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Regular Session, 2010
SENATE BILL NO. 514
BY SENATOR MURRAY
MALPRACTICE. Provides relative to the Patient's Compensation Fund and its
administration by the Patient's Compensation Fund Oversight Board. (8/15/10)
AN ACT1
To amend and reenact R.S. 40:1299.44(A)(2), (5), and (6) and (D)(1)(c) and (2)(b)(iii),2
relative to the Patient's Compensation Fund and the Patient's Compensation Fund3
Oversight Board; to provide with respect to exemption of the board and fund from4
rate regulation by the commissioner of insurance; to provide relative to the annual5
surcharge, including the manner of its determination; to provide relative to retention6
of monies in the fund; to provide with respect to composition of the board and to7
otherwise provide with respect to its authority; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 40:1299.44(A)(2), (5), and (6) and (D)(1)(c) and (2)(b)(iii) are10
hereby amended and reenacted to read as follows:11
ยง1299.44. Patient's Compensation Fund12
A.13
* * *14
(2)(a) In order to provide monies for the fund, an annual surcharge shall be15
levied on all health care providers in Louisiana qualified under the provisions of this16
Part.17 SB NO. 514
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(b) The board shall cause to be prepared an annual actuarial study of1
the fund by a qualified competent actuary.2
(b) (c) The board and the fund shall be exempt from rate regulation by3
the commissioner of insurance. The surcharge rates shall be determined by the4
commissioner of insurance board in a public meeting held pursuant to the5
provisions of R.S. 42:4.1 through 12 based upon actuarial principles and in6
accordance with an application for rates or rate changes, or both, filed by the7
Patient's Compensation Fund Oversight Board, established and authorized pursuant8
to Subsection D of this Section. reports, experience, and prudent judgment of the9
board. The board shall give at least fifteen days prior written or electronic10
notice of the meeting and provide an opportunity for public comment at the11
meeting prior to determining rates.12
(c) (d) The application for rate changes filed by the board shall be submitted13
to the commissioner of insurance at least annually on the basis of an annual actuarial14
study of the patient's compensation fund. surcharge rates shall not be excessive,15
inadequate, or unfairly discriminatory. In determining whether surcharge rates16
are excessive, inadequate, or unfairly discriminatory, consideration may be17
given to the following items:18
(i) Basic rate factors. Due consideration shall be given to past and19
prospective loss and expense experience, catastrophe hazards and contingencies,20
events, or trends, and all other relevant factors and judgments. Fines and21
penalties against a health care provider, whether levied by a court or regulatory22
body, shall not be used by the board or considered in any manner in the loss or23
expense experience for the purpose of determining surcharge rates.24
(ii) Classification. Risks may be grouped by classification for the25
establishment of rates. Classification rates may be modified for individual risks26
in accordance with an experience-rating plan or schedule which apportions a27
greater percentage of required surcharge increases to those health care28
providers who generate greater-than-expected losses.29 SB NO. 514
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(iii) Expenses. The expense provisions shall reflect the operating1
methods of the board and the fund, the past expense experience, and anticipated2
future expenses.3
(iv) Contingencies. The rates may contain a provision for contingencies.4
(v) Other relevant factors. Any other factors available at the time of5
determining the rates.6
(d) (e) The surcharge shall be collected on the same basis as premiums by7
each insurer, the risk manager, and surplus line agent.8
(e) (f) The board shall collect the surcharge from health care providers9
qualified as self-insureds.10
(f) (g) The surcharge for self-insureds shall be the same amount determined11
by the board in accordance with regulations promulgated under the Administrative12
Procedure Act and in accordance with the rate set by the commissioner of insurance13
to be the amount of surcharge which the health care provider would reasonably be14
required to pay were his qualification based upon filing a policy of malpractice15
liability insurance.16
* * *17
(5)(a) All expenses of collecting, protecting, and administering the fund shall18
be paid from the fund.19
(b) The functions of collecting, administering, and protecting the fund,20
including all matters relating to determining surcharge rates, establishing reserves,21
the evaluating and settlement of claims, and relating to the defense of the fund, shall22
be carried out by the board.23
(c) The board shall prepare quarterly statements of the financial24
condition of the fund and publish the statements on the board's website.25
(c) (d) The function of selecting the list of attorney names from which the26
selection of the attorney chairman of the medical review panels is to be made shall27
be the responsibility of the office of the clerk of the Louisiana Supreme Court.28
(d) (e) These expenses of the board and office of the clerk of the Louisiana29 SB NO. 514
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Supreme Court shall be paid from the fund by the state treasurer in accordance with1
the law.2
(e) (f) The fund shall be a budget unit of this state.3
(f) (g) The legislature shall appropriate from the fund sufficient monies for4
the carrying out by the board and office of the clerk of the Louisiana Supreme Court5
of the duties, functions, and responsibilities imposed upon them in this Section and6
shall also appropriate all remaining monies in the fund for use by the board to pay7
approved claims based upon final judgments, court-approved settlements, final8
arbitration awards, and judgments awarding medical care and related benefits9
rendered pursuant to R.S. 40:1299.43 and vouchers drawn by the board pursuant to10
a judgment reciting that a patient is in need of future medical and related benefits11
under the provisions of R.S. 40:1299.43 in accordance with Paragraph (7) of this12
Subsection and in accordance with Subsection B of this Section.13
(g) (h) Any purchases from the fund of furniture, fixtures, equipment, or14
other property shall be specifically designated, by such method of identification as15
is reasonable and practical for each item, as the property of the fund.16
(6)(a) At all times the fund shall be maintained so as to provide a surplus17
assets of at least thirty percent of the annual surcharge premiums, reserves18
established for individual claims, reserves established for incurred but not reported19
claims, and expenses. fund's outstanding liabilities, calculated using the most20
recent actuarial study and report for the fund.21
(b) No reduction in the surcharge shall be made unless such surplus balance22
on hand is available in the fund.23
* * *24
D.(1)25
* * *26
(c) The ninth member of the board shall be appointed from nominees27
provided by the principal professional organization of insurance executives,28
insurance agents organizations and this member must shall be an executive of a29 SB NO. 514
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familiar with property and casualty insurance company that is and licensed in this1
state which does not sell medical professional liability insurance. as a producer.2
* * *3
(2)4
* * *5
(b) In addition to such other powers and authority elsewhere expressly or6
impliedly conferred on the board by this Part, the board shall have the authority, to7
the extent not inconsistent with the provisions of this Part, to:8
* * *9
(iii) Collect, accumulate, and maintain claims experience data from enrolled10
health care providers and insurance companies providing professional liability11
insurance coverage to health care providers in this state, in such form as may be12
necessary or appropriate to permit the fund board to develop determine appropriate13
surcharge rates for the fund.14
* * *15
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Greg Waddell.
DIGEST
Present law establishes the Patient's Compensation Fund as a special fund in the state
treasury, to be funded by annual surcharges on qualified health care providers, for the
purpose of paying medical malpractice claims over $100,000. Provides that the fund is
generally administered by the Patient's Compensation Fund Oversight Board with surcharge
rates determined by the commissioner of insurance based upon actuarial principles.
Proposed law changes present law as follows:
(1)Present law provides that the annual surcharge levied on qualified health care
providers in this state shall be determined by the commissioner of insurance based
upon actuarial principles and in accordance with an application for rates or rate
changes filed by the Patient's Compensation Fund Oversight Board. Specifies that
application for rate changes filed by the board shall be submitted to the
commissioner at least annually on the basis of an annual actuarial study of the
patient's compensation fund.
Proposed law makes the board and the fund exempt from rate regulation by the
commissioner. Requires the board to cause to be prepared an annual actuarial study
of the fund by a qualified competent actuary. Provides that the surcharge shall be
determined by the board in a public meeting, held pursuant to present law, relative
to open meetings and occasions for executive sessions, based upon actuarial
principles and reports, experience, and prudent judgment of the board. Requires the SB NO. 514
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board to give at least 15 days prior written or electronic notice of the meeting and to
provide an opportunity for public comment at the meeting prior to determining rates.
(2)Proposed law provides that surcharge rates shall not be excessive, inadequate, or
unfairly discriminatory. Specifies that, in determining this, consideration may be
given to the following:
(a)Basic rate factors. Provides that due consideration shall be given to past and
prospective loss and expense experience, catastrophe hazards and
contingencies, events, or trends, and all other relevant factors and judgments.
Provides that fines and penalties against a health care provider, however
levied, shall not be used by the board or considered in any manner in the loss
or expense experience for the purpose of determining surcharge rates.
(b)Classification. Allows risks to be grouped by classification for the
establishment of rates. Allows classification rates to be modified for
individual risks in accordance with an experience-rating plan or schedule
which apportions a greater percentage of required surcharge increases to
those health care providers who generate greater-than-expected losses.
(c)Expenses. Requires that the expense provisions shall reflect the operating
methods of the board and the fund, the past expense experience, and
anticipated future expenses.
(d)Contingencies. Allows the rates to contain a provision for contingencies.
(e)Other relevant factors. Allows for use of any other factors available at the
time of determining the rates.
(3)Present law provides that the surcharge for self-insureds shall be the amount
determined by the board in accordance with regulations promulgated under the APA
and in accordance with the rate set by the commissioner of insurance to be the
amount of surcharge which the health care provider would reasonably be required
to pay were his qualification based upon filing a policy of malpractice liability
insurance.
Proposed law provides that the amount of the surcharge shall be the same amount
determined by the board to be the amount of surcharge which the health care
provider would reasonably be required to pay were his qualification based upon
filing a policy of malpractice liability insurance, deleting the requirement that the
amount of such surcharge be determined in accordance with regulations promulgated
under the APA and with the rate set by the commissioner.
(4)Proposed law requires the board to prepare quarterly statements of the financial
condition of the fund and publish the statements on the board's website.
(5)Present law provides that at all times the fund shall be maintained so as to provide
a surplus of 30% of the annual surcharge premiums, reserves established for
individual claims, reserves established for incurred but not reported claims, and
expenses. Further specifies that no reduction in the surcharge shall be made unless
such surplus is available in the fund.
Proposed law instead provides that at all times the fund shall be maintained so as to
provide assets on hand of at least 30% of the fund's outstanding liabilities, calculated
using the most recent actuarial study and report for the fund. Further specifies that
no reduction in the surcharge shall be made unless such balance on hand is available
in the fund. SB NO. 514
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(6)Present law provides for a nine-member board, including one member appointed
from nominees provided by the principal professional organization of insurance
executives. Requires that this member be an executive of a property and casualty
insurance company that is licensed in this state which does not sell medical
professional liability insurance.
Proposed law instead provides for a member appointed from nominees provided by
the principal professional insurance agents organizations. Requires that this member
be familiar with property and casualty insurance and licensed in this state as a
producer.
(7)Present law provides that among the powers and duties of the board is the authority
to collect, accumulate, and maintain claims experience data from enrolled health care
providers and insurance companies providing professional liability insurance
coverage to health care providers in this state, in such form as may be necessary or
appropriate to permit the fund to develop appropriate surcharge rates for the fund.
Proposed law instead provides that among the powers and duties of the board is the
authority to collect, accumulate, and maintain claims experience data from enrolled
health care providers and insurance companies providing professional liability
insurance coverage to health care providers in this state, in such form as may be
necessary or appropriate to permit the board to determine appropriate surcharge rates
for the fund.
Effective August 15, 2010.
(Amends R.S. 40:1299.44(A)(2), (5), and (6) and (D)(1)(c) and (2)(b)(iii))