exercise ordinary care when making health care treatment decisions and is liable for damages for harm to an insured or enrollee proximately caused by its failure to exercise ordinary care.
(b) A health insurance carrier, health maintenance organization or other managed care entity for a health care plan is also liable for damages for harm to an insured or enrollee proximately caused by the health care treatment decisions made by its:
(1) Employees;
(2) Agents;
(3) Ostensible agents; or
(4) Representatives who are acting on its behalf and over whom it has the right to exercise influence or control or has actually exercised influence or control which result in the failure to exercise ordinary care.
(c) It is a defense to any action asserted against a health insurance carrier, health maintenance organization or other managed care entity for a health care plan that:
(1) Neither the health insurance carrier, health maintenance
organization or other managed care entity, nor any employee, agent, ostensible agent, or representative for whose conduct the health insurance carrier, health maintenance organization or other managed care entity is liable under subsection (b) of this section, controlled, influenced or participated in the health care treatment decision; and
(2) The health insurance carrier, health maintenance organization or other managed care entity did not deny or delay payment for any treatment prescribed or recommended by a provider to the insured or enrollee.
(d) The standards in subsections (a) and (b) of this section create no obligation on the part of the health insurance carrier, health maintenance organization or other managed care entity to provide to an insured or enrollee treatment which is not covered by the health care plan of the entity.
(e) This article does not create any liability on the part of an employer, an employer group purchasing organization or a pharmacy licensed by the state board of pharmacy that purchases coverage or assumes risk on behalf of its employees.
(f) A health insurance carrier, health maintenance organization or managed care entity may not remove a physician or health care provider from its plan or refuse to renew the physician or health care provider with its plan for advocating on behalf of an enrollee for appropriate and medically necessary health care for the enrollee.
(g) A health insurance carrier, health maintenance organization or other managed care entity may not enter into a contract with a physician, hospital, or other health care provider or pharmaceutical company which includes an indemnification or hold harmless clause for the acts or conduct of the health insurance carrier, health maintenance organization or other managed care entity. Any such indemnification or hold harmless clause in an existing contract is hereby declared void.
(h) Nothing in any law of this state prohibiting a health insurance carrier, health maintenance organization or other managed care entity from practicing medicine or being licensed to practice medicine may be asserted as a defense by the health insurance carrier, health maintenance organization or other managed care entity in an action brought against it pursuant to this section or any other law.
(i) In an action against a health insurance carrier, health maintenance organization or managed care entity, a finding that a physician or other health care provider is an employee, agent, ostensible agent, or representative of the health insurance carrier, health maintenance organization or managed care entity
shall not be based solely on proof that the person's name appears in a listing of approved physicians or health care providers made available to insureds or enrollees under a health care plan.
(j) This article does not apply to workers' compensation insurance coverage.
(k) An enrollee who files an action under this article must
comply with the requirements of article seven-b, chapter fifty-five of this code, relating to the medical professional liability act, as it relates to complaints, pretrial procedures and expert reports.
§16-5R-3. Limitations on cause of action.

(a) A person may not maintain a cause of action under this article against a health insurance carrier, health maintenance organization or other managed care entity unless the affected insured or enrollee or the insured's or enrollee's representative:
(1) Has exhausted the appeals and review applicable under the utilization review requirements; or
(2) Before instituting the action:
(i) Gives written notice of the claim as provided by subsection (b) of this section; and
(ii) Agrees to submit the claim to a review by an independent review organization.
(b) The notice required by the provisions of paragraph (i), subdivision (2), subsection (a) of this section must be delivered or mailed to the health insurance carrier, health maintenance organization or managed care entity against whom the action is made not later than the thirtieth day before the date the claim is filed.
(c) The insured or enrollee or the insured's or enrollee's representative must submit the claim to a review by an independent review organization if the health insurance carrier, health maintenance organization or managed care entity against whom the claim is made requests the review not later than the fourteenth day after the date notice under the provisions of paragraph (i), subdivision (2), subsection (a) of this section is received by the health insurance carrier, health maintenance organization or managed care entity. If the health insurance carrier, health maintenance organization or managed care entity does not request the review within the period specified by this subsection, the insured or enrollee or the insured's or enrollee's representative is not required to submit the claim to independent review before maintaining the action.
(d) Subject to the provisions of subsection (e) of this section, if the enrollee has not complied with the provisions of subsection (a) of this section, an action under this section may not be dismissed by the court, but the court may, in its discretion, order the parties to submit to an independent review or mediation or other nonbinding alternative dispute resolution and may abate the action for a period of not to exceed thirty days for these purposes. The orders of the court are the sole remedy available to a party complaining of an enrollee's failure to comply with the provisions of subsection (a) of this section.
(e) The enrollee is not required to comply with the provisions of subsection (c) of this section and no abatement or other order pursuant to the provisions of subsection (d) of this section for failure to comply may be imposed if the enrollee has filed a pleading alleging in substance that:
(1) Harm to the enrollee has already occurred because of the conduct of the health insurance carrier, health maintenance organization or managed care entity or because of an act or omission of an employee, agent, ostensible agent, or representative of the carrier, organization or entity for whose conduct it is liable; and
(2) The review would not be beneficial to the enrollee, unless the court, upon motion by a defendant carrier, organization or entity finds after hearing that the pleading was not made in good faith, in which case the court may enter an order pursuant to the provisions of subsection (d) of this section.
(f) If the insured or enrollee or the insured's or enrollee's representative seeks to exhaust the appeals and review or provides notice, as required by the provisions of subsection (a) of this section, before the statute of limitations applicable to a claim against a managed care entity has expired, the limitations period is tolled until the later of:
(i) The thirtieth day after the date the insured or enrollee or the insured's or enrollee's representative has exhausted the process for appeals and review applicable under the utilization review requirements; or
(ii) The fortieth day after the date the insured or enrollee or the insured's or enrollee's representative gives notice under the provisions of paragraph (i), subdivision (2), subsection (a) of this section.
(g) This section does not prohibit an insured or enrollee from pursuing other appropriate remedies, including injunctive relief, a declaratory judgment, or relief available under law, if the requirement of exhausting the process for appeal and review places the insured's or enrollee's health in serious jeopardy.


NOTE: The purpose of this bill is to regulate health care liability. It provides definitions. It states how the article applies to care required by health insurance carriers or health maintenance organizations and when these entities are liable for damages. It also provides for limitations on causes of action against health care providers.

This article is new; therefore, strike-throughs and underscoring have been omitted.