Revision: Jan. 28, 2013, midnight
HB 489-FN – AS INTRODUCED
HOUSE BILL 489-FN
This bill establishes the New Hampshire Medical Malpractice Joint Underwriting Association Act.
This bill is a request of the insurance department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [
in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Thirteen
AN ACT relative to the New Hampshire medical malpractice joint underwriting association.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Defense and Indemnification; New Hampshire Medical Malpractice Joint Underwriting Association. Amend RSA 99-D:2 to read as follows:
99-D:2 Defense and Indemnification. If any claim is made or any civil action is commenced against a present or former officer, trustee, official, or employee of the state or any agency thereof, including members of the New Hampshire national guard and any justice of the district, municipal, probate, superior, or supreme court, or the clerks or bail commissioners thereof, or any harbor master appointed by the Pease development authority, division of ports and harbors, or officials and employees of the New Hampshire housing finance authority, or directors, officers, and employees of the Pease development authority, or directors, officers, and employees of the land and community heritage investment, or the New Hampshire Medical Malpractice Joint Underwriting Association or its board of directors seeking equitable relief or claiming damages for the negligent or wrongful acts and the officer, trustee, official, or employee requests the state to provide representation for him or her, and the attorney general, or, in the case of a claim or civil action commenced against the attorney general, the governor and council, determines that the acts complained of were committed by the officer, trustee, official, or employee while acting within the scope of official duty for the state and that such acts were not wanton or reckless, the attorney general shall represent and defend such person with respect to such claim or throughout such action, or shall retain outside counsel to represent or defend such person, and the state shall defray all costs of such representation or defense, to be paid from funds not otherwise appropriated. In such case the state shall also protect, indemnify, and hold harmless such person from any costs, damages, awards, judgments, or settlements arising from the claim or suit. The attorney general or governor and council shall not be required to consider the request of such person that representation be provided for him or her unless within 7 days of the time such person is served with any summons, complaint, process, notice, demand, or pleading the person shall deliver the original or a copy thereof to the attorney general or, in the case of an action against the attorney general, to the governor and council. As a condition to the continued representation by the attorney general and to the obligation of the state to indemnify and hold harmless, such officer, trustee, official, or employee shall cooperate with the attorney general in the defense of such claim or civil action. No property either real or personal of the state of New Hampshire shall be subject to attachment or execution to secure payment of or to satisfy any obligations of the state created under this chapter. Upon the entry of final judgment in any action brought under this chapter, the governor shall draw a warrant for said payment out of any money in the treasury not otherwise appropriated, and said sums are hereby appropriated. The attorney general shall have the authority to settle any claim brought under this chapter by compromise and the amount of any such settlement shall be paid as if the amount were awarded as a judgment under this chapter. Indemnification by the state under this section shall be for the actual amount of costs, damages, awards, judgments, or settlements personally incurred by any such officer, trustee, official, or employee, and the state shall not pay any amounts for which payment is the obligation of any insurance carrier or company under a policy or policies of insurance or any other third party under a similar obligation.
404-I:1 Title. This chapter shall be known and may be cited as the New Hampshire Medical Malpractice Joint Underwriting Association Act.
404-I:2 Purpose. The purpose of this chapter is to provide a mechanism for making medical malpractice coverage available for any risk in this state which is equitably entitled to, but may be unable to obtain such coverage. The general court finds and determines that it is in the public interest to make medical malpractice insurance readily available for the financial protection of consumers and medical providers that are otherwise unable to obtain such coverage in the voluntary market. Readily available medical malpractice coverage is also in the interest of those medical providers that are privately insured or self-insured, but may lose such coverage or may be subject to joint and several liability with medical providers that would otherwise be unable to obtain adequate coverage. Further, the general court finds that it is also in the public interest to provide a mechanism for making medical malpractice coverage readily available because the absence of such financial protection restricts adequate access to needed medical care.
404-I:3 Construction. This chapter shall be liberally construed to effect the purpose under RSA 404-I:2 which shall constitute an aid and guide to interpretation. This chapter is intended to provide authority for the performance of each and every act and thing authorized under this chapter and all powers granted under this chapter shall be broadly interpreted to effectuate such intent and purposes and not as a limitation of powers.
404-I:4 Definitions. In this chapter:
I. “Account” means any account created under RSA 404-I:7.
II. “Administrative rule” means the provisions of Ins 1700 adopted by the commissioner by authority of RSA 404-C and in accordance with RSA 541-A and that were in effect immediately prior to the effective date of this chapter.
III. “Anticipated liabilities” means the sum of all loss and loss adjustment expense reserves, including case reserves and incurred but not reported or recorded reserves as shown in the most recent audited financial statement, plus the actual operating expenses for the last 12 month period of the most recent audited financial statement.
IV. “Association” means the New Hampshire Medical Malpractice Joint Underwriting Association established in 1975 in administrative rules and reauthorized under this chapter.
V. “Commissioner” means the insurance commissioner.
VI. “Eligible risk” means any health care provider operating legally in this state excluding such person if timely payment of premium or assessment required under this chapter is not tendered or if there is an unsatisfied judgment of record against such person for recovery of amounts due for medical malpractice insurance premiums and such person has not been discharged from paying such judgment, or if such person does not furnish the information necessary to effectuate insurance coverage.
VII. “General assets” means those assets that are considered assets of the association under statutory accounting practices and procedures.
VIII. “Health care provider” means a person licensed or approved by this state to provide health care or professional health related services.
IX. “Member insurer” means any person authorized to write liability insurance on a direct basis within this state, including every insurer covering such perils in multiple peril package policies.
X. “Person” means any individual or legal entity.
XI. “Policyholder” means those health care providers who are or have been previously insured through the association at any time since the association’s establishment in 1975.
XII. “Statutory accounting practices and procedures” means accounting practices and procedures promulgated in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual and referenced in RSA 400-A:36 and Ins 4500.
XIII. “Surplus” means that amount defined as “surplus” under statutory accounting practices and procedures.
404-I:5 Creation of the Association; Members.
I. There is created a nonprofit unincorporated legal entity to be known as the New Hampshire Medical Malpractice Joint Underwriting Association that shall be the same association established and operating from 1975 to the effective date of this chapter, pursuant to administrative rule.
II. All member insurers, currently members of the association in accordance with administrative rules shall remain and shall be members of the association as a condition of their authority to transact insurance in this state.
III. The association shall be a body corporate and politic having a distinct legal existence, and separate from the state and not constituting a department or agency of the state government. The association shall have perpetual succession for carrying out the purposes of this chapter.
IV. The association is a public instrumentality exercising public and essential governmental functions, and the exercise by the association of the powers conferred by this chapter shall be deemed and held to be an essential governmental function of the state.
V. All functions, powers, duties, books, papers, records, and property of every kind, whether tangible or intangible, real or personal and held, possessed, controlled, or used by the association as of the effective date of this chapter, shall continue to be vested in the association.
VI. The association shall perform its functions under a plan of operation established and approved under RSA 404-I:8 and shall exercise its powers through a board of directors established under RSA 404-I:6.
404-I:6 Board of Directors.
I. The board of directors of the association shall consist of 7 voting representatives appointed by the commissioner as follows:
(a) An insurer which is a member of, and nominated by, the New Hampshire Association of Domestic Insurance Companies.
(b) A health care provider which is a member of, and nominated by, the New Hampshire Medical Society.
(c) A health care provider which is a member of, and nominated by, the New Hampshire Hospital Association.
(d) A member insurer of the association to be nominated by the commissioner.
(e) A health care provider who is not a member of the New Hampshire Medical Society or a member of the New Hampshire Hospital Association who shall be nominated by the commissioner.
(f) Two representatives of the public who are not members of any of the groups in (a) through (e).
II. The board of directors of the association shall continue to consist of the members of the board nominated and appointed under administrative rules until the expiration of each board member’s term or the resignation of the board member, whichever first occurs. Board members may be renominated and appointed for additional terms in accordance with the plan of operation adopted under this chapter.
III. Notwithstanding RSA 91-A or any other law to the contrary, members of the board shall be permitted to participate in meetings by telephone, provided that any board member so participating shall be able to be heard and to hear every other board member participating in the meeting, and unless the board is meeting in nonpublic session pursuant to RSA 91-A:3, shall be able to hear and be heard by all members of the public attending the meeting, and that the meeting is held at a physical location available to the public and identified in the notice of the meeting, and that at least 2 members of the authority are physically present at the meeting. Voting members of the board participating by telephone shall be treated as present at the meeting for all purposes, including the establishment of quorum.
404-I:7 Powers and Duties of the Association. The association shall have all the powers necessary to carry out and effectuate the purposes and provisions of this chapter, and may through its board:
I. Adopt and enforce a plan of operation in accordance with this chapter, and any necessary articles, bylaws or other governance documents required for the regulation of its affairs and the conduct of its business.
II. Issue coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as a result of negligence in professional health care services rendered or which should have been rendered by any health care provider legally operating in this state, including such other forms of liability insurance, other than automobile, that is reasonably necessary for and incidental to the provision of medical care by such health care provider.
III. Impose assessments upon one, all, or any combination of the following persons in accordance with the provisions of RSA 404-I:9:
(a) Policyholders of the association.
(b) Health care providers.
(c) Member insurers.
IV. Employ or retain such persons as are necessary to handle claims and perform other duties of the association.
V. Borrow funds necessary to effect the purposes of this chapter in accordance with the plan of operation.
VI. Issue bonds or notes and provide for and secure the payment thereof and to provide for the rights of the holders thereof and to purchase, hold and dispose of any of its bonds or notes.
VII. Negotiate and become a party to such contracts as are necessary to carry out the purposes of this chapter.
VIII. Invest any funds in property or securities in which an authorized insurer under Title XXXVII may legally invest funds subject to its control.
IX. Maintain an office at such place or places within this state as it may determine.
X. Acquire, hold, use and dispose of its income, revenues, funds, real property and moneys.
XI. Acquire, rent, lease, hold, use and dispose of other personal property for its purposes.
XII. Protect, indemnify, and hold harmless the members of the board of directors, officers and employees from any costs, damages, awards, judgments, or settlements arising from any claim, civil action, lawsuit, or other proceeding against them.
XIII. Investigate claims brought against the association and adjust, compromise, settle, and pay covered claims to the extent of the association’s obligation and deny all other claims.
XIV. Handle the adjudication of claims through its employees or through one or more insurers or other persons designated as servicing facilities.
XV. Reimburse any servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while adjudicating claims on behalf of the association and shall pay the other expenses of the association authorized by this chapter.
XVI. To sue and be sued, including authority to take legal action to collect assessments imposed in accordance with this chapter;
XVII. To establish additional accounts providing for a combination of specific policy year or calendar year or other exposures, to close accounts, to reinsure accounts, or to join accounts as the board in its sole discretion determines necessary, desirable or convenient for the efficient administration of the association or to further the accomplishment of the purposes of the association under this chapter.
XVIII. Perform such other acts as are necessary or desirable to effectuate the purposes of this chapter including those acts expressly granted or implied in this chapter.
404-I:8 Plan of Operation.
I. The association shall establish and adopt by a 2/3 majority vote of the board, a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation shall be filed with and approved by the commissioner as being consistent with this chapter.
II. The administrative rules shall be deemed to be the association’s plan of operation, as modified by this section, unless and until the board adopts a plan of operation.
III. In the event the administrative rules become the association’s plan of operation in accordance with paragraph II, the rules, including rules governing distributions, shall be deemed modified to conform to the provisions of this chapter.
IV. The commissioner’s authority over the association shall be consistent with this chapter and the authority granted the commissioner to regulate authorized insurers, as set forth in Title XXXVII.
V. All member insurers shall comply with the plan of operation.
VI. The plan of operation shall:
(a) Provide that the association shall issue or cause to be issued a non-participating policy of medical malpractice insurance to any eligible risk.
(b) Comply with the standards set forth in RSA 404-C:2.
(c) Establish the procedures whereby all the powers and duties of the association under RSA 404-I:7 shall be performed.
(d) Establish the procedures governing the terms and conduct of the board of directors, procedures for special and annual meetings of the board, and other matters related to the governance by the board of the business and affairs of the association.
(e) Establish procedures for handling and investing any assets of the association.
(f) Establish procedures to nominate, appoint, replace the members of the board of directors as well as the place, time and procedures for meetings of the board, and any compensation paid to the directors.
(g) Establish procedures for every member of the board to file a verified written statement of financial interests in accordance with RSA 15-A.
(h) Establish procedures for public records and meetings in compliance with RSA 91-A.
(i) Establish procedures by which claims and expenses shall be paid by the association.
(j) Provide procedures and methodologies for determining when the anticipated liabilities of the association for policies written will exceed the general assets of the association, and procedures and methodologies for imposing and collecting assessments.
(k) Establish procedures to keep records of all transactions of the association as well as financial reports to be completed in accordance with standards established by the federal accounting standards advisory board.
(1) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the board within 30 days after the action or decision.
(m) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.
I. Upon a determination by the board that the anticipated liabilities of the association for policies written will exceed the general assets of the association, the board shall recommend to the commissioner an assessment upon one, all, or any combination of the following persons:
(a) Policyholders of the association.
(b) Health care providers.
(c) Member insurers.
II. After approval by the commissioner of the board’s recommendation of assessment, the assessment shall be collected by the association in accordance with this chapter and its plan of operation.
III. The association may collect delinquent assessments, together with interest at the rate determined by the state treasurer pursuant to RSA 336:1, II. In addition, any person subject to the jurisdiction of the commissioner that fails to pay the assessment shall be subject to action by the commissioner for collection of the delinquent payment with interest at the rate determined by the state treasurer pursuant to RSA 336:1, II, and may also be subject to license suspension or revocation or administrative fine of $2,500 per violation, or both.
404-I:10 Examination of the Association; Annual Financial Report.
I. The association shall be subject to examination by the commissioner pursuant to RSA 400-A:37.
II. The board shall annually file with the commissioner a financial statement prepared in accordance with statutory accounting practices and procedures which shall be audited and certified to by an independent certified public accountant.
404-I:11 Declaration of Status; Tax Exemption.
I. The association shall be exempt from payment of all taxes levied by this state or any of its subdivisions except taxes levied on real or personal property and is intended to be exempt from federal tax under section 501(c)(3).
II. The association shall be exempt from payment of the assessment imposed pursuant to RSA 400-A:39.
III. The association shall be subject to the laws and rules governing authorized insurers, unless such laws and rules are expressly inconsistent with this chapter.
IV. The policies issued by the association, and any claims, expenses or liabilities attributable to any policy issued by the association, shall not create or constitute any indebtedness, liability or obligation of the state or be or constitute a pledge of the faith and credit of the state and nothing in this chapter shall be construed to authorize the association to incur any indebtedness or liability on behalf of or payable by the state.
V. The assets of the association are not under state control and the association is not an organization that is financially accountable to the state except as set forth in this chapter. Accounts of the association shall not be included on the comprehensive annual financial report of the state, nor shall the association be subject to the provisions of RSA 9, RSA 4:15 or other provisions applicable to entities under state control.
I. At the board’s discretion, any surplus may be:
(a) Held to reduce future assessments against policyholders, health care providers and member insurers;
(b) Held to reduce potential future rate increases provided that the application of surplus to reduce rate increases does not result in interference by the association with the voluntary market; or
(c) Used to provide grants in aid to health care providers servicing medically underserved populations.
II. Policyholders shall not have nor shall acquire any vested right or entitlement to the surplus of the association.
404-I:13 Member Insurer Recoupment of Assessments. Member insurers that are charged an assessment by the association may recoup such assessment by:
I. Including in the rates and premiums charged for insurance policies by member insurers an amount sufficient to recoup a sum equal to any assessment paid to the association by the member insurer. Such rates shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments paid by the member insurer.
II. Collecting a surcharge on premiums charged for insurance policies, where the amount of any surcharge may be separately stated on either a billing or policy declaration sent to an insured. Amounts recouped by member insurers through surcharge shall be considered premiums for all purposes, including the computation of gross premium tax.
404-I:14 Immunity and Indemnification.
I. Any suit or action against the association or its board shall be brought in the courts in this state. Such courts shall have exclusive jurisdiction over all actions relating to or arising out of this chapter against the association.
II. Without waiver of the state’s sovereign immunity, and in addition to any further protections provided by law, no civil action shall be maintained against the association, or its agents or employees, the board of directors, or any person serving as a representative of any board member while acting as agents of the commissioner under the authority of this chapter, for the exercise of a discretionary function, for an act or omission provided such person is exercising due care in the execution of statues, rules and the plan of operation or for any claim arising out of an intentional tort, including assault, battery, false imprisonment, false arrest, intentional mental distress, malicious prosecution, malicious abuse of process, libel, slander, misrepresentation, deceit, invasion of privacy, interference with advantageous relations, or interference with contractual relations, provided that at the time of the act or omission complained of, the person reasonably believed the conduct was lawful and within the scope of official duties of the person.
III. The board of directors of the association, acting as agents of the commissioner under the authority of this chapter, shall be entitled to the indemnification and defense of state officers and officials as provided in RSA 99-D:2.
404-I:15 Severability. If any provision of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable.
3 Repeal. RSA 404-C:14, relative to the New Hampshire Medical Malpractice Joint Underwriting Association, is repealed.
4 Effective Date. This act shall take effect 60 days after its passage.
HB 489 FISCAL NOTE
AN ACT relative to the New Hampshire medical malpractice joint underwriting association.
The Department of Justice states this bill, as introduced, may increase state expenditures by an indeterminable amount in FY 2013 and each year thereafter. There is no fiscal impact on county and local expenditures, or state, county and local revenue.
The Insurance Department states this bill establishes the NH Medical Malpractice Joint Underwriting Association Act. The Department states this bill will have no fiscal impact as the legislation just codifies the current operational plan of an entity that has been exempt from federal and state tax since its inception in 1976.
The Department of Revenue Administration states this bill will have no fiscal impact based upon the language contained in the bill that exempts the association “from payment of all taxes levied by this state or any of its subdivisions except taxes levied upon real or personal property and is intended to be exempt from federal tax under section 501(c )(3).”
The Department of Justice states the fiscal impact of this bill on state expenditures is indeterminable. The Department states the bill would entitle the Association to defense and indemnity under RSA 99-D but as a body corporate and politic it would not receive civil legal counsel from the Department. The Department is not able to determine the fiscal impact because it is not able to determine how many claims would be filed against the Association that would be subject to defense and indemnity under RSA 99-D.