COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 6014
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
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[Originating in the Committee Banking and Insurance;
reported October 29, 2001.]
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A BILL to amend and reenact sections two, three, six and eight,
article twenty-b, chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to amend and reenact sections two, three and four, article
twenty-c of said chapter, all relating generally to medical
malpractice liability insurance; providing for ratemaking,
rate filings, rate review and reporting; reporting of medical
malpractice civil actions; imposing and collecting civil money
penalty for failure to report certain information pertaining
to the civil action; prohibiting cancellation of policy except
for specified reasons and upon notice; requiring insurer to
specify reasons for cancellation of policies; specifying
notice period for cancellation of policy; and making various technical corrections.
Be it enacted by the Legislature of West Virginia:
That sections two, three, six and eight, article twenty-b,
chapter thirty-three of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted; and
that sections two, three and four, article twenty-c of said chapter
be amended and reenacted, all to read as follows:
ARTICLE 20B. RATES AND MALPRACTICE INSURANCE POLICIES.
§33-20B-2. Rate making.
Any and all modifications of rates made on or after the
effective date of this article the sixth day of June, one thousand
nine hundred eighty-six shall be made in accordance with the
following provisions:
(a) Due consideration shall be given to the past and
prospective loss experience within and outside this state. No
consideration shall be given to the prospective or projected loss
experience within or outside this state except as prescribed by the
regulations of the commissioner promulgated pursuant to subsection
(a), section six of this article.
(b) Due consideration shall be given to catastrophe hazards,
if any, to a reasonable margin for underwriting profit and
contingencies, to dividends, savings or unabsorbed premium deposits
allowed or returned by insurers to their policyholders, members or subscribers and actual past expenses and demonstrable prospective
or projected expenses applicable to this state.
(c) Rates shall not be excessive, inadequate or unfairly
discriminatory.
(d) Risks may not be grouped by territorial areas for the
establishment of rates and minimum premiums.
(e) The use of guide "A" rates and other nonapproved rates,
also known as "consent to rates," by an insurer for an individual
provider are prohibited: Provided, That guide "A" rates and
"consent to rates" are permissible for group practices of providers
and health care entities. No insurer may require execution of a
consent to rate endorsement for the purpose of offering to issue or
issuing a contract or coverage to an insured, or continuing an
existing contract or coverage, at a rate in excess of that provided
by a filing otherwise applicable.
(d) (f) Except to the extent necessary to meet the provisions
of subdivision (c) of this section, uniformity among insurers, in
any matters within the scope of this section, is neither required
nor prohibited.
(e) (g) Rates made in accordance with this section may be used
subject to the provisions of this article.
§33-20B-3. Rate filings.
(a) Every filing for malpractice insurance made pursuant to subsection (a), section four, article twenty of this chapter shall
state the proposed effective date thereof, the character and extent
of the coverage contemplated, and information in support of such
filing. The information furnished in support of a filing shall
include (i) the experience or judgment of the insurer or rating
organization making the filing; (ii) its interpretation of any
statistical data the filing relies upon; (iii) the experience of
other insurers or rating organizations; and (iv) any other relevant
factors required by the commissioner. When a filing is not
accompanied by the information required by this section upon which
the insurer supports such filing, the commissioner shall require
such insurer to furnish such information and, in such event, the
waiting period prescribed by subsection (b) of this section shall
commence as of the date such information is furnished.
A filing and any supporting information shall be open to
public inspection as soon as the filing is received by the
commissioner. Any interested party may file a brief with the
commissioner supporting his position concerning the filing. Any
person or organization may file with the commissioner a signed
statement declaring and supporting his or its position concerning
the filing. Upon receipt of any such statement prior to the
effective date of the filing, the commissioner shall mail or
deliver a copy of such statement to the filer, which may file such reply as it may desire to make. This section shall not be
applicable to any memorandum or statement of any kind by any
employee of the commissioner.
(b) Every such filing shall be on file for a waiting period of
sixty ninety days before it becomes effective, which period may be
extended by the commissioner for an additional period not to exceed
thirty days, if he or she gives written notice within such waiting
period to the insurer or rating organization which made the filing
that he or she needs such additional time for the consideration of
such filing. Upon written application by such insurer or rating
organization, the commissioner may authorize a filing which he or
she has reviewed to become effective before the expiration of the
waiting period or any extension thereof. A filing shall be deemed
to meet the requirements of this article unless disapproved by the
commissioner within the waiting period or any extension thereof.
(c) No insurer shall make or issue a contract or policy of
malpractice insurance except in accordance with the filings which
are in effect for said insurer as provided in this article.
§33-20B-6. Rate review and reporting.
(a) The commissioner shall review annually the rules, rates
and rating plans filed and in effect for each insurer providing
five percent or more of the malpractice insurance coverage in this
state in the preceding calendar year to determine whether such filings continue to meet the requirements of this article and
whether such filings are unfair or inappropriate given the loss
experience in this state in the preceding year.
Within two hundred forty days of the effective date of this
article, in the year one thousand nine hundred eighty-six, the
commissioner shall promulgate legislative rules pursuant to article
three, chapter twenty-nine-a of this code, establishing procedures
for the fair and appropriate evaluation and determination of the
past loss experience and prospective or projected loss experience
of insurers within and outside this state, actual past expenses
incurred in this state and demonstrable prospective or projected
expenses applicable to this state.
(b) Within one hundred eighty days of the effective date of
this article, in the year one thousand nine hundred eighty-six, the
commissioner shall promulgate legislative rules pursuant to article
three, chapter twenty-nine-a of this code, establishing procedures
whereby each insurer providing five percent or more of the
malpractice insurance coverage in this state annually shall submit
to the commissioner the following information:
(1) The number of claims filed per category;
(2) The number of civil actions filed;
(3) The number of civil actions compromised or settled;
(4) The number of verdicts in civil actions;
(5) The number of civil actions appealed;
(6) The number of civil actions dismissed;
(7) The total dollar amount paid in claims compromised or
settled;
(8) The total dollar amount paid pursuant to verdicts in civil
actions;
(9) The number of claims closed without payment and the amount
held in reserve for all such claims;
(10) The total dollar amount expended for loss adjustment
expenses, commissions and brokerage expenses;
(11) The total dollar amount expended in defense and
litigation of claims;
(12) The total dollar amount held in reserve for anticipated
claims;
(13) Net profit or loss;
(14) Investment and other income on net realized capital gains
and loss reserves and unearned premiums; and
(15) The number of malpractice insurance polices canceled for
reasons other than nonpayment of premiums.
The commissioner shall establish, in such rules, methods of
allocating investment and other income among capital gains, loss
reserves, unearned premiums and other assets, if an insurer does
not separately account for and allocate such income.
Any insurer who fails to submit any and all such information
to the commissioner, as required by this subsection, in accordance
with the regulations promulgated hereunder, shall be fined ten
thousand dollars for each of the first five such failures per year
and shall be fined one hundred thousand dollars for the sixth and
each subsequent such failure. per year
(c) Beginning in the year one thousand nine hundred
eighty-six, the commissioner shall report annually, during the
month of November, to the joint standing committee on the judiciary
the following information pertaining to each insurer providing five
percent or more of the malpractice insurance coverage in this
state:
(1) The loss experience within the state during the preceding
calendar year;
(2) The rules, rates and rating plans in effect on the date of
such report;
(3) The investment portfolio, including reserves, and the
annual rate of return thereon; and
(4) The information submitted to the commissioner pursuant to
the regulations promulgated by authority of subsection (b) of this
section.
§33-20B-8. Insurers required to report results of civil actions
against physicians or podiatrists; penalties for failure to report; notice and hearing.
(a) Every insurer issuing, or issuing for delivery in this
state, a professional liability policy or providing professional
liability insurance to a physician, osteopathic physician or
surgeon, podiatrist, or chiropractor, hospital, medical clinic,
professional limited liability company, medical corporation, or
partnership in this state, shall submit to the commissioner, within
thirty sixty days from the date of entry of any judgment or
dismissal without payment, or the date a release is executed in
connection with a settlement, or the date a file is closed on of a
civil action or any claim in which a law suit has not been filed
involving the insured, the following information:
(1) The date of any judgment, dismissal, or settlement;
(2) Whether any appeal has been taken on the judgment and, if
so, by which party;
(3) The amount of any settlement or judgment against the
insured; and
(4) Whether the claim was the subject of mediation;
(5) Whether any settlement of a claim was made in a lump sum
payment, a structured settlement, or a combination of the two; and
(11) (6) Any such other information as the commissioner may
require.
For purposes of this section, "claim" means a third party request for indemnification.
(b) Any additional resolution, including appellate decision or
other subsequent action, shall necessitate a supplemental report to
the commissioner, to be designated as such.
(c) The West Virginia insurance guaranty association created
pursuant to article twenty-six of this chapter, the state board of
risk and insurance management created pursuant to article twelve,
chapter twenty-nine of this code, and the preferred and high risk
medical liability programs created pursuant to article twelve-b,
chapter twenty-nine of this code are subject to the reporting
requirements of subsection (a) of this section.
(b) (d) Any insurer person, partnership, corporation,
association, insurance company, professional society or other
organization that fails to report any information on a payment
required to be reported under this section shall be subject to a
civil money penalty to be imposed by the insurance commissioner.
Upon a determination of the commissioner that there is probable
cause to believe that any person, partnership, corporation,
association, insurance company, professional society or other
organization has failed or refused to make a report required by
this section, the commissioner shall provide written notice to the
alleged violator stating the nature of the alleged violation. Upon
written request of the alleged violator within thirty days of the date of the commissioner's written notice, the commissioner shall
notify the alleged violator of and the time and place of a hearing
at which the alleged violator shall may appear to show good cause
why a civil penalty should not be imposed. The hearing shall be
conducted in accordance with the provisions of article five,
chapter twenty-nine-a of this code.
(c) (e) If after notice and hearing as provided in subsection
(b) herein, the commissioner determines that a violation of this
section has occurred, the commissioner shall assess a civil penalty
of not less than one thousand dollars nor more than ten thousand
dollars against such violator per violation. Anyone so assessed
shall be notified of the assessment in writing and the notice shall
specify the reasons for the assessment. If the alleged violator
requests a hearing, as provided in subsection (d), the commissioner
may not make his or her determination of violation and assessment
until the conclusion of the hearing. The amount of penalty
collected shall be deposited in the general revenue fund.
(d) (f) If an insurer who has been found to have violated the
provisions of this section any violator fails to pay the amount of
the penalty assessment to the commissioner within thirty days after
issuance of notice of the same, the attorney general commissioner
may institute a civil action in the circuit court of Kanawha County
to recover the amount of the assessment. In any such civil action, the court's review of the commissioner's action shall be conducted
in accordance with the provisions of section four, article five,
chapter twenty-nine-a of this code.
(e) (g) No person or entity shall may be held liable in any
civil action with respect to any report made pursuant to this
section, if such report was made without knowledge of any falsity
of the information contained therein.
ARTICLE 20C. CANCELLATION AND NONRENEWAL OF MALPRACTICE INSURANCE
POLICIES.
§33-20C-2. Cancellation prohibited except for specified reasons;
notice.
No insurer once having issued or delivered a policy providing
malpractice insurance in this state shall may cancel such policy,
except for one or more of the following reasons:
(a) The named insured fails to discharge any of his
obligations to pay premiums for such policy or any installment
thereof within a reasonable time of the due date;
(b) The policy was obtained through material
misrepresentation;
(c) The insured violates any of the material terms and
conditions of the policy;
(d) The insured's experiences render him an increased risk;
(e) (d) The unavailability of reinsurance, upon sufficient proof thereof being supplied to the commissioner.
Any purported cancellation of a policy providing malpractice
insurance attempted in contravention of this section shall be is
void.
§33-20C-3. Insurer to specify reasons for cancellation.
In every instance in which a policy or contract of malpractice
insurance is canceled by the insurer, the insurer or his its duly
authorized agent shall cite within the written notice of the action
the allowable reason in section two of this article for which such
action was taken and shall state with specificity the circumstances
giving rise to the allowable reason so cited. The notice of the
action shall further state that the insured has a right to request
a hearing, pursuant to section five of this article, within thirty
days.
§33-20C-4. Notice period for cancellation; sixty-day ninety-day
notice required for nonrenewal.
(a) No insurer shall fail to renew a policy or contract
providing malpractice insurance unless written notice of such
nonrenewal is forwarded to the insured by certified mail, return
receipt requested, not less than sixty ninety days prior to the
expiration date of such policy.
(b) No insurer shall cancel a policy or contract providing
malpractice insurance during the term of such policy unless written notice of such cancellation is forwarded to the insured by
certified mail, return receipt requested, not more than thirty days
after the reason for such cancellation, as provided in section two
of this article, arose or occurred or the insurer learned that it
arose or occurred and not less than thirty days prior to the
effective cancellation date.
NOTE: The purpose of this bill is to change the factors on
which modifications of rates for medical malpractice liability
policies will be considered to disallow territorial grouping for
rates and disallowing the use of consent to rates for individual
providers; to extend the deem period from sixty to ninety days on
rate increase requests; to add entities subject to the reporting
requirements on civil actions and claims and adding to the
information required to be reported to the insurance commission;
making the hearing on alleged violations of the reporting
requirements optional rather than mandatory; to remove as a cause
for cancellation the insured's increased risk based on experience;
and to enlarge the notice period for nonrenewal from sixty to
ninety days.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.