HB 1547

1	A bill to be entitled
2	An act relating to insurance; creating s. 624.156, F.S.;
3	providing for application of certain provisions of law to
4	the business of insurance; amending s. 627.062, F.S.;
5	revising requirements for rate standards; providing
6	additional filing requirements for medical malpractice
7	liability insurers; amending s. 627.4147, F.S.; deleting
8	an authorization for medical malpractice insurers to
9	require insureds to be members of certain professional
10	societies; creating s. 627.41491, F.S.; requiring the
11	Office of Insurance to provide detailed insurer rate
12	comparisons to health care providers; creating s.
13	627.41493, F.S.; requiring medical malpractice insurers to
14	reduce rates; requiring office approval of medical
15	malpractice insurance rates; providing for application to
16	affiliates; amending s. 627.41495, F.S.; revising
17	requirements for public notice of medical malpractice rate
18	filings; providing for public hearings; providing standing
19	for the Public Counsel; creating s. 627.41496, F.S.;
20	providing legislative intent and findings; limiting the
21	loss and expense experience period as the basis for
22	medical malpractice insurance rates; amending s. 627.912,
23	F.S.; revising requirements for professional liability
24	claims and actions; requiring certain entities to provide
25	the office with certain financial information; authorizing
26	the director of the office to levy administrative fines
27	under certain circumstances; authorizing the office to
28	adopt rules; providing an effective date.
29
30	Be It Enacted by the Legislature of the State of Florida:
31
32	Section 1.  Section 624.156, Florida Statutes, is created
33	to read:
34	624.156  Applicability of consumer protection laws to the
35	business of insurance.--Notwithstanding any other provision of
36	law, the business of insurance shall be subject to the Florida
37	Civil Rights Act of 1992 set forth in part I of chapter 760 and
38	the Florida Deceptive and Unfair Trade Practices Act set forth
39	in part II of chapter 501 and the protections afforded consumers
40	under those acts shall apply to insurance consumers.
41	Section 2.  Paragraph (e) of subsection (7) of section
42	627.062, Florida Statutes, as amended by section 18 of chapter
43	2007-1, Laws of Florida, is amended, paragraph (f) of that
44	subsection is redesignated as paragraph (g), and a new paragraph
45	(f) is added to that subsection, to read:
46	627.062  Rate standards.--
47	(7)
48	(e)  The insurer must apply a discount or surcharge,
49	exclusive of any other discounts, credits, or rate
50	differentials, based on the health care provider's loss
51	experience and disciplinary action taken by the federal or state
52	government or health care facility or health care plan, or shall
53	establish an alternative method giving due consideration to the
54	provider's loss experience and disciplinary record. The insurer
55	must include in the filing a copy of the surcharge or discount
56	schedule or a description of the alternative method used, and
57	must provide a copy of such schedule or description, as approved
58	by the office, to policyholders at the time of renewal and to
59	prospective policyholders at the time of application for
60	coverage. A medical malpractice liability insurer may not use
61	any rate or charge any premium unless the insurer has filed such
62	schedule or alternative method with the director and the
63	director has approved such schedule or alternative method. The
64	office shall adopt a schedule of appropriate ranges for such
65	credits, discounts, or alternative methods of rate reductions
66	that will bring premium relief to providers who have experienced
67	no closed claims or limited indemnity and expense payments over
68	a specified period of time as determined by the office.
69	(f)  In reviewing any rate filing under this subsection,
70	the office shall consider as part of the insurer's rate base the
71	insurer's loss cost adjustment expenses or defense cost and
72	containment expenses only to the extent that the expenses do not
73	exceed the national average for such expenses, as determined by
74	the office, for the prior calendar year. An insurer's loss cost
75	adjustment expenses or defense cost and containment expenses in
76	excess of the national average may not be used to justify a rate
77	or rate change.
78	Section 3.  Subsections (2) and (3) of section 627.4147,
79	Florida Statutes, are amended to read:
80	627.4147  Medical malpractice insurance contracts.--
81	(2)  Each insurer covered by this section may require the
82	insured to be a member in good standing, i.e., not subject to
83	expulsion or suspension, of a duly recognized state or local
84	professional society of health care providers which maintains a
85	medical review committee. No professional society shall expel or
86	suspend a member solely because he or she participates in a
87	health maintenance organization licensed under part I of chapter
88	641.
89	(2)(3)  This section shall apply to all policies issued or
90	renewed after October 1, 2003.
91	Section 4.  Section 627.41491, Florida Statutes, is created
92	to read:
93	627.41491  Full disclosure of insurance information.--The
94	Office of Insurance Regulation shall provide health care
95	providers with a comparison of the rates in effect for each
96	medical malpractice insurer and self-insurer risk retention
97	group and the Florida Medical Malpractice Joint Underwriting
98	Association. The chart shall include comparisons of the rates of
99	a variety of specialties and shall reflect the differing rates
100	by geographic region, years in practice, and the discounts and
101	surcharges available, including those required under s.
102	627.4147(2) for the loss and disciplinary record of the
103	potential insured. Such rate comparison chart shall be made
104	available to the public through the Internet no later than
105	January 1 of each year.
106	Section 5.  Section 627.41493, Florida Statutes, is created
107	to read:
108	627.41493  Medical malpractice insurance rate rollback.--
109	(1)  For any coverage for medical malpractice insurance
110	subject to this chapter issued or renewed on or after October 1,
111	2007, each insurer shall reduce its rates to levels that are at
112	least 25 percent less than the rates for the same coverage that
113	were in effect on September 15, 2003.
114	(2)  Notwithstanding any other provision of law, commencing
115	October 1, 2007, insurance rates for medical malpractice subject
116	to this chapter shall be approved by the director of the Office
117	of Insurance Regulation prior to being used.
118	(3)  Any separate affiliate of an insurer is subject to the
119	provisions of this section.
120	Section 6.  Section 627.41495, Florida Statutes, is amended
121	to read:
122	(Substantial rewording of section. See s.
123	627.41495, Florida Statutes, for present text.)
124	627.41495  Consumer participation in rate review.--
125	(1)  Upon the filing of a proposed rate change by a medical
126	malpractice insurer, self-insurer, or risk retention group, the
127	director of the Office of Insurance Regulation shall require the
128	insurer, self-insurer, or risk retention group to give notice to
129	the public and to the insureds or associations of insureds of
130	the insurer, self-insurer, or risk retention group making the
131	filing.
132	(2)  The rate filing shall be available for public
133	inspection. If any insureds or associations of insureds of the
134	insurer, self-insurer, or risk retention group filing the
135	proposed rate change requests the director of the office to hold
136	a hearing within 30 days after the mailing of the notification
137	of the proposed rate changes to the insureds, the director shall
138	hold a hearing within 30 days after such request. Any consumer
139	may participate in such hearing, and the office shall adopt
140	rules governing such participation.
141	(3)  The Public Counsel shall have standing to request a
142	hearing in according with this section.
143	Section 7.  Section 627.41496, Florida Statutes, is created
144	to read:
145	627.41496  Legislative intent; findings; limitation.--
146	(1)  It is the intent of the Legislature that medical
147	malpractice rates be based upon projected losses and expenses
148	that reflect the current state of the law in this state
149	regarding medical malpractice claims. The Legislature finds that
150	there is no justification for basing rates on the prior 5 to 10
151	years of loss experience and expenses when significant
152	restrictions on the rights of patients and their families were
153	enacted in 2003 that have significantly impacted both the
154	frequency and severity of medical malpractice claims, including,
155	but not limited to, caps on noneconomic damages, expert witness
156	restrictions, and other barriers to full recovery for victims of
157	medical malpractice and their families.
158	(2)  Notwithstanding any provision of law, rule, policy, or
159	industry standard, rates for medical malpractice insurance filed
160	with the Office of Insurance Regulation prior to September 15,
161	2009, shall not be based upon the loss and expense experience of
162	more than 5 years prior to such date. For rates filed with the
163	Office of Insurance Regulation on or after September 15, 2009,
164	insurers may base such filings on the loss and expense
165	experience of 2004 and thereafter but may not base rates on loss
166	and expense experience prior to that year.
167	Section 8.  Paragraphs (h) and (i) of subsection (2) and
168	subsection (5) of section 627.912, Florida Statutes, are
169	amended, subsection (6)  is renumbered as subsection (8),
170	subsection (7) is renumbered as subsection (9) and amended, and
171	new subsections (6) and (7) are added to that section, to read:
172	627.912  Professional liability claims and actions; reports
173	by insurers and health care providers; annual report by
174	office.--
175	(2)  The reports required by subsection (1) shall contain:
176	(h)  The total number, names, and health care provider
177	professional license numbers of all defendants involved in the
178	claim, and any non-party health care provider who appeared on
179	the jury verdict form in any case.
180	(i)  The date and amount of judgment or settlement, if any,
181	including the itemization of the verdict from the jury verdict
182	form.
183	(5)  Any self-insurance program established under s.
184	1004.24 shall report to the office any claim or action for
185	damages for personal injuries claimed to have been caused by
186	error, omission, or negligence in the performance of
187	professional services provided by the state university board of
188	trustees through an employee or agent of the state university
189	board of trustees, including practitioners of medicine licensed
190	under chapter 458, practitioners of osteopathic medicine
191	licensed under chapter 459, podiatric physicians licensed under
192	chapter 461, and dentists licensed under chapter 466, or based
193	on a claimed performance of professional services without
194	consent if the claim resulted in a final judgment in any amount,
195	or a settlement in any amount. The reports required by this
196	subsection shall contain the information required by subsection
197	(3) and the name, address, and specialty of the employee or
198	agent of the state university board of trustees whose
199	performance or professional services is alleged in the claim or
200	action to have caused personal injury. Such employee or agent
201	shall report such claim to the Department of Health to be
202	included on that employee's or agent's practitioner profile.
203	(6)  Each entity required to report closed claims for the
204	classification of insurance set forth in subsection (1) shall
205	also provide to the office the following financial information,
206	specific to this state and countrywide, if applicable, for the
207	prior calendar year:
208	(a)  Direct premiums written.
209	(b)  Direct premiums earned.
210	(c)  Incurred loss and loss expense developed according to
211	the formula A + B - C + D - E + F + G - H, for which A equals
212	the dollar amount of losses paid, B equals the reserves for
213	reported claims at the end of the current year, C equals the
214	reserves for reported claims at the end of the previous year, D
215	equals the reserves for incurred but not reported claims at the
216	end of the current year, E equals the reserves for incurred but
217	not reported claims at the end of the previous year, F equals
218	loss adjustment expenses paid, G equals the reserves for loss
219	adjustment expenses at the end of the current year, and H equals
220	the reserves for loss adjustment expenses at the end of the
221	previous year.
222	(d)  Incurred expenses allocated separately to commissions,
223	other acquisition costs, general expenses, taxes, licenses, and
224	fees, using appropriate estimates when necessary.
225	(e)  Policyholder dividends.
226	(f)  Underwriting gain or loss.
227	(g)  Net investment income, including net realized capital
228	gains and losses, using appropriate estimates where necessary.
229	(h)  Federal income taxes.
230	(i)  Net income.
231	(7)  The director of the office may levy an administrative
232	fine of $1,000 per day against any insurer failing to comply
233	with the reporting requirements of this section.
234	(9)(7)  The office commission may adopt rules requiring
235	persons and entities required to report pursuant to this section
236	to also report data related to the frequency and severity of
237	open claims for the reporting period, amounts reserved for
238	incurred claims, changes in reserves from the previous reporting
239	period, and other information considered relevant to the ability
240	of the office to monitor losses and claims development in the
241	Florida medical malpractice insurance market.
242	Section 9.  The Office of Insurance Regulation may adopt
243	rules pursuant to ss. 120.536(1) and 120.54, Florida Statutes,
244	to administer this act.
245	Section 10.  This act shall take effect July 1, 2007.

CODING: Words stricken are deletions; words underlined are additions.