Texas Insurance Code - Not Codified - Article 5.15-1. Professional Liability Insurance For Physicians And Health Care Providers
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Art. 5.15-1. PROFESSIONAL LIABILITY INSURANCE FOR PHYSICIANS
AND HEALTH CARE PROVIDERS.
Scope of Article
Text of Sec. 1 effective until April 1, 2007
Sec. 1. This article shall apply to the making and use of
insurance rates by every insurer licensed to write or engaged in
writing professional liability insurance for any physician or any
health care provider including rating organizations, acting on
behalf of insurers.
Definitions
Text of Sec. 2 effective until April 1, 2007
Sec. 2. In this article:
(1) "Physician" means a person licensed to practice
medicine in this state.
(2) "Health care provider" means any person, partnership,
professional association, corporation, facility, or institution
licensed or chartered by the State of Texas to provide health care
as a registered nurse, hospital, dentist, podiatrist,
chiropractor, optometrist, pharmacist, veterinarian,
not-for-profit kidney dialysis center, blood bank that is a
nonprofit corporation chartered to operate a blood bank and which
is accredited by the American Association of Blood Banks,
for-profit nursing home or not-for-profit nursing home, for-profit
assisted living facility or not-for-profit assisted living
facility, or an officer, employee, or agent of any of them acting in
the course and scope of his employment, or a health care
practitioner or facility that the commissioner, in accordance with
Section 3B(b), Article 21.49-3, of this code, determines is
eligible for coverage under this article.
(3) "Hospital" means a licensed public or private
institution as defined in Chapter 241, Health and Safety Code, or in
Section 88, Chapter 243, Acts of the 55th Legislature, Regular
Session, 1957 (Article 5547-88, Vernon's Texas Civil Statutes).
Rate Standards
Text of Sec. 3 effective until April 1, 2007
Sec. 3. Rates shall be made in accordance with the following
provisions:
(a) Consideration shall be given to past and prospective
loss and expense experience for all professional liability
insurance for physicians and health care providers written in this
state, unless the department shall find that the group or risk to be
insured is not of sufficient size to be deemed credible, in which
event, past and prospective loss and expense experience for all
professional liability insurance for physicians and health care
providers written outside this state shall also be considered, to a
reasonable margin for underwriting profit and contingencies, to
investment income, to dividends or savings allowed or returned by
insurers to their policyholders or members.
(b) The department shall consider the impact of risk
management courses taken by physicians and health care providers in
this state in approving rates under this article.
(c) For the establishment of rates, risks may be grouped by
classifications, by rating schedules, or by any other reasonable
methods. Classification rates may be modified to produce rates for
individual risks in accordance with rating plans which establish
standards for measuring variations in hazards or expense
provisions, or both. Those standards may measure any difference
among risks that can be demonstrated to have a probable effect upon
losses or expenses.
(d) Rates shall be reasonable and shall not be excessive or
inadequate, as defined in this subsection, nor shall they be
unfairly discriminatory. No rate shall be held to be excessive
unless the rate is unreasonably high for the insurance coverage
provided. No rate shall be held to be inadequate unless the rate is
unreasonably low for the insurance coverage provided and is
insufficient to sustain projected losses and expenses; or unless
the rate is unreasonably low for the insurance coverage provided
and the use of the rate has or, if continued, will have the effect of
destroying competition or creating a monopoly.
Filing Rates
Text of Sec. 4 effective until April 1, 2007
Sec. 4. (a) The provisions of Article 5.13-2 of this code
shall apply to the filing of rates and rating information required
under this article.
(b) Nothing contained in this article or other provisions of
this subchapter concerning the regulation of rates, rating plans,
and rating classifications shall, as applies to the writing of
professional liability insurance for health care providers and
physicians, give the board the power to prescribe uniform or
absolute rates; nor shall anything therein be construed as
preventing the filing of different rates for risks in a given
classification or modified rates for individual risks made in
accordance with rating plans, as filed by different insurers or
organizations authorized to file such rates. As used in this
subsection, "absolute rates" means rates, rating classifications,
or rating plans filed by an insurer or authorized rating
organization in accordance with this subchapter and the rates,
rating classifications, or rating plans so filed are required to be
used, to the exclusion of all others, by each insurer lawfully
engaged in writing policies.
(c) The State Board of Insurance shall prescribe
standardized policy forms for occurrence, claims-made and
claims-paid policies of professional liability insurance covering
health care providers and physicians, and no insurer may use any
other forms in writing professional liability insurance for health
care providers and physicians without the prior approval of the
State Board of Insurance. However, an insurer writing professional
liability insurance for health care providers and physicians may
use any form of endorsement if the endorsement is first submitted to
and approved by the board.
Text of Sec. 4A effective until April 1, 2007
Sec. 4A. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 6.12,
eff. Sept. 1, 1993.
Rate appeals
Text of Sec. 4B effective until April 1, 2007
Sec. 4B. (a) Each insurer covered by this article shall adopt
a procedure for reconsideration of a rate or premium charged a
physician or health care provider for professional liability
insurance coverage. The procedure shall include an opportunity for
a hearing before officers or employees who have responsibility for
determining rates and premiums to be charged for professional
liability insurance and a requirement that the insurer reconsider
the rate or premium and provide the physician or health care
provider a written explanation of the rate or premium being
charged.
(b) If a physician or health care provider is not satisfied
with a decision under procedures established under Subsection (a)
of this section, the physician or health care provider may appeal to
the State Board of Insurance for a review of the rate or premium and
a determination if the rate or premium being charged complies with
criteria under Section 3 of this article.
(c) The State Board of Insurance by rule shall establish
criteria to be followed by insurers in establishing reconsideration
procedures under Subsection (a) of this section and standards and
procedures to be followed in review of rates and premiums by the
board.
Reporting of Claims and Claims Information
Text of Sec. 5 effective until April 1, 2007
Sec. 5. Each insurer who issues policies of professional
liability insurance covering physicians and health care providers
shall file annually with the State Board of Insurance a report of
all claims and amount of claims, amounts of claims reserves,
investment income of the company derived from medical professional
liability premiums, information relating to amounts of judgments
and settlements paid on claims, and other information required by
the board. The board may formulate and promulgate a form on which
this information shall be reported. The form shall be so devised as
to require the information to be reported in an accurate manner,
reasonably calculated to facilitate interpretation and to protect
the confidentiality of the health care provider or physician.
Annual Premiums
Text of Sec. 6 effective until April 1, 2007
Sec. 6. Policies of professional liability insurance under
this article shall be written on not less than an annual premium
basis.
Notice of Cancellation or Nonrenewal
Text of Sec. 7 effective until April 1, 2007
Sec. 7. An insurer who issues a policy of professional
liability insurance covered by this article shall give at least 90
days' written notice to an insured if premiums on the insurance are
to be increased or the policy is to be cancelled or is not to be
renewed other than for nonpayment of premiums or because the
insured is no longer licensed. If the premiums are to be increased,
the notice shall state the amount of the increase, and if the policy
is to be cancelled or is not to be renewed, the insurer shall state
in the notice the reason for cancellation or nonrenewal. Notice of
cancellation under this section may only be given within the first
90 days from the effective date of the policy.
Exemplary Damages Under Medical Professional Liability Insurance
Text of Sec. 8 effective until April 1, 2007
Sec. 8. No policy of medical professional liability insurance
issued to or renewed for a health care provider or physician in this
state may include coverage for exemplary damages that may be
assessed against the health care provider or physician; provided,
however, that the commissioner may approve an endorsement form that
provides for coverage for exemplary damages to be used on a policy
of medical professional liability insurance issued to a hospital,
as the term "hospital" is defined in this article, or to a
for-profit or not-for-profit nursing home or assisted living
facility.
Claim Surcharges
Text of Sec. 9 effective until April 1, 2007
Sec. 9. A claim surcharge assessed by an insurer against a
health care provider or physician under a professional liability
insurance policy may be based only on claims actually paid by an
insurer as a result of a settlement or an adverse judgment or an
adverse decision of a court.
Premium Discount Recoupment
Sec. 10. (a) Eligibility. Effective January 1, 1999, each
insurer that has filed and issued premium discounts to health care
professionals pursuant to Article 5.15-4 of this code shall be
eligible to elect to receive a premium tax credit in lieu of
indemnification for claims filed with the Attorney General under
Chapter 110, Civil Practice and Remedies Code.
(b) Amount of Tax Credit. An eligible company may elect to
recoup premium discounts issued to eligible health care
professionals in lieu of indemnification from the State of Texas
for claims filed under Chapter 110, Civil Practice and Remedies
Code. Such election shall be made as a credit that is part of the
annual premium tax return filed on or before March 1, 1999. An
insurer may credit the total amount of any discounts issued less any
reimbursements received prior to January 1, 1999, by the insurer
for claims filed under Chapter 110, Civil Practice and Remedies
Code, against its premium tax under Article 4.10 of this code. The
tax credit herein authorized shall be allowed at a rate not to
exceed 20 percent of the credit per year for five or more successive
years following the initial election made in March 1999. The
balance of payments due the insurer and not claimed as a tax credit
may be reflected in the books and records of the insurer as an
admitted asset for all purposes, including exhibition in annual
statements pursuant to Article 6.12 of this code. The tax credit
allowed in any one year may not exceed the premium tax due in that
year.
(c) An eligible insurer that elects to receive tax credits
shall not be eligible to file claims for indemnity under Chapter
110, Civil Practice and Remedies Code after January 1, 1999. Any
claims of an eligible insurer filed with the Attorney General prior
to January 1, 1999, that have not been reimbursed shall also be
deemed to have been waived by the insurer by making its election.
An insurer that elects not to recoup its discount through tax credit
will continue to remain eligible for indemnification of eligible
claims under Chapter 110, Civil Practice and Remedies Code.
(d) The elections provided herein shall not affect the right
of a self-insurance trust created under Article 21.49-4 of this
code from seeking indemnification for eligible claims.
(e) The provisions of Article 21.46 of this code shall not
apply to the credits authorized herein.
Vendor's Endorsement
Text of Sec. 11 effective until April 1, 2007
Sec. 11. An insurer may not exclude or otherwise limit
coverage for physicians or health care providers under a vendor's
endorsement issued to a manufacturer, as that term is defined by
Section 82.001, Civil Practice and Remedies Code. A physician or
health care provider shall be considered a vendor for purposes of
coverage under a vendor's endorsement or a manufacturer's general
liability or products liability policy.
Text of Sec. 12 as added by Acts 2005, 79th Leg., ch. 184.
Coverage for Volunteer Health Care Providers
Sec. 12. (a) In this section:
(1) "Charitable organization" has the meaning assigned by
Section 84.003, Civil Practice and Remedies Code.
(2) "Volunteer health care provider" has the meaning
assigned by Section 84.003, Civil Practice and Remedies Code.
(b) An insurer may make available professional liability
insurance covering a volunteer health care provider for an act or
omission resulting in death, damage, or injury to a patient while
the person is acting in the course and scope of the person's duties
as a volunteer health care provider as described by Chapter 84,
Civil Practice and Remedies Code.
(c) This section does not affect the liability of a
volunteer health care provider who is serving as a direct service
volunteer of a charitable organization. Section 84.004(c), Civil
Practice and Remedies Code, applies to the volunteer health care
provider without regard to whether the volunteer health care
provider obtains liability insurance under this section.
(d) An insurer may make professional liability insurance
available under this section to a volunteer health care provider
without regard to whether the volunteer health care provider is a
"health care provider" as defined by Section 2 of this article.
Prohibition of Use of Certain Information for Physician or Health
Care Provider
Text of Sec. 12 as added by Acts 2005, 79th Leg., ch. 1135.
Sec. 12. (a) For the purpose of writing professional
liability insurance for physicians and health care providers, an
insurer may not consider whether, or the extent to which, a
physician or health care provider provides services in this state
to individuals who are recipients of Medicaid or covered by the
state child health plan program established by Chapter 62, Health
and Safety Code, including any consideration resulting in:
(1) denial of coverage;
(2) refusal to renew coverage;
(3) cancellation of coverage;
(4) limitation of the amount, extent, or kind of coverage
available; or
(5) a determination of the rate or premium to be paid.
(b) The commissioner may adopt rules as necessary to
implement this section.
Use in Underwriting of Certain Information Related to Lawsuits;
Refund
Sec. 13. (a) Notwithstanding any other provision of this
code, an insurer may not consider for the purpose of setting
premiums or reducing a claims-free discount for a particular
insured physician's professional liability insurance a lawsuit
filed against the physician if:
(1) before trial, the lawsuit was dismissed by the claimant
or nonsuited; and
(2) no payment was made to the claimant under a settlement
agreement.
(b) An insurer that, in setting premiums or reducing a
claims-free discount for a physician's professional liability
insurance, considers a lawsuit filed against the physician shall
refund to the physician any increase in premiums paid by the
physician that is attributable to that lawsuit or reinstate the
claims-free discount if the lawsuit is dismissed by the claimant or
nonsuited without payment to the claimant under a settlement
agreement. The insurer shall issue the refund or reinstate the
discount on or before the 30th day after the date the insurer
receives written evidence that the lawsuit was dismissed or
nonsuited without payment to the claimant under a settlement
agreement.
(c) This section does not prohibit an insurer from
considering and using aggregate historical loss and expense
experience applicable generally to a classification of physicians'
professional liability insurance to set rates for that
classification to the extent authorized by Article 5.13-2 of this
code. Notwithstanding Section 4(c), Article 5.13-2, of this code,
an insurer may not assign a physician to a particular
classification based on a factor described by Subsection (a) of
this section.
Added by Acts 1977, 65th Leg., p. 2054, ch. 817, Sec. 31.01, eff.
Aug. 29. 1977; Sec. 2(2) amended by Acts 1987, 70th Leg., ch. 718,
Sec. 1, eff. Sept. 1, 1987; Sec. 4A added by Acts 1987, 70th Leg.,
1st C.S., ch. 1, Sec. 2.05, eff. Sept. 2, 1987; Sec. 8 amended by
Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 7.01, eff. Sept. 2,
1987; Sec. 3 amended by Acts 1989, 71st Leg., ch. 1027, Sec. 15,
eff. Sept. 1, 1989; Sec. 4B added by Acts 1989, 71st Leg., ch. 1027,
Sec. 16, eff. Sept. 1 1989; Sec. 2(3) amended by Acts 1991, 72nd
Leg., ch. 14, Sec. 284(15), eff. Sept. 1, 1991; Sec. 3 amended by
Acts 1991, 72nd Leg., ch. 606, Sec. 1, eff. Sept. 1, 1991; Sec. 4A
amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.17D, eff. Sept. 1,
1991; Sec. 4B(b) amended by Acts 1991, 72nd Leg., ch. 606, Sec. 2,
eff. Sept. 1, 1991; Sec. 4(a) amended by Acts 1993, 73rd Leg., ch.
685, Sec. 6.11, eff. Sept. 1, 1993; Sec. 4A repealed by Acts 1993,
73rd Leg., ch. 685, Sec. 6.12, eff. Sept. 1, 1993; Sec. 8 amended by
Acts 1997, 75th., ch. 746, Sec. 1, eff. Sept. 1, 1997; Sec. 10 added
by Acts 1997, 75th Leg., ch. 991, Sec. 1, eff. Sept. 1, 1997; Sec.
2(2) amended by Acts 2001, 77th Leg., ch. 1284, Sec. 5.01, eff. June
15, 2001; Sec. 8 amended by Acts 2001, 77th Leg., ch. 1284, Sec.
5.02, eff. June 15, 2001; Sec. 2(2) amended by Acts 2003, 78th
Leg., ch. 141, Sec. 1, eff. Sept. 1, 2003; Sec. 8 amended by Acts
2003, 78th Leg., ch. 141, Sec. 2, eff. Sept. 1, 2003; Sec. 11 added
by Acts 2003, 78th Leg., ch. 204, Sec. 10.08, eff. Sept. 1, 2003;
Sec. 3 amended by Acts 2005, 79th Leg., ch. 1135, Sec. 1, eff. Sept.
1, 2005; Sec. 12 added by Acts 2005, 79th Leg., ch. 184, Sec. 1,
eff. May 27, 2005; Secs. 12, 13 added by Acts 2005, 79th Leg., ch.
1135, Sec. 2, eff. Sept. 1, 2005; Secs. 1 to 9 and 11 are repealed
by Acts 2005, 79th Leg., ch. 727, Sec. 18(e), eff. April 1, 2007.
Article: 5.11 5.12-1 5.13 5.13-1 5.13-2 5.13-2C 5.14 5.15-1 5.15-2 5.15-3 5.15-4 5.18 5.19 5.20 5.21
Last modified: August 11, 2007
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