By Carona                                              S.B. No. 415
         77R4991 PB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to operation of the Texas Medical Liability Insurance
 1-3     Underwriting Association and to participation of nursing homes in
 1-4     that association.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 2(6), Article 21.49-3, Insurance Code, is
 1-7     amended to read as follows:
 1-8                 (6)  "Health care provider" means:
 1-9                       (A)  any person, partnership, professional
1-10     association, corporation, facility, or institution duly licensed or
1-11     chartered by the State of Texas to provide health care as defined
1-12     in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance
1-13     Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
1-14     Statutes), as:
1-15                             (i)  a registered nurse, hospital, dentist,
1-16     podiatrist, pharmacist, chiropractor, or optometrist;
1-17                             (ii)  a for-profit[,] or not-for-profit
1-18     nursing home;
1-19                             (iii)  [, or] a radiation therapy center
1-20     that is independent of any other medical treatment facility and
1-21     which is licensed by the Texas Department of Health in that
1-22     agency's capacity as the Texas [State] Radiation Control Agency
1-23     pursuant to the provisions of Chapter 401, Health and Safety Code,
1-24     and which is in compliance with the regulations promulgated under
 2-1     that chapter;
 2-2                             (iv)  [by the Texas State Radiation Control
 2-3     Agency,] a blood bank that is a nonprofit corporation chartered to
 2-4     operate a blood bank and which is accredited by the American
 2-5     Association of Blood Banks;
 2-6                             (v)  [,] a nonprofit corporation which is
 2-7     organized for the delivery of health care to the public and which
 2-8     is certified under Chapter 162, Occupations Code; [Article 4509a,
 2-9     Revised Civil Statutes of Texas, 1925,] or
2-10                             (vi)  a [migrant] health center as defined
2-11     by 42 U.S.C. Section 254b [P.L. 94-63], as amended; [(42 U.S.C.
2-12     Section 254b), or a community health center as defined by P.L.
2-13     94-63, as amended (42 U.S.C. Section 254c), that is receiving
2-14     federal funds under an application approved under either Title IV,
2-15     P.L. 94-63, as amended (42 U.S.C. Section 254b), or Title V, P.L.
2-16     94-63, as amended (42 U.S.C. Section 254c),] or
2-17                       (B)  an officer, employee, or agent of an entity
2-18     listed in Paragraph (A) [any of them] acting in the course and
2-19     scope of that person's [his] employment.
2-20           SECTION 2. Section 4(b)(1), Article 21.49-3, Insurance Code,
2-21     is amended to read as follows:
2-22                 (1)  The rates, rating plans, rating rules, rating
2-23     classifications, territories, and policy forms applicable to the
2-24     insurance written by the association and statistics relating
2-25     thereto shall be subject to Subchapter B of Chapter 5 of the
2-26     Insurance Code, as amended, giving due consideration to the past
2-27     and prospective loss and expense experience for medical
 3-1     professional liability insurance within and without this state of
 3-2     all of the member companies of the association, trends in the
 3-3     frequency and severity of losses, the investment income of the
 3-4     association, and such other information as the commissioner [board]
 3-5     may require;  provided, that if any article of the above subchapter
 3-6     is in conflict with any provision of this Act, this Act shall
 3-7     prevail.  For purposes of this article, rates, rating plans, rating
 3-8     rules, rating classifications, territories, and policy forms for
 3-9     for-profit nursing homes are subject to the requirements of Article
3-10     5.15-1 of this code to the same extent as not-for-profit nursing
3-11     homes.
3-12           SECTION 3. Section 4A, Article 21.49-3, Insurance Code, is
3-13     amended to read as follows:
3-14           Sec. 4A.  POLICYHOLDER'S STABILIZATION RESERVE FUND. (a)
3-15     There is hereby created a policyholder's stabilization reserve fund
3-16     which shall be administered as provided herein and in the plan of
3-17     operation of the association.
3-18           (b)  Each policyholder shall pay annually into the
3-19     stabilization reserve fund a charge, the amount of which shall be
3-20     established annually by advisory directors chosen by health care
3-21     providers and physicians eligible for insurance in the association
3-22     in accordance with the plan of operation.  The charge shall be in
3-23     proportion to each premium payment due for liability insurance
3-24     through the association.  Such charge shall be separately stated in
3-25     the policy, but shall not constitute a part of premiums or be
3-26     subject to premium taxation, servicing fees, acquisition costs, or
3-27     any other such charges.
 4-1           (c)  The [policyholder's] stabilization reserve fund shall be
 4-2     collected and administered by the association and shall be treated
 4-3     as a liability of the association along with and in the same manner
 4-4     as premium and loss reserves.  The fund shall be valued annually by
 4-5     the board of directors as of the close of the last preceding year.
 4-6           (d)  Except as provided by Subsection (e) of this section,
 4-7     collections [Collections] of the stabilization reserve fund charge
 4-8     shall continue only until such time as the net balance of the
 4-9     stabilization reserve fund is not less than the projected sum of
4-10     premiums to be written in the year following valuation date.
4-11           (e)  If in any fiscal year the incurred losses and defense
4-12     and cost-containment expenses from physicians or any single
4-13     category of health care provider result in a net underwriting loss
4-14     and exceed 25 percent of the stabilization reserve fund, as valued
4-15     for that year, the commissioner may by order direct the initiation
4-16     or continuation of the stabilization reserve fund charge for
4-17     physicians or that category of health care provider until the fund
4-18     recovers the amount by which those losses and cost-containment
4-19     expenses exceed 25 percent of the fund.
4-20           (f)  The stabilization reserve fund shall be credited with
4-21     all stabilization reserve fund charges collected from policyholders
4-22     and shall be charged with any deficit from the prior year's
4-23     operation of the association.
4-24           SECTION 4.  Sections 2 and 4, Article 21.49-3, Insurance
4-25     Code, as amended by this Act, apply only to an insurance policy
4-26     delivered, issued for delivery, or renewed on or after January 1,
4-27     2002.  A policy delivered, issued for delivery, or renewed before
 5-1     January 1, 2002, is governed by the law as it existed immediately
 5-2     before the effective date of this Act, and that law is continued in
 5-3     effect for that purpose.
 5-4           SECTION 5.  This Act takes effect September 1, 2001.