H. B. 4263


(By Delegates H. White, G. White and Hrutkay)
[Introduced February 2, 2004; referred to the
Committee on Finance.]




A BILL to amend and reenact §33-20F-4, §33-20F-5 and §33-20F-7 of the code of West Virginia, 1931, as amended, all relating to the authorization for the creation of and governance and organization of the physicians' mutual insurance company; clarifying and correcting the premium taxes that the physicians' mutual insurance company will be subject to; and amending provisions relating to the one-time assessment on physicians.

Be it enacted by the Legislature of West Virginia:
That §33-20F-4, §33-20F-5 and §33-20F-7 of the code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 20F. PHYSICIANS' MUTUAL INSURANCE COMPANY.
§33-20F-4. Authorization for creation of company; requirements and limitations.
(a) Subject to the provisions of this article, a physicians' mutual insurance company may be created as a domestic, private, nonstock, nonprofit corporation. As an incentive for its creation, the company may be eligible for funds from the Legislature in accordance with the provisions of section seven of this article. The company must remain for the duration of its existence a domestic mutual insurance company owned by its policyholders and may not be converted into a stock corporation, a for-profit corporation or any other entity not owned by its policyholders. The company may not declare any dividend to its policyholders; sell, assign or transfer substantial assets of the company; or write coverage outside this state, except for counties adjoining this state, until after any and all debts owed by the company to the state have been fully paid.
(b) For the duration of its existence, the company is not and may not be considered a department, unit, agency, or instrumentality of the state for any purpose. All debts, claims, obligations and liabilities of the company, whenever incurred, shall be the debts, claims, obligations and liabilities of the company only and not of the state or of any department, unit, agency, instrumentality, officer or employee of the state.
(c) The moneys of the company are not and may not be considered part of the general revenue fund of the state. The debts, claims, obligations and liabilities of the company are not and may not be considered a debt of the state or a pledge of the credit of the state.
(d) The company is not subject to provisions of article nine-a, chapter six of this code or the provisions of article one, chapter twenty-nine-b of this code.
(e)(1) All premiums collected by the company are subject to the premium taxes, additional premium taxes, additional fire and casualty insurance premium taxes and surcharges contained in sections fourteen, and fourteen-a, fourteen-d and thirty-three, article three of this chapter: Provided, That while the loan to the company of moneys from the West Virginia tobacco settlement medical trust fund pursuant to section nine of this article remains outstanding, the commissioner may waive the company's premium taxes, and surcharges additional premium taxes and additional fire and casualty insurance premium taxes if payment would render the company insolvent or otherwise financially impaired.
(2) On and after the first day of July, two thousand and three, any premium taxes, additional premium taxes, additional fire and casualty insurance premium taxes and surcharges paid by the company and by any insurer on its medical malpractice line pursuant to sections fourteen, and fourteen-a, fourteen-d and thirty-three, article three of this chapter, shall be temporarily applied toward replenishing the moneys appropriated from the West Virginia tobacco settlement medical trust fund pursuant to subsection (c), section two, article eleven-a, chapter four of this code pending repayment of the loan of such moneys by the company.
(3) The state treasurer shall notify the commissioner when the moneys appropriated from the West Virginia tobacco settlement medical trust have been fully replenished, at which time the commissioner shall resume depositing premium taxes, additional premium taxes, additional fire and casualty insurance premium taxes and surcharges diverted pursuant to subdivision (2) of this subsection in accordance with the provisions of sections fourteen, and fourteen-a, fourteen-d and thirty-three, article three of this chapter.
(4) Payments received by the treasurer from the company in repayment of any outstanding loan made pursuant to section nine of this article shall be deposited in the West Virginia tobacco settlement medical trust fund and dedicated to replenishing the moneys appropriated therefrom under subsection (c), section two, article eleven-a, chapter four of this code. Once the moneys appropriated from the West Virginia tobacco settlement medical trust fund have been fully replenished, the treasurer shall deposit any payments from the company in repayment of any outstanding loan made pursuant to section nine of this article in said fund and transfer a like amount from said fund to the commissioner for disbursement in accordance with the provisions of sections fourteen, and fourteen-a, fourteen-d and thirty-three, article three of this chapter.
§33-20F-5. Governance and organization.
(a)(1) The board of risk and insurance management shall implement the initial formation and organization of the company as provided by this article.
(2) From the first day of July, two thousand three, until the thirtieth day of June, two thousand four, the company shall be governed by a provisional board of directors consisting of the members of the board of risk and insurance management, the dean of the West Virginia University School of Medicine or a physician representative designated by him or her, and five physician directors, elected by the policyholders whose policies are to be transferred to the company pursuant to section nine of this article.
(3) Only physicians who are licensed to practice medicine in this state pursuant to article three or article fourteen, chapter thirty of this code and who have purchased medical professional liability coverage from the board of risk and insurance management are eligible to serve as physician directors on the provisional board of directors. One of the physician directors shall be selected from a list of three physicians nominated by the West Virginia medical association. The board of risk and insurance management shall develop procedures for the nomination of the remaining physician directors and for the conduct of the election, to be held no later than the first day of June, two thousand three, of all of the physician directors, including, but not limited to, giving notice of the election to the policyholders. These procedures shall be exempt from the provisions of article three, chapter twenty-nine twenty-nine-a of this code.
(b) From the first day of July, two thousand four, the company shall be governed by a board of directors consisting of eleven directors, as follows:
(1) Five directors who are physicians licensed to practice medicine in this state by the board of medicine or the board of osteopathy, including at least one general practitioner and one specialist: Provided, That only physicians who have purchased medical professional liability coverage from the board of risk and insurance management are eligible to serve as physician representatives on the company's first board of directors;
(2) Three directors who have substantial experience as an officer or employee of a company in the insurance industry;
(3) Two directors with general knowledge and experience in business management who are officers and employees of the company and are responsible for the daily management of the company; and
(4) One director who is a dean of a West Virginia school of medicine or osteopathy or his or her designated physician representative. This director's position shall rotate annually among the dean of the West Virginia University School of Medicine, the dean of the Marshall University Joan C. Edwards School of Medicine and the dean of the West Virginia School of Osteopathic Medicine. This director shall serve until such time as the moneys loaned to the company from the West Virginia tobacco settlement medical trust fund have been replenished as provided in subsection (e), section four of this article. After the moneys have been replenished to the West Virginia tobacco settlement medical trust fund, this director shall be a physician licensed to practice medicine in this state by the board of medicine or the board of osteopathy.
(c) In addition to the eleven directors required by subsection (b) of this section, the bylaws of the company may provide for the addition of at least two directors who represent an entity or institution which lends or otherwise provides funds to the company.
(d) The directors and officers of the company are to be chosen in accordance with the articles of incorporation and bylaws of the company. The initial board of directors selected in accordance with the provisions of subdivision (3), subsection (a) of this section shall serve for the following terms: (1) Three for four-year terms; (2) three for three-year terms; (3) three for two-year terms; and (4) two for one-year terms. Thereafter, the directors shall serve staggered terms of four years. If an additional director is added to the board as provided in subsection (c) of this section, his or her initial term shall be for four years. No director chosen pursuant to subsection (b) of this section may serve more than two consecutive terms.
(e) The incorporators are to prepare and file articles of incorporation and bylaws in accordance with the provisions of this article and the provisions of chapters thirty-one, and thirty-three of this code.
§33-20F-7. Initial capital and surplus; special assessment. (a) There is hereby created in the state treasury a special revenue account designated as the "Board of Risk and Insurance Management Physicians' Mutual Insurance Company Account" solely for the purpose of receiving moneys transferred from the West Virginia tobacco medical trust fund pursuant to subsection (c), section two, article eleven-a, chapter four of this code for the company's use as initial capital and surplus. (b) On the first day of July, two thousand three, a special one-time assessment, in the amount of one thousand dollars, shall be imposed on every physician licensed by the board of medicine or by the board of osteopathy for the privilege of practicing medicine in this state. Provided, That the following physicians shall be exempt from the assessment The board of medicine and the board of osteopathy, as appropriate, may take the following actions against any physician who is required by this section to pay the one-time assessment but has failed to do so:
(1) If a physician does not pay the assessment in full by the first day of May, two thousand four, the board of medicine or the board of osteopathy, as appropriate, may assess a civil penalty in the amount of three thousand dollars payable to the appropriate board against such physician; and
(2) Notwithstanding any other provision of this code to the contrary, the license of any physician who has not paid the one-time assessment in full by the physician's license renewal date will be automatically suspended until such time as the one-time assessment is paid in full.
(c) The following physicians shall be exempt from the assessment set forth in subsection (b) of this section:
(1) A faculty physician who meets the criteria for full-time faculty under subsection (f), section one, article eight, chapter eighteen-b of this code, who is a full-time employee of a school of medicine or osteopathic medicine in this state, and who does not maintain a private practice; (2) A resident physician who is a graduate of a medical school or college of osteopathic medicine enrolled and who is participating in an accredited full-time program of post-graduate medical education in this state; (3) A physician who has presented suitable proof that he or she is on active duty in armed forces of the United States and who will not be reimbursed by the armed forces for the assessment; (4) A physician who receives more than fifty percent of his or her practice income from providing services to federally qualified health center as that term is defined in 42 U.S.C. §1396d(1)(2); and (5) A physician who practices solely under a special volunteer medical license authorized by section ten-a, article three or section twelve-b, article fourteen, chapter thirty of this code. The assessment is to be imposed and collected by the board of medicine and the board of osteopathy on forms prescribed by each licensing board. (c) (d) The entire proceeds of the special assessment collected pursuant to subsection (b) of this section shall be dedicated to the company. The board of medicine and the board of osteopathy shall promptly pay over to the company all amounts collected pursuant to this section to be used as policyholder surplus for the company. (d) (e) Any physician who applies to purchase insurance from the company and who has not paid the assessment pursuant to subsection (b) of this section shall pay one thousand dollars to the company as a condition of obtaining insurance from the company.

NOTE: The purpose of this bill is to clarify the premium taxes and surcharges in Chapter 33 of the West Virginia Code which apply to the Physicians' Mutual Insurance Company. The bill will also correct an incorrect Code reference in section 33-20F-5(a)(3). In addition, the bill will add provisions in section 7 that will allow the Board of Medicine or the Board of Osteopathy to assess a civil penalty against a physician who fails to pay the assessment and provides for automatic license suspension until the assessment is paid by the physician in full.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.