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Regular Session, 2010
SENATE BILL NO. 586
BY SENATOR MARTINY
FUNDS/FUNDING. Provides relative to the Patient's Compensation Fund. (8/15/10)
AN ACT1
To amend and reenact R.S. 40:1299.44(A)(2), (6) and (7) and (D)(1)(a), (b) and (c), relative2
to the Patient's Compensation Fund; to provide for the establishment of surcharge3
rates and rating requirements; to provide with respect to the rating approval by the4
commissioner of insurance; to provide for examination of the Fund by the5
commissioner of insurance; to provide for examination procedures; to provide for6
required reserves of the Fund; to provide for the appointment of the Patient's7
Compensation Fund Oversight Board; 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), (6) and (7) and (D)(1)(a), (b) and (c) are hereby10
amended and reenacted to read as follows: 11
ยง1299.44. Patient's Compensation Fund12
A. * * *13
(2)(a) In order to provide monies for the fund, an annual surcharge shall be14
levied on all health care providers in Louisiana qualified under the provisions of this15
Part.16
(c) (b) The board shall submit an application for rates changes filed by the17 SB NO. 586
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board shall be submitted to the commissioner of insurance at least annually on or1
before September first of each year. the basis of The application for rates shall2
be based upon an annual actuarial study of the patient's compensation fund.3
(b) (c) The surcharge shall be determined by the commissioner of insurance4
based upon actuarial principles and in accordance with an application for rates or rate5
changes, or both, filed by the Patient's Compensation Fund Oversight Board,6
established and authorized pursuant to Subsection D of this Section.7
(d) The board shall be prohibited from using or implementing any8
surcharges that have not been approved by the commissioner of insurance.9
(e) The surcharges approved by the commissioner of insurance shall10
become effective as to all new or renewal business beginning January first of the11
following year.12
(f) The fund shall be administered in a manner to provide for financial13
solvency in order to protect claimants and health care providers from losses14
resulting from insolvency.15
(g) The commissioner of insurance shall make an examination of the16
fund at least once every five years unless the commissioner of insurance, in his17
discretion, determines that the financial condition or operations of the fund18
warrant more frequent examinations. All examinations shall be conducted in19
accordance with the provisions of Chapter 8 of Title 22 of the Louisiana Revised20
Statutes of 1950, R.S. 22:1981 et seq.21
(d) (h) The surcharge shall be collected on the same basis as premiums by22
each insurer, the risk manager, and surplus line agent.23
(e) (i) The board shall collect the surcharge from health care providers24
qualified as self-insureds.25
(f) (j) The surcharge for self-insureds shall be the amount determined by the26
board in accordance with regulations promulgated under the Administrative27
Procedure Act and in accordance with the rate set by the commissioner of insurance28
to be the amount of surcharge which the health care provider would reasonably be29 SB NO. 586
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required to pay were his qualification based upon filing a policy of malpractice1
liability insurance.2
* * *3
(6)(a) At On or before January 1, 2016 and at all times thereafter the4
fund shall be maintained assets in excess of liabilities so as to provide a surplus of5
thirty percent of the annual surcharge premiums, reserves established for individual6
claims, reserves established for incurred but not reported claims, and expenses.7
(b) No reduction in the surcharge shall be made unless such surplus is8
available in the fund.9
(7)(a) Claims from the patient's compensation fund exclusive of those10
provided for in R.S. 40:1299.43 shall be computed at the time the claim becomes11
final.12
(b) A final claim shall be paid within forty-five days of the board's receipt of13
a certified copy of the settlement, judgment, or arbitration award, unless the fund is14
exhausted and the proration provision contained in Subparagraph (7)(c) applies.15
(c) If the fund would be exhausted by payment in full of all final claims then16
the health care providers qualified under the provisions of this Part shall be17
liable in solido for liabilities which have been incurred by the fund and shall be18
assessed in order to pay any claims that are due. amount paid to each claimant19
shall be prorated.20
(d) Any amounts due and unpaid shall be prorated.21
(e) Any amounts due and unpaid shall be paid in the following semi-annual22
periods.23
* * *24
D.(1)(a) The Patient's Compensation Fund Oversight Board is hereby created25
and established in the office of the governor. The board shall be comprised of nine26
thirteen members, all of whom shall be residents of the state of Louisiana. Two27
members shall be appointed by the commissioner of insurance. One member28
shall be appointed by the speaker of the House of Representatives and one29 SB NO. 586
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member shall be appointed by the president of the Senate, both of whom are to1
represent consumer interests and not be in the business of insurance or a health2
care provider. Nine members shall be appointed by the governor as provided in3
Subparagraphs (b) and (c) of this Paragraph. All appointments shall be subject4
to Senate confirmation.5
(b) Nine Eight of the nine members of the board appointed by the governor6
shall be a representative of and for one or more classes of health care providers7
enrolled in the fund, and the board's membership shall be apportioned according to8
the distribution of aggregate surcharges paid to the fund among the several classes9
of health care providers enrolled with the fund, as follows:10
(i) Four members of the board shall be representatives of the class of health11
care providers contributing the greatest percentage of the fund's aggregate12
surcharges.13
(ii) Two members of the board shall be representatives of the class of health14
care providers contributing the second greatest percentage of the fund's aggregate15
surcharges.16
(iii) One member of the board shall be a representative of the class of health17
care providers contributing the third greatest percentage of the fund's aggregate18
surcharges.19
(iv) One member of the board shall be appointed to represent all other classes20
of health care providers enrolled with the fund.21
(c) The ninth member of the board appointed by the governor shall be22
appointed from nominees provided by the principal professional organization of23
insurance executives, and this member must be an executive of a property and24
casualty insurance company that is licensed in this state which does not sell medical25
professional liability insurance.26
* * *27 SB NO. 586
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words in boldface type and underscored are additions.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Present law provides that a surcharge shall be levied on all participating health care
providers to provide for the monies necessary to operate the Patient's Compensation Fund
(PCF).
Proposed law retains present law.
Present law provides that the PCF board shall submit at least annually an application for rate
changes based upon an annual actuarial study. Proposed law retains present law but requires
the application for rates to be submitted annually on or before Sept. 1 of each year.
Present law provides that the surcharge shall be determined by the commissioner of
insurance based upon the rate application and actuarial principles. Proposed law retains
present law.
Proposed law provides that the PCF board is prohibited from using or implementing any
surcharges that have not been approved by the commissioner of insurance. Provides that the
surcharges approved by the commissioner of insurance shall become effective as to all new
or renewal business beginning January 1, of the following year.
Proposed law provides that PCF shall be administered in a manner to provide for financial
solvency in order to protect claimants and health care providers from losses resulting from
insolvency. Provides that the commissioner of insurance shall make an examination of PCF
at least once every five years.
Present law provides that the surcharge shall be collected on the same basis as premiums by
each insurer, the risk manager, and surplus line agent. Proposed law retains present law.
Present law provides that the PCF board shall collect the surcharge from health care
providers qualified as self-insureds in an amount determined to be the amount of surcharge
the health care provider would reasonably be required to pay if he was insured under a policy
of malpractice liability insurance. Proposed law retains present law.
Present law provides that PCF shall be maintained so as to provide a surplus of thirty percent
of the annual surcharge premiums, reserves established for individual claims, reserves
established for incurred but not reported claims, and expenses and that no reduction in the
surcharge shall be made unless such surplus is available.
Proposed law repeals present law and provides that on or before January 1, 2016, the PCF
shall maintain assets in excess of liabilities.
Present law provides for the PCF board consisting of nine members appointed by the
governor subject to Senate confirmation and provides that the board shall be representative
of health care providers enrolled in the fund and apportioned as follows:
(1)Four members representing the class of health care providers contributing the
greatest percentage of the fund's aggregate surcharges.
(2)Two members representing the class of health care providers contributing the second
greatest percentage of the fund's aggregate surcharges.
(3)One member representing the class of health care providers contributing the third
greatest percentage of the fund's aggregate surcharges. SB NO. 586
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(4)One member appointed to represent all other classes of health care providers enrolled
with the fund.
(5) One member appointed from nominees provided by the principal professional
organization of insurance executives and who is an insurance executive of a property
and casualty insurance company which does not sell medical professional liability
insurance.
Proposed law abolishes the current PCF board. Provides for a new 7 member board whose
members are residents of Louisiana and subject to Senate confirmation and appointed as
follows:
(1)One member appointed by the commissioner of insurance, who shall serve as ex
officio chairman of the board.
(2)Two members appointed by the speaker of the House of Representatives.
(3)Two members appointed by the president of the Senate.
(4)Two members appointed by the governor.
Proposed law provides that 4 members constitute a quorum and the ex officio chairman may
be counted for the purpose of establishing a quorum, but the ex officio chairman may vote
only in the case of a tie vote between the other members.
Present law provides the PCF board will elect a chairman and secretary and meet not less
than quarterly or on the call of the chairman. Proposed law retains present law but provides
that the chairman is not elected, the member appointed by the commissioner of insurance is
designated as the ex officio chairman.
Present law provides that the members of the board will receive $75 per day while engaged
in board business and reasonable expenses incurred, but members will not be reimbursed for
any expenses incurred for meetings outside of the state. Proposed law retains present law.
Effective August 15, 2010.
(Amends R.S. 40:1299.44(A)(2), (6), (7) and (D)(1)(a), (b) and (c))