ENGROSSED
H. B. 601
(By Mr. Speaker, Mr. Kiss, and Delegate Trump)
[By Request of the Executive]
[Introduced October 21, 2001; referred to the
Committee on Finance.]
A BILL to amend chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding
thereto a new article designated, article thirteen-p; to amend
and reenact sections one, two, three, four, five and five-c,
article twelve, chapter twenty-nine of said code; and to
further amend said article by adding thereto seven new
sections, designated sections five-d, five-e, five-f, five-g,
thirteen-b, thirteen-c and fourteen, all relating generally to
establishment and operation of medical professional liability
insurance programs as an alternative to commercial coverage
for medical liability claims; creating a tax credit for
physicians to assist in paying for medical liability premiums and establishing a termination date; defining certain terms;
establishing medical liability programs, including a preferred
medical liability program and a high risk medical liability
program and exceptions to participation; expanding the board
of risk and insurance management and establishing
reimbursement, establishing a procedure for appointment to
the board and expanding the powers and duties of the board;
providing for employment of executive director and specifying
powers and duties of the director; establishing special
revenue account in state treasury for deposit of collected
premiums and for expenditure and investment of funds in the
account; providing for payment of start up operating expenses
of medical liability board and a pool from which claims may be
paid and for amounts so paid to be reimbursed from collected
premiums; requiring certain documentation to pay a medical
liability settlement or judgment; providing sole authority to
the board to settle and release claims; requiring board to
submit certain reports to licensing authorities; exempting
specific claim reserve information from disclosure under state
freedom of information act; requiring board to post
supersedeas bond when it appeals a medical liability judgment against a health care provider; providing for apportionment of
interest accruing prejudgment or post-judgment on certain
claims; establishing a rule making procedure; establishing the
ability to do a governmental transfer of up to ten million
dollars from the Tobacco Settlement medical trust fund if
appropriated by the legislature; specifying that up to ten
million dollars could be made available by appropriation by
the legislature to provide capitalization for a private entity
to establish a medical liability insurance company; specifying
effective date; and allowing policies written after the
effective date to be retroactive to the effective date.
Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended by adding thereto
a new article designated article thirteen-p; that sections one,
two, three, four, five and five-c, article twelve, chapter twenty-
nine of said code be amended and reenacted; and that said article
be further amended by adding thereto seven new sections, designated
sections five-d, five-e, five-f, five-g, thirteen-b, thirteen-c and
fourteen, all to read as follows:
CHAPTER 11. TAXATION.
ARTICLE 13P.TAX CREDIT FOR MEDICAL LIABILITY INSURANCE PREMIUMS.
§11-13P-1. Legislative finding and purpose.
The Legislature finds that the retention of physicians
practicing in this state is in the public interest and promotes the
general welfare of the people of this state. The Legislature
further finds that the promotion of stable and affordable medical
malpractice liability insurance premium rates will induce retention
of physicians practicing in this state.
In order to effectively decrease the cost of medical liability
insurance premiums paid in this state on physicians' services,
there is hereby provided a tax credit for certain medical liability
insurance premiums paid.
§11-13P-2. Definitions.
(a) General. - When used in this article, or in the
administration of this article, terms defined in subsection (b) of
this section have the meanings ascribed to them by this section,
unless a different meaning is clearly required by the context in
which the term is used.
(b) Terms defined. -
(1)"Adjusted annual medical liability premium" means statewide
average of medical liability insurance premiums by specialty and sub-specialty groups directly paid by the eligible taxpayer during
the taxable year to cover physicians' services performed during the
year reduced by the sum of ten thousand dollars per physician
covered by the medical liability insurance policy or policies for
which the premiums are paid.
(2) "Eligible taxpayer" means any person subject to tax under
section sixteen, article twenty-seven of this chapter or a
physician who is a partner, member, shareholder or employee of an
eligible taxpayer.
(3) "Person" means and includes any natural person,
corporation, limited liability company, trust or partnership.
(4) "Physicians' services" means health care providers
services taxable under section sixteen, article twenty-seven of
this chapter performed in this state by physicians licensed by the
state board of medicine or the state board of osteopathic medicine.
(5) "Statewide average medical liability insurance premiums"
are the average of premiums for each specialty and sub-specialty
group as determined by the state insurance commission.
§11-13P-3. Eligibility for tax credits; creation of the credit.
There shall be allowed to every eligible taxpayer a credit
against the taxes imposed by article twenty-one of this chapter and against the taxes payable under section sixteen, article twenty-
seven of this chapter. The amount of this credit shall be
determined and applied as provided in this article.
§11-13P-4. Amount of credit allowed.
The amount of annual credit allowable under this article to an
eligible taxpayer shall be equal to ten percent of the adjusted
annual medical liability insurance.
§11-13P-5. Excess credit forfeited.
If after application of the credit against tax under this
article, any credit remains for the taxable year, the amount
remaining and not used is forfeited. Unused credit may not be
carried back to any prior taxable year and shall not carry forward
to any subsequent taxable year.
§11-13P-6. Application of credit; schedules; estimated taxes.
(a) The credit allowed under this article shall be applied
against the taxes imposed by article twenty-one of this chapter and
against the tax payable under section sixteen, article twenty-seven
of this chapter.
(b) To assert this credit against tax, the eligible taxpayer
shall prepare and file with its annual tax return filed under
article twenty-seven of this chapter, a schedule showing the amount
paid for medical liability coverage for the taxable year, the amount of credit allowed under this article, the taxes against
which the credit is being applied and other information that the
tax commissioner may require. This annual schedule shall set forth
the information and be in the form prescribed by the tax
commissioner.
(c) An eligible taxpayer may consider the amount of credit
allowed under this article when determining the eligible taxpayer's
liability under article twenty-one and article twenty-seven of this
chapter for periodic payments of estimated tax for the taxable
year, in accordance with the procedures and requirements prescribed
by the tax commissioner. The annual total tax liability and total
tax credit allowed under this article are subject to adjustment and
reconciliation pursuant to the filing of the annual schedule
required by subsection (b) of this section.
§ 11-13P-7. Computation and application of credit.
(a) Computation of credit resulting from premiums directly
paid by individual physicians or by small business corporations,
partnerships, and limited liability companies; application of
credit.
(1) Application of annual credit allowable. - The annual
credit allowable under this article for eligible taxpayers other
than payors described in subsection (b) of this section, shall be applied as a credit against the eligible taxpayer's income tax
liability imposed by article twenty-one of this chapter and against
the eligible taxpayer's state tax liability determined under
section sixteen, article twenty-seven of this chapter, and shall be
allowed as provided in subdivisions (2) and (3) of this subsection,
and in that order.
(2) The annual credit allowable shall first be applied to
reduce the eligible taxpayer's annual income tax liability imposed
by article twenty-one of this chapter, determined after application
of allowable credits and exemptions.
(A) If the eligible taxpayer is an electing small business
corporation (as defined in Section 1361 of the United States
Internal Revenue Code of 1986, as amended), a partnership, or a
limited liability company treated as a partnership for federal
income tax purposes, then the credit allowed by this article shall
be applied as a credit against the taxes imposed by article twenty-
one of this chapter on the income flowing through the eligible
taxpayer to shareholders, partners or members of the eligible
taxpayer and shall be allocated under this subsection among the
eligible taxpayer's shareholders, partners or members in the same
manner as profits and losses are allocated for the taxable year. In the case of shareholders, owners, partners or members of the
eligible taxpayer that are not subject to the taxes imposed by
article twenty-one of this chapter, no credit shall be allowed
against tax on income flowing through those shareholders, owners,
partners or members to any other person.
(B) No credit shall be allowed under this section against any
employer withholding taxes imposed by article twenty-one of this
chapter.
(3) After application of this credit as provided in
subdivision (2) of this subsection, remaining annual credit
allowable shall then be applied to reduce the eligible taxpayer's
tax liability as determined under section sixteen, article twenty-
seven of this chapter, determined after application of all other
allowable credits and exemptions.
(b) Computation of credit for premiums directly paid by
partners, members or shareholders of partnerships, limited
liability companies, or corporations for or on behalf of such
organizations; application of credit.
(1) Qualification for credit.
(A) For purposes of this section the term "eligible taxpayer
organization" means a partnership, limited liability company, or
corporation that is an eligible taxpayer.
(B) For purposes of this section the term "payor" means a
natural person who is a partner, member, shareholder or owner, in
whole or in part, of an eligible taxpayer organization and who pays
medical liability insurance premiums for or on behalf of the
eligible taxpayer organization.
(C) Medical liability insurance premiums paid by a payor (as
defined in this section) qualify for tax credit under this article,
provided that such payments are made to insure against medical
liabilities arising out of or resulting from physicians' services
provided by a physician while practicing in service to or under the
organizational identity of such eligible taxpayer organization or
as an employee of such eligible taxpayer organization, and where
such insurance covers the medical liability of:
(i) the eligible taxpayer organization or
(ii) one or more physicians practicing in service to or under
the organizational identity of the eligible taxpayer organization
or as an employee of the eligible taxpayer organization or
(iii) any combination thereof.
(2) Application of credit by the payor against personal income
tax. - The annual credit allowable under this subsection shall
first be applied to reduce the payor's annual income tax liability imposed by article twenty-one of this chapter (determined after
application of allowable credits and exemptions) on income flowing
through the eligible taxpayer organization to the payor that is
directly attributable to the business operations of the eligible
taxpayer organization. No credit shall be allowed under this
section against any employer withholding taxes imposed by article
twenty-one of this chapter.
(3) Application of credit by the payor against health care
provider tax on physician's services. - After application of this
credit as provided in subdivision (2) of this subsection, remaining
annual credit allowable shall then be applied to reduce the tax
liability directly payable by the payor under section sixteen,
article twenty-seven of this chapter, determined after application
of all other allowable credits and exemptions.
(4) Application of credit by the eligible taxpayer
organization against health care provider tax on physician's
services. - After application of this credit as provided in
subdivision (3) of this subsection, remaining annual credit shall
then be applied to reduce the tax liability directly payable by the
eligible taxpayer organization under section sixteen, article
twenty-seven of this chapter, determined after application of all
other allowable credits and exemptions.
(5) Apportionment among multiple eligible taxpayer
organizations. - Where a payor described in subdivision (1) of this
subsection pays medical liability insurance premiums for and
provides services to or under the organizational identity of two or
more eligible taxpayer organizations described in this section or
as an employee of two or more such eligible taxpayer organizations,
the tax credit shall, for purposes of subdivision (4) of this
subsection, be allocated among such eligible taxpayer organizations
in proportion to the medical liability insurance premiums paid
directly by the payor during the taxable year to cover physicians'
services during such year for, or on behalf of, each eligible
taxpayer organization. In no event may the total credit claimed by
all eligible taxpayers and eligible taxpayer organizations exceed
the credit which would be allowable if the payor had paid all such
medical liability insurance premiums for or on behalf of one
eligible taxpayer organization, and if all physician's services had
been performed for, or under the organizational identity of, or by
employees of, one eligible taxpayer organization.
§11-13P-8. Legislative rules.
The tax commissioner may propose for promulgation pursuant to
the provisions of article three, chapter twenty-nine-a of this code such rules as may be necessary to carry out the purposes of this
article.
§11-13P-9. Construction of article; burden of proof.
The provisions of this article shall be reasonably construed.
The burden of proof is on the person claiming the credit allowed by
this article to establish by clear and convincing evidence that the
person is entitled to the amount of credit asserted for the taxable
year.
§11-13P-10. Effective date.
This article shall be effective for taxable years beginning
after the thirty-first day of December, two thousand one.
§11-13P-11. Termination of tax credit.
No credit shall be allowed under this article for any taxable
year ending after the thirty-first day of December, two thousand
four.
CHAPTER 29. MISCELLANEOUS BOARDS AND OFFICERS.
ARTICLE 12. STATE INSURANCE.
§29-12-1. Intent and objects.
Recognition is given to the fact that the state of West
Virginia owns extensive properties of varied types and descriptions
representing the investment of vast sums of money; that the state and its officials, agents and employees engage in many governmental
activities and services and incur and undertake numerous
governmental responsibilities and obligations; that such properties
are subject to losses, damage, destruction, risks and hazards and
such activities and responsibilities are subject to liabilities
which can and should be covered by a sound and adequate insurance
program; and that good business and insurance practices and
principles necessitate the centralization of responsibility for the
purchase, control and supervision of insurance coverage on all
state properties, activities and responsibilities and the
cooperation and coordination of all state officials, departments
and employees in the development and success of such centralized
state insurance program. Wherefore, in order to accomplish these
desired ends and objectives, the provisions of this article are
hereby enacted into law in response to manifest needs and
requirements therefor and in the interest of the establishment and
development of an adequate, economical and sound state insurance
and bonding service on all state property, activities and
responsibilities. Further recognition is given to the need for
health care access for the citizens of the state and the critical
need for available and affordable medical liability insurance.
§29-12-2. Definitions.
As used in this article, unless the context otherwise clearly
requires:
(a) "Board" means the "State state Board board of risk and
Insurance of West Virginia" insurance management.
(b) "Claim history debit or surcharge" means a charge added to
the premium due to a claims history as determined by the board.
(b)(c) "Claims-made coverage" is coverage for a claim made
during the policy period.
(d) "Company" means and includes corporations, associations,
partnerships and individuals.
(e) "Extreme risk" means the risk of a provider whose
probability of loss is greater than a participant in the high risk
medical liability program such that the provision of coverage would
create a significant increase in the future liability of the
program as determined by criteria established by the board.
(f) "Health care provider" means:
(1) A person licensed by the state board of medicine to
practice any branch of medicine in this state;
(2) A person licensed by the state board of osteopathy to
practice medicine in this state;
(3) A podiatrist licensed by the state board of medicine;
(4) An optometrist licensed by the state board of optometry;
(5) A pharmacist licensed by the state board of pharmacy;
(6) A registered nurse holding an advanced practice
announcement from the state board of professional registered
nurses;
(7) A physician's assistant licensed by either the state board
of medicine or the state board of osteopathy;
(8) A dentist licensed by the state board of dental examiners;
(9) A physical therapist licensed by the state board of
physical therapy;
(10) A professional limited liability company or medical
corporation certified by the state board of medicine;
(11) An association, partnership or other entity organized for
the purpose of rendering professional services by persons who are
health care providers;
(12) A hospital, medical clinic, psychiatric hospital or other
medical facility authorized by law to provide professional medical
services; or
(13) Such other health care provider as the board may from
time to time approve, and for whom an adequate rate can be established.
(14) "High risk medical liability program" is the program for
health care providers whose probability of loss is greater than
average based on criteria established by the board.
"Health care provider" does not include any provider of
professional medical services that has medical liability insurance
pursuant to subsection (e), section two, of this chapter.
(c)(g) "Insurance" means all forms of insurance and bonding
services available for protection and indemnification of the state
and its officials, employees, properties, activities and
responsibilities against loss or damage or liability, including
fire, marine, casualty, and surety insurance. Insurance includes
medical liability insurance for health care providers as defined in
this article.
(d)(h) "Insurance company" means all insurers or insurance
carriers, including, but not limited to, stock insurance companies,
mutual insurance companies, reciprocal and interinsurance
exchanges, and all other types of insurers and insurance carriers,
including life, accident, health, fidelity, indemnity, casualty,
hospitalization and other types and kinds of insurance companies,
organizations and associations, but excepting and excluding workers' compensation coverage.
(i) "Prior acts endorsement" is coverage added to a claims-
made medical liability insurance policy for acts which occurred
prior to the issuance of the claims-made policy currently in
effect.
(j) "Professional medical services" means the providing of
medical services, including medical treatment.
(e)(k) "State property activities" and "state
responsibilities" shall mean and include all operations, boards,
commission, works, projects and functions of the state, its
properties, officials, agents and employees which, within the scope
and in the course of governmental employment, may be subject to
liability, loss, damage, risks and hazards recognized to be and
normally included within insurance and bond coverages. For
purposes of this article, "state property activities" includes
ambulances as defined in article sixteen, chapter four-c, section
two.
(f)(l) "State property" means all property belonging to the
state of West Virginia and any boards or commissions thereof
wherever situated and which is the subject of risk or reasonably
considered to be subject to loss or damage or liability by any single occurrence of any event insured against. For purposes of
this article, "state property" includes ambulances as defined in
article sixteen, chapter four-c, section two.
(m) "Reinsurance" is an agreement between insurance companies
under which one insurer accepts all or part of the risk or loss of
the other insurer.
(n) "Sexual acts" means that sexual conduct which constitutes
a criminal or tortious act under the laws of West Virginia;
(o) "Tail coverage" or "extended reporting coverage" is
coverage that protects the health care provider against all claims
arising from professional services performed while the claims-made
policy was in effect and included in the policy but reported after
the termination of the policy.
§29-12-3. State board of risk and insurance management; creation,
composition, qualifications, and compensation.
(a)(1) There is hereby created the The "state board of
insurance of West Virginia" which is continued and reestablished as
the state board of risk and insurance management. The board shall
be composed of three eleven members appointed by the governor with
the advice and consent of the Senate from a list of eligible
persons submitted to the governor by the president of the Senate and the speaker of the House of Delegates: Provided, That the list
shall include at least three persons for each member to be
appointed. Each of the members member shall be a resident of West
Virginia, possessed of not less than five years' experience in the
business of insurance no more than four members may reside in the
same congressional district, no more than one member other than the
executive director of the investment management board may reside in
the same county, and no more than two six of such members shall may
belong to any one the same political party. The three original
members of such board shall be appointed for terms of one, two and
three years, respectively, and each subsequent appointment shall be
for a term of four years.
(2) Any member serving an unexpired term on the effective date
of the enactment of this section in the year two thousand one shall
continue to serve for the unexpired portion of the term. Initial
appointment of the remaining members shall be for the following
terms:
Two members shall be appointed for a term ending the thirtieth
day of June, two thousand two;
Three members shall be appointed for a term ending the
thirtieth day of June, two thousand three;
Three members shall be appointed for a term ending the
thirtieth day of June, two thousand four; and
Two members shall be appointed for a term ending the thirtieth
day of June, two thousand five.
(3) Except for appointments to fill vacancies, each subsequent
appointment shall be for a term ending the thirtieth day of June of
the fourth year following the year the preceding term expired. In
the event a vacancy occurs it shall be filled by appointment for
the unexpired term. A member whose term has expired shall continue
in office until a successor has been duly appointed and qualified.
No member of the board may be removed from office by the governor
except for official misconduct, incompetency, neglect of duty, or
gross immorality.
(4) The board shall consist of the following:
(A) two physicians licensed in this state recommended from a
list of six candidates from a specialty area and six candidates
from a non-specialty area submitted by the state medical
association to the president of the Senate and the speaker of the
House of Delegates;
(B) a physician licensed by the state board of osteopathy
recommended from a list of six candidates submitted by the state society of osteopathic medicine to the president of the Senate and
the speaker of the House of Delegates;
(C) a physician licensed by the state board of medicine from
a specialty area representing primary care in a rural area of this
state from a list of six candidates submitted by the state academy
of family physicians to the president of the Senate and the speaker
of the House of Delegates;
(D) a chief executive officer or chief financial officer of a
hospital recommended from a list of six submitted by the state
hospital association to the president of the Senate and the speaker
of the House of Delegates;
(E) two consumers or consumer representatives;
(F) two persons with training or experience in underwriting;
(G) a person with training or experience in insurance industry
management; and
(H) the executive director of the investment management board;
(b) The insurance commissioner of West Virginia shall serve as
secretary of the board without vote and shall make available to the
board the information, facilities and services of the office of the
state insurance commissioner.
(c) Each member of the board shall receive the sum of forty dollars per day for each day's services actually performed for such
board as well as all necessary expenses incurred in the performance
of their duties, not exceeding one hundred days in any one calendar
year. The auditor shall pay such compensation and expenses upon
requisition certified by the chairman from appropriations provided
for such purposes. The executive director shall pay each citizen
member of the board the same compensation as is paid to members of
the Legislature for their interim duties, as authorized by law, for
each day or portion thereof the member is engaged in the discharge
of official duties. The citizen members shall be reimbursed his or
her actual and necessary expenses incurred in the discharge of
official duties, except that the per mile rate to be reimbursed
shall be the same rate as authorized for members of the
Legislature. All such payments shall be made from the special
revenue fund created pursuant to section five-c of this article.
(d) Notwithstanding any provision of this section to the
contrary, the board shall be subject to the expiration provisions
of section twelve of this chapter.
§29-12-4. Organization, meetings, records and reports of board.
The board shall select one of its members as chairman and
shall meet in the office of the insurance commissioner upon call of the chairman. The board shall keep records of all of its
proceedings which shall be public and open to inspection,:
Provided, That any discussion or consideration of the financial or
personal information of an insured may be held by the board in
executive session closed to the public, notwithstanding the
provisions of article nine-a, chapter six of this code. The board
shall adopt a seal and shall exercise and perform the duties
prescribed by this article.
The board shall report in writing to the governor, legislative
auditor and budget director on or before the thirty-first day of
August of each year. Such report shall contain a summary of the
board's proceedings during the preceding fiscal year including a
detailed and itemized statement and summary of all state insurance
procured by the board during such fiscal year.
§29-12-5. Powers and duties of board.
(a) The board shall have general supervision and control over
the insurance of all state property, activities and
responsibilities, including the acquisition and cancellation
thereof; determination of amount and kind of coverage, including,
but not limited to, deductible forms of insurance coverage,
inspections or examinations relating thereto, reinsurance, and any and all matters, factors and considerations entering into
negotiations for advantageous rates on and coverage of all such
state property, activities and responsibilities. Any policy of
insurance purchased or contracted for by the board shall provide
that the insurer shall be barred and estopped from relying upon the
constitutional immunity of the state of West Virginia against
claims or suits: Provided, That nothing herein shall bar the
insurer of political subdivisions from relying upon any statutory
immunity granted such political subdivisions against claims or
suits. The board may enter into any contracts necessary to the
execution of the powers granted to it by this article. It shall
endeavor to secure the maximum of protection against loss, damage
or liability to state property and on account of state activities
and responsibilities by proper and adequate insurance coverage
through the introduction and employment of sound and accepted
methods of protection and principles of insurance. It is empowered
and directed to make a complete survey of all presently owned and
subsequently acquired state property subject to insurance coverage
by any form of insurance, which survey shall include and reflect
inspections, appraisals, exposures, fire hazards, construction, and
any other objectives or factors affecting or which might affect the insurance protection and coverage required. It shall keep itself
currently informed on new and continuing state activities and
responsibilities within the insurance coverage herein contemplated.
The board shall work closely in cooperation with the state fire
marshal's office in applying the rules of that office insofar as
the appropriations and other factors peculiar to state property
will permit. The board is given power and authority to make rules
governing its functions and operations and the procurement of state
insurance, but shall not make or promulgate any rules in
contravention of or inconsistent with the laws or rules governing
the office of insurance commissioner of West Virginia.
The board is hereby authorized and empowered to negotiate and
effect settlement of any and all insurance claims arising on or
incident to losses of and damages to state properties, activities
and responsibilities hereunder and shall have authority to execute
and deliver proper releases of all such claims when settled. The
board may adopt rules and procedures for handling, negotiating and
settlement of all such claims. All such settlements and releases
shall be effected with the knowledge and consent of the attorney
general.
(b) If requested by a political subdivision or by a charitable or public service organization, the board is authorized to provide
property and liability insurance to the political subdivisions or
such organizations to insure their property, activities and
responsibilities. Such board is authorized to enter into any
necessary contract of insurance to further the intent of this
subsection.
The property insurance provided by the board, pursuant to this
subsection, may also include insurance on property leased to or
loaned to the political subdivision or such organization which is
required to be insured under a written agreement.
The cost of this insurance, as determined by the board, shall
be paid by the political subdivision or the organization and may
include administrative expenses. All funds received by the board,
(including, but not limited to, state agency premiums, mine
subsidence premiums, and political subdivision premiums) shall be
deposited with the West Virginia state board of investments
investment management board with the interest income and returns on
investment a proper credit to such property insurance trust fund or
liability insurance trust fund, as applicable.
Political subdivision as used in this subsection shall have
the same meaning as in section three, article twelve-a of this chapter.
Charitable or public service organization as used in this
subsection means a bona fide, not for profit, tax-exempt,
benevolent, educational, philanthropic, humane, patriotic, civic,
religious, eleemosynary, incorporated or unincorporated association
or organization or a rescue unit or other similar volunteer
community service organization or association, but does not include
any nonprofit association or organization, whether incorporated or
not, which is organized primarily for the purposes of influencing
legislation or supporting or promoting the campaign of any
candidate for public office.
(c)(1) The board shall have general supervision and control over
the optional medical liability insurance programs providing
coverage to health care providers as defined in this article. The
board is hereby granted and may exercise all powers necessary or
appropriate to carry out and effectuate the purposes of this
article.
(2) The board shall:
(A) administer the preferred medical liability program and the
high risk medical liability program, and exercise and perform other
powers, duties and functions specified in this article;
(B) obtain and implement, at least annually, from an
independent outside source, such as a medical liability actuary or
a rating organization experienced with the medical liability line
of insurance, written rating plans for the preferred medical
liability program and high risk medical liability program on which
premiums shall be based;
(C) prepare and annually review written underwriting criteria
for the preferred medical liability program and the high risk
medical liability program. The board may utilize review panels,
including but limited to, the same specialty review panels to
assist in establishing criteria;
(D) prepare and publish, before each regular legislative
session, separate summaries for the preferred medical liability
program and high risk medical liability program activity during the
preceding fiscal year, each summary to include, but not be limited
to, an audited financial statement which shall follow the
accounting practices and procedures prescribed by the national
association of insurance commissioners accounting practices and
procedures manual, as amended, a balance sheet, income statement
and cash flow statement, an actuarial opinion addressing adequacy
of reserves, the highest and lowest premiums assessed, the number of claims filed with the program by provider type, the number of
judgments paid from the program, the number of settlements paid
from the program, and the number of dismissals without payment;
(E) determine and annually review the claims history debit or
surcharge for the high risk medical liability program;
(F) determine and annually review the criteria for transfer
from the preferred medical liability program to the high risk
medical liability program;
(G) determine and annually review the extreme risk health care
providers to be excluded from the high risk medical liability
program;
(H) determine and annually review the extended reporting
endorsement credit and vesting terms;
(I) determine and annually review the role of independent
agents, the amount of commission to be paid therefore, and agent
appointment criteria;
(J) study and annually evaluate the operation of the preferred
medical liability program and the high risk medical liability
program, and make recommendations to the Legislature, as may be
appropriate, to ensure their viability, including but not limited
to, recommendations for judicial reform with an associated cost-benefit analysis, recommendations on the feasability and
desirability of a plan which would require all health care
providers in the state to participate with an associated cost-
benefit analysis, recommendations on additional funding of other
state run insurance plans with an associated cost-benefit analysis
and recommendations on the desirability of ceasing to offer a state
plan with an associated analysis of a potential transfer to the
private sector with a cost benefit analysis including impact on
premiums;
(K) establish a five-year financial plan to ensure an adequate
premium base to cover the long-tail nature of the claims- made
coverage provided by the preferred medical liability program and
the high risk medical liability program. The plan shall be
designed to meet the program's estimated total financial
requirements, taking into account all revenues projected to be made
available to the program, and apportioning necessary costs
equitably among participating classes of health care providers.
For these purposes, the board shall:
(i) retain the services of an impartial, professional actuary,
with demonstrated experience in analysis of large group malpractice
plans, to estimate the total financial requirements of the program for each fiscal year and to review and render written professional
opinions as to financial plans proposed by the board. The actuary
shall also assist in the development of alternative financing
options and perform any other services requested by the board or
the executive director. All reasonable fees and expenses for
actuarial services shall be paid by the board. Any financial plan
or modifications to a financial plan approved or proposed by the
board pursuant to this section shall be submitted to and reviewed
by the actuary and may not be finally approved and submitted to the
governor and to the Legislature without the actuary's written
professional opinion that the plan may be reasonably expected to
generate sufficient revenues to meet all estimated program and
administrative costs, including incurred but unreported claims, for
the fiscal year for which the plan is proposed. The actuary's
opinion for any fiscal year shall include a requirement for
establishment of a reserve fund;
(ii) submit its final, approved five-year financial plan,
after obtaining the necessary actuary's opinion, to the governor
and to the Legislature no later than the first day of January
preceding the fiscal year. The financial plan for a fiscal year
becomes effective and shall be implemented by the executive director on the first day of July of the fiscal year. In addition
to each final, approved financial plan required under this section,
the board shall also simultaneously submit financial statements
based on association of insurance commissioners annual statement
instructions handbook and shall follow the accounting practices and
procedures prescribed by the national association of insurance
commissioners accounting practices and procedures manual as
amended. The provisions of chapter twenty-nine-a of this code
shall not apply to the preparation, approval and implementation of
the financial plans required by this section;
(iii) submit to the governor and the Legislature a prospective
five-year financial plan beginning on the first day of January, two
thousand three, and every year thereafter, for the programs
provided for in section five-c of this article. Factors that the
board shall consider include, but shall not be limited to, the
trends for the program and the industry; claims history, number and
category of participants in each program; settlements and claims
payments; and judicial results;
(iv) limit premium increases for program participants to a
yearly increase, except in the event of an emergency as provided
for in this section or in the event a participant, in the board's opinion, has changed his or her area of practice to such an extent
that the change increases the participant's claim exposure. For
purposes of this section, "emergency" means that the most recent
projections demonstrate that plan expenses will exceed plan
revenues by more than five percent in any plan year;
(L) meet on at least a quarterly basis to review
implementation of its current financial plan in light of the actual
experience of the medical liability programs established in this
act. The board shall review actual costs incurred, any revised
cost estimates provided by the actuary, expenditures and any other
factors affecting the fiscal stability of the plan and may make any
additional modifications to the plan necessary to ensure that the
total financial requirements of these programs for the current
fiscal year are met;
(M) by February of 2002 and each year thereafter, analyze and
recommend to the Legislature the most effective method to
distribute a subsidy provided by appropriation by the Legislature
taking into consideration the following:
(i) access to care particularly in rural areas;
(ii) malpractice premium rates;
(iii) community impact;
and
(iv) other criteria established by the board;
(N) purchase reinsurance, in the amounts as it may from time
to time consider appropriate, and the cost thereof shall be
considered to be an operating expense of the board;
(O) review and approve, reject or modify rules that are
proposed by the executive director to implement, clarify or explain
administration of the preferred medical liability program and the
high risk medical liability program. Notwithstanding any
provisions in this code to the contrary, rules promulgated pursuant
to this paragraph are not subject to the provisions of sections
nine through sixteen, article three, chapter twenty-nine-a of this
code. The board shall follow the remaining provisions of article
three and shall hold hearings or receive public comments before
promulgating any proposed rule filed in the state register.
Provided, That the initial rules proposed by the executive director
and promulgated by the board shall become effective upon approval
by the board;
(P) have the authority to enter into settlements or
structured settlement agreements whenever settlement is
appropriate, to execute and deliver proper releases of all such claims when settled and to own or assign any annuity purchased by
the board to a company licensed to do business in the state;
(Q) terminate coverage for nonpayment of premiums upon written
notice of the termination forwarded to the health care provider not
less than thirty days prior to termination of coverage; and
(R) assign coverage to a third party medical liability
insurance carrier with comparable coverage conditions as determined
by the board;
(S) notify the insured of nonrenewal by certified mail, return
receipt requested, not less than ninety days prior to the
expiration of the policy and cancellation by certified mail, not
more than thirty days after the reason for cancellation arose or
occurred or the insurer learned that it arose or occurred and not
less than thirty days prior to the effective cancellation date.
§29-12-5c. Insurance for damages allegedly resulting from
obstetric treatment of medicaid patients. Medical liability
program for health care providers.
(a) In accordance with the provisions of this article, the
state board of risk and insurance management shall provide
professional malpractice insurance for all medical practitioners
who provide obstetric treatment to patients which is reimbursed or
reimbursable by state medicaid funds: Provided, That such medical practitioner has, prior to the alleged negligent act or acts,
become a participant in the primary professional malpractice
insurance program.
Said primary insurance shall cover any claim, demand, action,
suit or judgment by reason of alleged negligence in the course of
providing such obstetric treatment which results in injury. Such
primary insurance coverage shall be in an amount to be determined
by the state board of risk and insurance management, but in no
event less than one million dollars for each occurrence.
Such primary insurance coverage shall be mandatory for medical
practitioners covered for obstetric treatment by the board of risk
and insurance management. Such primary coverage shall be optional
for any other medical practitioner who treats medicaid obstetric
patients.
The board of risk and insurance management shall establish the
criteria for the program for the approval of the insurance
commissioner on or before the fifteenth day of June, one thousand
nine hundred ninety.
The insurance coverage specified in this subsection shall not
apply to any hospital which is the site of the obstetric treatment
or to any employee of said hospital, except that a medical practitioner providing the obstetric treatment who is also an
employee of the hospital which is the site of the treatment shall
be included in the insurance coverage required by this section.
(b) In accordance with the provisions of this article, the
state board of risk and insurance management shall provide optional
excess professional malpractice insurance for all medical
practitioners who provide obstetric treatment to patients which is
reimbursed or reimbursable by state medicaid funds: Provided, That
such medical practitioner has, prior to the alleged negligent act
or acts, become a participant in the excess insurance program.
Such excess insurance coverage shall, in no event, exceed three
million dollars.
For the purposes of this subsection, excess insurance shall be
defined as coverage over and above any other primary or collectible
malpractice liability coverage. In no event shall this coverage be
primary. Each insured must carry primary insurance of at least one
million dollars. Such liability excess malpractice coverage shall
be in an amount to be determined by the state board of risk and
insurance management, but in no event less than one million dollars
for each occurrence.
The board of risk and insurance management shall establish the criteria for an optional program of excess professional malpractice
insurance for the approval of the insurance commissioner on or
before the fifteenth day of June, one thousand nine hundred ninety.
(c) For the purpose of this section, the definition of medical
practitioner shall be limited to physicians,
obstetric/gynecological nurse practitioners, certified nurse
midwives, nurse anesthetists, and physicians' assistants.
(d) Any premiums assessed and collected under the provisions
of this section, or rules and regulations promulgated pursuant to
the provisions of this section, shall be placed in a separate
insurance pool known as the obstetrical/gynecological liability
pool. Said pool is to be administered and maintained by the board
of risk and insurance management.
(e) The board of risk and insurance management, with approval
of the insurance commissioner, shall have the authority to make
needful rules and regulations for the administration of this
section, as provided in the State Administrative Procedures Act in
chapter twenty-nine-a of this code: Provided, That the board of
risk and insurance management, with approval of the insurance
commissioner, shall have the authority to promulgate rules and
regulations regarding the discontinuance of the program if participation in the program is insufficient to make said program
economically feasible.
(a) There is hereby established optional medical liability
insurance for health care providers consisting of a preferred
medical liability program and a high risk medical liability
program. In order to participate in either program, a health care
provider must maintain a policy of not excluding patients whose
health care coverage is provided pursuant to the West Virginia
public employees insurance act, the West Virginia children's health
insurance program, West Virginia medicaid, or the West Virginia
workers' compensation fund solely based on the fact that the
person's health care coverage is provided by any of the
aforementioned entities and must annually attend a five hour
program, approved by the board, related to risk management;
(b) Each of the programs described in subsection (a) of this
section shall provide claims-made coverage together with an
optional prior acts endorsement for any covered act or omission
resulting in injury or death arising out of the rendering of or the
failure to render professional medical services by a health care
provider, and for which there is no other policy or guaranty fund
protection. The premium for the coverage may be phased in over a five-year maturity schedule depending on the years of prior acts
exposure, as more specifically set forth in a written rating manual
approved by the board.
(c) Each of the programs described in subsection (a) of this
section shall further provide an option to purchase, upon
termination, an extended reporting endorsement with respect to any
claim arising during the policy period, including any prior acts
endorsement, but not made until after said termination. Each
participant shall receive an annual credit pursuant to amounts and
vesting terms more specifically set forth in a written rating
manual approved by the board. At the time of enrollment in the
programs, each health care provider shall have the option to select
either five-year or ten-year vesting for extended reporting and
coverage shall be provided without further charge after the
selected term of vesting. If the plan is terminated without a sale
or transfer of the plan to another entity, the extended reporting
endorsement shall be available to all participants at no additional
cost.
(d) Each of the programs described in subsection (a) of this
section shall offer limits of one million dollars per claim,
including repeated exposure to the same event or series of events, and all derivative claims, and three million dollars in the annual
aggregate. Health care providers have the option to purchase
higher limits of up to two million dollars per claim, including
repeated exposure to the same event or series of events, and all
derivative claims, and up to four million dollars in the annual
aggregate. In addition, hospitals covered by the plan shall have
available limits of three million dollars per claim, including
repeated exposure to the same event or series of events, and all
derivative claims, and five million dollars in the annual
aggregate. Installment payment plans as established in the rating
manual shall be available to all participants.
(e) Each of the programs described in subsection (a) of this
section shall cover any negligent act or negligent omission
resulting in injury or death arising out of the rendering of, or
the failure to render, professional medical services, not to exceed
the policy limits, except sexual acts as defined in subdivision
(m), section two of this article and shall have the authority to
exclude other acts or omissions from coverage.
(f) Each of the programs described in subsection (a) of this
section shall cover all damages not to exceed the policy limits,
except punitive damages, arising from injury or death. The cost of defense is not included in the policy limits.
(g) Each of the programs described in subsection (a) of this
section shall provide excess verdict liability in the event that
the insured health care provider and the claimant were each willing
to settle, within policy limits, but the board declined to do so.
Actual malice by the insurer must be established by proving that
the insurer actually knew that the claim was proper, but the
insurer nonetheless acted willfully, maliciously, and intentionally
in failing to settle the claim on behalf of the insured.
(h) Rates for each of the programs described in subsection (a)
of this section may not be excessive, inadequate or unfairly
discriminatory.
(i) Each of the programs described in subsection (a) shall
require, as a basis of participation, that all participants agree,
in writing, to the assignment of their policy to a third party
providing that the third party provide comparable coverage as
determined by the board.
(j) Notwithstanding any other provisions in this article, the
premiums for each of the programs described in subsection (a) of
this section are subject to premium taxes imposed by article three,
chapter thirty-three of this code, and assessments pursuant to the West Virginia insurance guaranty association act set forth in
article twenty-six, chapter thirty-three of this code, and any
other assessment against premiums.
(k) Neither the state, the board, or any individual member or
employee of any of the preceding entities, are liable for any
alleged negligence, unfair trade practices, unfair claims
settlement practices, bad faith or failure to act in good faith
with respect to a claim. No insured, codefendant or codefendant's
insurer may be vicariously liable for any alleged negligence,
unfair trade practices, unfair claims settlement practices, bad
faith or failure to act in good faith by the state, the board, or
any individual member or employee of any of the preceding entities.
(l) The Legislature may appropriate moneys from general
revenue to supplement the fund. Nothing in this article may be
construed to require any appropriation by the Legislature. No
person, entity or class may seek any judicial or administrative
order or decision the direct or indirect effect of which is to
require any appropriation, or increased level of appropriation by
the legislative or executive branch of state government as a
supplement or subsidy of the fund. No court or administrative
agency or board shall have the jurisdiction to consider any such request by any person, entity, or class or the authority to enter
any order in violation of this section. No claims or expenses
against the fund shall constitute a debt of the state or its
general fund.
(m) The board may terminate coverage for nonpayment of
premiums upon written notice of the termination forwarded to the
health care provider not less than thirty days prior to termination
of coverage.
(n) The premiums charged and collected by the board under this
article shall be deposited into a special revenue account hereby
created in the state treasury to be known as the "medical liability
fund," and shall not be part of the general revenue fund of the
state. Disbursements from the special revenue fund shall be upon
requisition of the executive director and in accordance with the
provisions of chapter five-a of this code. Disbursements from this
fund shall pay a percentage of operating expenses of the board as
appropriated by the Legislature and the board's share of any
judgments or settlements of medical malpractice claims. Funds
shall be invested with the consolidated fund managed by the West
Virginia investment management board and interest income and
returns on investments shall be used for purposes of the medical liability program.
(o) For purposes of establishing a pool from which settlements
and judgments may be paid, the board is authorized to apply such
other reserves that exist and are under their control in an amount
not to exceed two million dollars. The board shall reimburse the
other reserves for the amount withdrawn by the first day of July,
two thousand three.
(p) All payments made in satisfaction of any settlement or
judgment shall be in accordance with the procedures established by
the board. No settlement or judgment may be paid until there is
recorded in the office of the executive director (1) a certified
copy of a final judgment against a health care provider insured by
either of the medical liability programs created pursuant to this
article, or a certified copy of an order approving settlement in a
summary proceeding; or (2) appropriate
settlement documentation to include a written settlement
determination issued by or on behalf of the board.
(q) In the event of a judgment against a health care provider
from which the health care provider or the board wishes to appeal,
the board is not liable for more than its share of the judgment
and, as to that portion, a supersedeas bond signed by the chairperson of the board, or the chairperson's designee, shall
suffice without further surety or other security.
§29-12-5d. Preferred medical liability program.
(a) Participation in the preferred medical liability program
shall be (1) determined by underwriting criteria approved by the
board and set forth in a written underwriting manual, and (2)
subject to rates approved by the board and set forth in a written
rating manual. Participation in the preferred medical liability
program may not be limited based on specialty, type of practice or
geographic location, but may be limited based upon indemnity loss
history, number of patient exposures, refusal to participate in
risk management/loss control programs or any other grounds the
board may approve, as set forth in a written underwriting manual.
The board shall periodically review its underwriting manual and
make any changes it considers necessary or appropriate.
(b) Qualification for participation in the preferred medical
liability program shall be reviewed at each annual renewal with the
possibility of transfer to the high risk medical liability program,
as set forth in the written underwriting manual approved by the
board.
§29-12-5e. High risk medical liability program.
(a) Participation in the high risk medical liability program is subject to higher rates than those established for participants
qualifying as preferred and approved by the board, as set forth in
a written rating manual. Only extreme risks may be excluded under
criteria approved by the board, as set forth in a written
underwriting manual approved by the board. The board shall
periodically review its underwriting manual and make any changes it
deems necessary or appropriate.
(b) The high risk medical liability program shall provide full
defense and indemnity up to the coverage limit purchased.
(c) Participants placed in the high risk medical liability
program due to prior indemnity payments, but who remain claims-free
for a period of three consecutive policy years, and who otherwise
are eligible for the preferred program, will then be eligible for
transfer to the preferred medical liability program. The board
will have the authority to determine whether nominal indemnity
payments will be considered for purposes of this subsection.
(d) Two or more indemnity payments in excess of one hundred
thousand dollars each during any three consecutive policy years
may, at the discretion of the board, result in application of a
claims history debit or surcharge approved by the board, as set
forth in the written rating manual. Based on actuarial data, additional surcharges may be considered by the board to maintain
the fiscal soundness of the program.
(e) If the board determines that due to criteria established
by the board, a health care provider presents an extreme risk to
the program, the board is authorized by a vote of a majority of
members, after notice and an opportunity for hearing in accordance
with the provisions of the state administrative procedures act, to
refuse or terminate coverage for all claims against the health care
provider. The date of termination shall be ninety days after the
date of the decision by the board. Upon termination of the
liability of the program under this subsection, the board shall
notify the licensing or other disciplinary board having
jurisdiction over the health care provider of the name of the
health care provider and the reason for termination of coverage.
29-12-5f. Executive director.
(a) The board shall employ an executive director for the board
of risk and insurance management program created by this article.
The executive director shall receive an annual salary of seventy
thousand dollars and actual expenses incurred in the performance of
official business.
(b) The executive director may employ attorneys and actuaries, all of whom shall be in the classified-exempt class of service
under section four, article six, chapter twenty-nine of this code.
(c) The executive director may also employ legal assistants,
agents, underwriters, adjusters, claims managers, compliance
auditors, and other necessary personnel, all of whom shall be in
classified service under section three, article six, chapter
twenty-nine of this code.
(d) The executive director may contract for any services the
board may from time to time consider appropriate. The provisions
of article three, chapter five-a of this code, relating to the
purchasing division of the department of administration, do not
apply to any contracts or agreements executed by or on behalf of
the board or the executive director under the provisions of this
article.
(e) Notwithstanding any provision of this code to the
contrary, the executive director may acquire legal services as are
considered necessary, including representation of the insured or
the board before any court or administrative body. Attorneys may
be employed either on a salaried basis or on a reasonable fee
basis.
§29-12-5g Reporting Requirements
(a) The board shall submit expert witness reports,
depositions, interrogatories, admissions or other relevant
information to the licensing authority for the health care provider
which have been made available to the opposing parties. This
information will be made available upon a request by affidavit from
the licensing authority establishing that an investigation
concerning a specific complaint is in process and that the
complaint is specifically related to claims information held by
the board.
(b) The board shall submit to the licensing authority of any
attorney any order related to a claim filed against a health care
provider participating in the medical liability program created in
this article wherein the court determines that any complaint was
without merit.
(c) The board may not be required to furnish information not
in its possession. Reasonable expenses incurred in reproducing the
documents, other than expert witness reports or court orders, shall
be paid by the licensing authority.
(d) Immunity from suit is hereby granted to any expert witness
or judicial officer who makes any finding which is later the
subject of a report forwarded to a disciplinary board and, likewise, the state board of risk and insurance management and
members and employees thereof are also immune from any claim
arising out of reports forwarded to disciplinary boards pursuant to
this section.
(e) Any specific claim reserve information is exempt from
public disclosure under the freedom of information act set forth in
article one, chapter twenty-nine-b of this code.
29-12-13b. Intergovernmental transfer.
Notwithstanding any provisions of sections one, two, or three,
article eleven-a, chapter four of this code to the contrary,
transfers may be made during any fiscal year by intergovernmental
transfer, from the West Virginia tobacco settlement medical trust
fund established by those sections in an amount not to exceed ten
million dollars pursuant to appropriation by the Legislature.
29-12-13c. Legislative intent.
It is the intent of the Legislature to encourage the creation
of a private entity to establish a medical liability insurance
company in the state by making available by legislative
appropriation up to ten million dollars. On or before the first
day of January, 2003, and each year thereafter, the board shall
offer, through public bid, the opportunity for a private entity to operate the medical liability insurance programs established in
this article as an on-going private business.
§29-12-14. Effective date of act.
This act shall be effective from the date of passage. Any
policies written under this article may have an effective date
retroactive to the date of passage.
NOTE: §11-13P-1 through 11 is new, therefore, strike throughs
and underscoring have been omitted.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.