Senate Bill 0282

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    Florida Senate - 2000                                   SB 282

    By Senators Silver, Kurth, Mitchell, Campbell, Dawson and
    Klein




    38-305-00

  1                      A bill to be entitled

  2         An act relating to health care; providing for

  3         liability of managed care entities to

  4         subscribers in a health care plan for damages

  5         for harm proximately caused by a failure to

  6         exercise ordinary care; providing defenses;

  7         providing conditions; providing definitions;

  8         prohibiting certain activities; providing

  9         nonapplicability to workers' compensation

10         insurance coverage; providing a limitation on

11         cause of action; providing for appeal of a

12         subscriber's claim to an independent review

13         organization; providing for tolling of statute

14         of limitations; providing for immediate appeals

15         under certain conditions; requiring the Agency

16         for Health Care Administration to establish and

17         certify independent review organizations;

18         providing for notice to subscribers of their

19         right to appeal an adverse determination to an

20         independent review organization; providing

21         responsibilities of the agency to provide

22         certain information to independent review

23         organizations; authorizing the agency to adopt

24         rules; prescribing information to be included

25         in an application for certification as an

26         independent review organization; prohibiting an

27         independent review organization from being a

28         subsidiary of a managed care entity or a trade

29         or professional association of managed care

30         entities; providing for immunity from liability

31         for damages for review organizations; repealing

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  1         s. 408.7056, F.S., relating to the Statewide

  2         Provider and Subscriber Assistance Program;

  3         providing an effective date.

  4

  5  Be It Enacted by the Legislature of the State of Florida:

  6

  7         Section 1.  Definitions.--As used in this act:

  8         (1)  "Adverse determination" means determination by a

  9  managed care entity that the health care services furnished or

10  proposed to be furnished to a subscriber are not medically

11  necessary.

12         (2)  "Appropriate and medically necessary treatment"

13  means treatment that meets the standard for health care

14  services as determined by providers in accordance with the

15  prevailing practices and standards of the medical profession

16  and community.

17         (3)  "Health care plan" means any plan whereby a person

18  undertakes to provide, arrange for, pay for, or reimburse any

19  part of the cost of any health care services.

20         (4)  "Health care provider" means a provider as defined

21  in chapter 636 or chapter 641, Florida Statutes.

22         (5)  "Health care treatment decision" means a

23  determination made when medical services are actually provided

24  by the health care plan which affects the quality of the

25  diagnosis, care, or treatment provided to the plan's

26  enrollees.

27         (6)  "Health maintenance organization" means an

28  organization as defined in section 641.19, Florida Statutes.

29         (7)  "Independent review organization" means an

30  organization certified by the Agency for Health Care

31  Administration.

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  1         (8)  "Life-threatening condition" means a disease or

  2  other medical condition with respect to which death is

  3  probable unless the course of the disease or condition is

  4  interrupted.

  5         (9)  "Managed care entity" means a health maintenance

  6  organization or a prepaid health clinic certified under

  7  chapter 641, Florida Statutes, a prepaid health plan

  8  authorized under section 409.912, Florida Statutes, or an

  9  exclusive provider organization certified under section

10  627.6472, Florida Statutes.

11         (10)  "Ordinary care" means, in the case of a managed

12  care entity, that degree of care which a managed care entity

13  of ordinary prudence would use under the same or similar

14  circumstances. In the case of a person who is an employee,

15  agent, ostensible agent, or representative of a managed care

16  entity, "ordinary care" means that degree of care which a

17  person of ordinary prudence in the same profession, specialty,

18  or area of practice would use in the same or similar

19  circumstances.

20         (11)  "Physician" means:

21         (a)  An individual licensed to practice medicine in

22  this state; or

23         (b)  A professional limited liability company organized

24  under the laws of this state to provide physician services.

25         (12)  "Subscriber" means an individual who is enrolled

26  in a health care plan, including his or her covered

27  dependents.

28         Section 2.  Application.--

29         (1)  A managed care entity has the duty to exercise

30  ordinary care when making health care treatment decisions and

31

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  1  is liable for damages for harm to a subscriber proximately

  2  caused by its failure to exercise such ordinary care.

  3         (2)  A managed care entity plan is also liable for

  4  damages for harm to a subscriber proximately caused by the

  5  health care treatment decisions made by its employees, agents,

  6  ostensible agents, or representatives who are acting on its

  7  behalf and over whom it has the right to exercise influence or

  8  control or has actually exercised influence or control which

  9  decisions result in the failure to exercise ordinary care.

10         (3)  It is a defense to any action asserted against a

11  managed care entity that:

12         (a)  Neither the managed care entity, nor any employee,

13  agent, ostensible agent, or representative for whose conduct

14  such managed care entity is liable under subsection (2),

15  controlled, influenced, or participated in the health care

16  treatment decision; and

17         (b)  The managed care entity did not deny or delay

18  payment of any treatment prescribed or recommended by a health

19  care provider to the subscriber.

20         (4)  The standards in subsections (1) and (2) create no

21  obligation on the part of the managed care entity to provide

22  to a subscriber treatment that is not covered by the health

23  care plan of the entity.

24         (5)  This act does not create any liability on the part

25  of an employer, an employer group purchasing organization, or

26  a licensed pharmacy that purchases coverage or assumes risk on

27  behalf of its employees.

28         (6)  A managed care entity may not remove a health care

29  provider from its plan or refuse to renew the physician or

30  health care provider with its plan for advocating on behalf of

31

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  1  a subscriber for appropriate and medically necessary health

  2  care for the subscriber.

  3         (7)  A managed care entity may not enter into a

  4  contract with another health care provider or pharmaceutical

  5  company which includes an indemnification or hold-harmless

  6  clause for the acts or conduct of the managed care entity. Any

  7  such indemnification or hold-harmless clause in an existing

  8  contract is void.

  9         (8)  Nothing in any law of this state prohibiting a

10  managed care entity from practicing medicine or being licensed

11  to practice medicine may be asserted as a defense by such

12  managed care entity in an action brought against it under this

13  act or any other law.

14         (9)  In an action against a managed care entity, a

15  finding that a health care provider is an employee, agent,

16  ostensible agent, or representative of such managed care

17  entity may not be based solely on proof that such person's

18  name appears in a listing of approved health care providers

19  made available to a subscriber under a health care plan.

20         (10)  This act does not apply to workers' compensation

21  insurance coverage.

22         (11)  A subscriber who files an action under this act

23  shall comply with the requirements of cost bonds, deposits,

24  and expert reports.

25         Section 3.  Limitations on causes of action.--

26         (1)  A subscriber may not maintain a cause of action

27  under this act against a managed care entity that is required

28  to comply with grievance resolution procedures until the

29  subscriber has:

30         (a)  Exhausted any applicable appeals and review

31  procedures; or

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  1         (b)  Before instituting the action:

  2         1.  Gives written notice of the claim as provided by

  3  subsection (2); and

  4         2.  Agrees to submit the claim to a review by an

  5  independent review organization as provided in subsection (3).

  6         (2)  Notice must be delivered or mailed to the managed

  7  care entity against whom the action is made not later than the

  8  30th day before the date the claim is filed.

  9         (3)  The subscriber or the subscriber's representative

10  must submit the claim to a review by an independent review

11  organization if the managed care entity against whom the claim

12  is made requests the review not later than the 14th day after

13  the date notice is received by the managed care entity. If the

14  managed care entity does not request the review within the

15  specified period, the subscriber or the subscriber's

16  representative is not required to submit the claim to review

17  by an independent review organization before maintaining the

18  action.

19         (4)  Subject to subsection (5), if the subscriber has

20  not complied with subsection (1), an action may not be

21  dismissed by the court, but the court may, in its discretion,

22  order the parties to submit to an independent review or

23  mediation or other nonbinding alternative dispute resolution

24  and may abate the action for such purposes for a period not to

25  exceed 30 days. Such orders of the court shall be the sole

26  remedy available to a party complaining of a subscriber's

27  failure to comply with subsection (1).

28         (5)  The subscriber is not required to comply with

29  subsection (3), and no abatement or other court order pursuant

30  to subsection (4) for failure to comply may be imposed, if the

31  subscriber has filed a pleading alleging in substance that:

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  1         (a)  Harm to the subscriber has already occurred

  2  because of the conduct of the managed care entity or because

  3  of an act or omission of an employee, agent, ostensible agent,

  4  or representative of such entity for whose conduct the entity

  5  is liable; and

  6         (b)  The review would not be beneficial to the

  7  subscriber, unless the court, upon motion by a defendant

  8  entity, finds after hearing that such pleading was not made in

  9  good faith, in which case the court may enter an order

10  pursuant to subsection (4).

11         (6)  If the subscriber or the subscriber's

12  representative seeks to exhaust the appeals and review process

13  as provided under the managed care entity's grievance

14  resolution procedures or provides notice before the statute of

15  limitations applicable to a claim against a managed care

16  entity has expired, the limitations period is tolled until the

17  later of:

18         (a)  The 30th day after the date the subscriber or the

19  subscriber's representative has exhausted the process for

20  appeals and review; or

21         (b)  The 40th day after the date the subscriber or the

22  subscriber's representative gives notice.

23         (7)  This section does not prohibit a subscriber from

24  pursuing other appropriate remedies, including injunctive

25  relief, a declaratory judgment, or relief available under law,

26  if the requirement of exhausting the process for appeal and

27  review places the subscriber's health in serious jeopardy.

28         Section 4.  Immediate appeal.--Notwithstanding any

29  other law, in a circumstance involving a subscriber's

30  life-threatening condition, the subscriber is entitled to an

31  immediate appeal to an independent review organization and is

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  1  not required to comply with a managed care entity's grievance

  2  procedures and review process. For purposes of this section,

  3  "life-threatening condition" means a disease or other medical

  4  condition with respect to which death is probable unless the

  5  course of the disease or condition is interrupted.

  6         Section 5.  Independent review of adverse

  7  determinations.--

  8         (1)  The Agency for Health Care Administration shall,

  9  by rule, provide for the establishment of independent review

10  organizations and prescribe procedures for hearing appeals

11  from a managed care entity's adverse determination of a

12  subscriber's claim.

13         (2)  A managed care entity must notify any subscriber

14  who receives an adverse determination under the managed care

15  entity's grievance procedure of the subscriber's right to seek

16  review of the adverse determination by an independent review

17  organization assigned by the Agency for Health Care

18  Administration.

19         (3)  A managed care entity shall, when requested,

20  provide the following information to the appropriate

21  independent review organization not later than the third

22  business day after the date of receipt of the request:

23         (a)  Any medical records of the subscriber which are

24  relevant to the review;

25         (b)  Any documents used in making the determination to

26  be reviewed by the organization;

27         (c)  The written notification described in this act;

28         (d)  Any documentation or written information submitted

29  to the agency or department in support of the appeal;

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  1         (e)  A list of each physician or health care provider

  2  who has provided care to the subscriber and who may have

  3  medical records relevant to the appeal; and

  4         (f)  Confidential information in its custody.

  5         (4)  A managed care entity must comply with the

  6  independent review organization's determination with respect

  7  to the medical necessity or appropriateness of health care

  8  items and services for a subscriber.

  9         (5)  A managed care entity must pay for the independent

10  review.

11         Section 6.  Notification to subscriber.--The grievance

12  and review procedures of a managed care entity must include:

13         (1)  Notification by a managed care entity to the

14  subscriber of the subscriber's right to appeal an adverse

15  determination to an independent review organization;

16         (2)  Notification by a managed care entity to a

17  subscriber of the procedures for appealing an adverse

18  determination to an independent review organization; and

19         (3)  Notification by a managed care entity to a

20  subscriber who has a life-threatening condition of the

21  subscriber's right to immediate review by an independent

22  review organization and the procedures for obtaining that

23  review.

24         Section 7.  Certification and designation of

25  independent review organizations.--

26         (1)  The Agency for Health Care Administration shall:

27         (a)  Adopt rules for:

28         1.  The certification, selection, and operation of

29  independent review organizations; and

30         2.  The suspension and revocation of the certification.

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  1         (b)  Designate annually each organization that meets

  2  the standards required of an independent review organization.

  3         (c)  Charge fees to fund the operations of independent

  4  review organizations.

  5         (d)  Provide ongoing oversight of the independent

  6  review organizations to ensure continued compliance with the

  7  rules adopted by the agency.

  8         (2)  The rules must ensure:

  9         (a)  The timely response of an independent review

10  organization;

11         (b)  The confidentiality of medical records transmitted

12  to an independent review organization for use in independent

13  reviews;

14         (c)  The qualifications and independence of each health

15  care provider or physician making review determinations for an

16  independent review organization;

17         (d)  The fairness of the procedures used by an

18  independent review organization in making the determinations;

19  and

20         (e)  Timely notice to subscribers of the results of the

21  independent review, including the clinical basis for the

22  determination.

23         (3)  The rules adopted must include standards that

24  require each independent review organization to make its

25  determination:

26         (a)  No later than the earlier of:

27         1.  The 15th day after the date the independent review

28  organization receives the information necessary to make the

29  determination; or

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  1         2.  The 20th day after the date the independent review

  2  organization receives the request that the determination be

  3  made; and

  4         (b)  In the case of a life-threatening condition, no

  5  later than the earlier of:

  6         1.  The 5th day after the date the independent review

  7  organization receives the information necessary to make the

  8  determination; or

  9         2.  The 8th day after the date the independent review

10  organization receives the request that the determination be

11  made.

12         Section 8.  Independent review organizations.--

13         (1)  To be certified as an independent review

14  organization, an organization must submit to the Agency for

15  Health Care Administration an application in the form required

16  by the agency. The application must include:

17         (a)  For an applicant that is publicly held, the name

18  of each stockholder or owner of more than 5 percent of any

19  stock or options;

20         (b)  The name of any holder of bonds or notes of the

21  applicant that exceed $100,000;

22         (c)  The name and type of business of each corporation

23  or other organization that the applicant controls or is

24  affiliated with and the nature and extent of the affiliation

25  or control;

26         (d)  The name and a biographical sketch of each

27  director, officer, and executive of the applicant and any

28  entity the applicant controls and a description of any

29  relationship the named individual has with:

30         1.  A health benefit plan;

31         2.  A health maintenance organization;

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  1         3.  An insurer;

  2         4.  A health care provider; or

  3         5.  A group representing any of the entities described

  4  by subparagraphs 1. through 4.;

  5         (e)  A description of the areas of expertise of the

  6  health care professionals making review determinations for the

  7  applicant; and

  8         (f)  The procedures to be used by the independent

  9  review organization in making review determinations.

10         (2)  The independent review organization must annually

11  submit the information required by section 7. If at any time

12  there is a material change in the information included in the

13  application, the independent review organization must submit

14  updated information to the Agency for Health Care

15  Administration.

16         (3)  An independent review organization may not be a

17  subsidiary of, or in any way owned or controlled by, a managed

18  care entity or a trade or professional association of managed

19  care entities.

20         (4)  An independent review organization conducting a

21  review is not liable for damages arising from the

22  determination made by the organization. This subsection does

23  not apply to an act or omission of the independent review

24  organization which is made in bad faith or which involves

25  gross negligence.

26         Section 9.  Section 408.7056, Florida Statutes, is

27  repealed.

28         Section 10.  This act shall take effect October 1,

29  2000.

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  1            *****************************************

  2                          SENATE SUMMARY

  3    Provides a cause of action for damages for harm to a
      subscriber in a health care plan as a result of a managed
  4    care entity's failure to exercise ordinary care. Provides
      definitions. Provides conditions and procedures. Provides
  5    nonapplicability to specified entities. Provides a
      limitation on bringing a cause of action. Requires a
  6    subscriber to comply with specified grievance procedures
      and to agree to submit the claim to an independent review
  7    organization under certain circumstances. Requires notice
      to subscribers of their rights. Provides for
  8    certification, designation, and operation of independent
      review organizations and for suspension and revocation of
  9    certification. Authorizes the Agency for Health Care
      Administration to adopt rules to accomplish these
10    purposes. Provides guidelines for rules. Provides for
      application procedures and forms for certification.
11    Requires an independent review organization to provide
      annual updates of certain information to the agency.
12    Provides that an independent review organization may not
      be a subsidiary of a managed care entity. Provides
13    limited immunity from damages for such organizations.
      Repeals s. 408.7056, F.S., relating to the Statewide
14    Provider and Subscriber Assistance Program.

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