Senate Bill sb1660
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Florida Senate - 2007 SB 1660
By Senator Peaden
2-878-07
1 A bill to be entitled
2 An act relating to insurance; creating s.
3 624.156, F.S.; prescribing applicability of
4 consumer protection laws to the business of
5 insurance; amending s. 627.062, F.S.; revising
6 determination of rate standards for medical
7 malpractice insurance; repealing s.
8 627.4147(2), F.S.; deleting a provision that
9 medical malpractice insureds may be required by
10 their insurers to be members of certain
11 professional societies; amending s. 627.912,
12 F.S.; requiring that certain information be
13 included in reports related to professional
14 liability claims and actions; authorizing the
15 director of the Office of Insurance Regulation
16 to levy an administrative fine against an
17 insurer that fails to comply with reporting
18 requirements; creating s. 627.41491, F.S.;
19 requiring the office to provide certain
20 information concerning medical malpractice
21 coverage providers; creating s. 627.41493,
22 F.S.; requiring a rate rollback for medical
23 malpractice insurance; amending s. 627.41495,
24 F.S.; requiring notice of and providing for
25 hearings on rate changes by medical malpractice
26 insurance providers; prescribing authority of
27 the Public Counsel with respect thereto;
28 declaring legislative intent with respect to
29 medical malpractice rates; authorizing the
30 Office of Insurance Regulation to adopt rules;
31 providing an effective date.
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1 Be It Enacted by the Legislature of the State of Florida:
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3 Section 1. Section 624.156, Florida Statutes, is
4 created to read:
5 624.156 Applicability of consumer protection laws to
6 the business of insurance.--Notwithstanding any provision of
7 law to the contrary, the business of insurance is subject to
8 the Florida Civil Rights Act of 1992, ss. 760.01-760.11 and
9 509.092, and the Florida Deceptive and Unfair Trade Practices
10 Act, ss. 501.201-501.213, and the protections afforded
11 consumers in these statutes apply to insurance consumers.
12 Section 2. Paragraph (e) of subsection (7) of section
13 627.062, Florida Statutes, as amended by section 18 of chapter
14 2007-1, Laws of Florida, is amended, present paragraph (f) of
15 that subsection is redesignated as paragraph (g), and a new
16 paragraph (f) is added to that subsection to read:
17 627.062 Rate standards.--
18 (7)
19 (e) The insurer must apply a discount or surcharge,
20 exclusive of any other discounts, credits, or rate
21 differentials, based on the health care provider's loss
22 experience and disciplinary action taken by the federal or
23 state government or health care facility or health care plan
24 or shall establish an alternative method giving due
25 consideration to the provider's loss experience and
26 disciplinary record. The insurer must include in the filing a
27 copy of the surcharge or discount schedule or a description of
28 the alternative method used, and must provide a copy of such
29 schedule or description, as approved by the office, to
30 policyholders at the time of renewal and to prospective
31 policyholders at the time of application for coverage. A
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1 medical malpractice liability insurer may not use any rate or
2 charge any premium unless the insurer has filed such schedule
3 or alternative method with the director and the director has
4 approved such schedule or alternative method. The Office of
5 Insurance Regulation shall adopt a schedule of appropriate
6 ranges for such credits, discounts, or alternative methods of
7 rate reduction which will bring premium relief to providers
8 who have experienced no closed claims or limited indemnity and
9 expense payments over a specified period of time as determined
10 by the office.
11 (f) In reviewing any rate filing under this
12 subsection, the office shall consider as part of the insurer's
13 rate base the insurer's loss cost adjustment expenses or
14 defense cost and containment expenses only to the extent that
15 the expenses do not exceed the national average for such
16 expenses, as determined by the office, for the prior calendar
17 year. An insurer's loss cost adjustment expenses or defense
18 cost and containment expenses in excess of the national
19 average may not be used to justify a rate or rate change.
20 Section 3. Subsection (2) of section 627.4147, Florida
21 Statutes, is repealed.
22 Section 4. Section 627.912, Florida Statutes, is
23 amended to read:
24 627.912 Professional liability claims and actions;
25 reports by insurers and health care providers; annual report
26 by office.--
27 (1)(a) Each self-insurer authorized under s. 627.357
28 and each commercial self-insurance fund authorized under s.
29 624.462, authorized insurer, surplus lines insurer, risk
30 retention group, and joint underwriting association providing
31 professional liability insurance to a practitioner of medicine
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1 licensed under chapter 458, to a practitioner of osteopathic
2 medicine licensed under chapter 459, to a podiatric physician
3 licensed under chapter 461, to a dentist licensed under
4 chapter 466, to a hospital licensed under chapter 395, to a
5 crisis stabilization unit licensed under part IV of chapter
6 394, to a health maintenance organization certificated under
7 part I of chapter 641, to clinics included in chapter 390, or
8 to an ambulatory surgical center as defined in s. 395.002, and
9 each insurer providing professional liability insurance to a
10 member of The Florida Bar shall report to the office any claim
11 or action for damages for personal injuries claimed to have
12 been caused by error, omission, or negligence in the
13 performance of such insured's professional services or based
14 on a claimed performance of professional services without
15 consent, if the claim resulted in:
16 1. A final judgment in any amount.
17 2. A settlement in any amount.
18 3. A final disposition of a medical malpractice claim
19 resulting in no indemnity payment on behalf of the insured.
20 (b) Each health care practitioner and health care
21 facility listed in paragraph (a) must report any claim or
22 action for damages as described in paragraph (a), if the claim
23 is not otherwise required to be reported by an insurer or
24 other insuring entity.
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26 Reports under this subsection shall be filed with the office
27 no later than 30 days following the occurrence of any event
28 listed in paragraph (a).
29 (2) The reports required by subsection (1) shall
30 contain:
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1 (a) The name, address, health care provider
2 professional license number, and specialty coverage of the
3 insured.
4 (b) The insured's policy number.
5 (c) The date of the occurrence which created the
6 claim.
7 (d) The date the claim was reported to the insurer or
8 self-insurer.
9 (e) The name and address of the injured person. This
10 information is confidential and exempt from the provisions of
11 s. 119.07(1), and must not be disclosed by the office without
12 the injured person's consent, except for disclosure by the
13 office to the Department of Health. This information may be
14 used by the office for purposes of identifying multiple or
15 duplicate claims arising out of the same occurrence.
16 (f) The date of suit, if filed.
17 (g) The injured person's age and sex.
18 (h) The total number, names, and health care provider
19 professional license numbers of all defendants involved in the
20 claim and any nonparty health care provider who appeared on
21 the jury verdict form in any case.
22 (i) The date and amount of judgment or settlement, if
23 any, including the itemization of the verdict from the jury
24 verdict form.
25 (j) In the case of a settlement, such information as
26 the office may require with regard to the injured person's
27 incurred and anticipated medical expense, wage loss, and other
28 expenses.
29 (k) The loss adjustment expense paid to defense
30 counsel, and all other allocated loss adjustment expense paid.
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1 (l) The date and reason for final disposition, if no
2 judgment or settlement.
3 (m) A summary of the occurrence which created the
4 claim, which shall include:
5 1. The name of the institution, if any, and the
6 location within the institution at which the injury occurred.
7 2. The final diagnosis for which treatment was sought
8 or rendered, including the patient's actual condition.
9 3. A description of the misdiagnosis made, if any, of
10 the patient's actual condition.
11 4. The operation, diagnostic, or treatment procedure
12 causing the injury.
13 5. A description of the principal injury giving rise
14 to the claim.
15 6. The safety management steps that have been taken by
16 the insured to make similar occurrences or injuries less
17 likely in the future.
18 (n) Any other information required by the commission,
19 by rule, to assist the office in its analysis and evaluation
20 of the nature, causes, location, cost, and damages involved in
21 professional liability cases.
22 (3) The office shall provide the Department of Health
23 with electronic access to all information received under this
24 section related to persons licensed under chapter 458, chapter
25 459, chapter 461, or chapter 466. The Department of Health
26 shall review each report and determine whether any of the
27 incidents that resulted in the claim potentially involved
28 conduct by the licensee that is subject to disciplinary
29 action, in which case the provisions of s. 456.073 shall
30 apply.
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1 (4) There shall be no liability on the part of, and no
2 cause of action of any nature shall arise against, any person
3 or entity reporting hereunder or its agents or employees or
4 the office or its employees for any action taken by them under
5 this section. The office may impose a fine of up to $250 per
6 day per case, but not to exceed a total of $10,000 per case,
7 against an insurer, commercial self-insurance fund, medical
8 malpractice self-insurance fund, or risk retention group that
9 violates the requirements of this section, except that the
10 office may impose a fine of $250 per day per case, not to
11 exceed a total of $1,000 per case, against an insurer
12 providing professional liability insurance to a member of The
13 Florida Bar, which insurer violates the provisions of this
14 section. If a health care practitioner or health care facility
15 violates the requirements of this section, it shall be
16 considered a violation of the chapter or act under which the
17 practitioner or facility is licensed and shall be grounds for
18 a fine or disciplinary action as such other violations of the
19 chapter or act. The office may adjust a fine imposed under
20 this subsection by considering the financial condition of the
21 licensee, premium volume written, ratio of violations to
22 compliancy, and other mitigating factors as determined by the
23 office.
24 (5) Any self-insurance program established under s.
25 1004.24 shall report to the office any claim or action for
26 damages for personal injuries claimed to have been caused by
27 error, omission, or negligence in the performance of
28 professional services provided by the state university board
29 of trustees through an employee or agent of the state
30 university board of trustees, including practitioners of
31 medicine licensed under chapter 458, practitioners of
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1 osteopathic medicine licensed under chapter 459, podiatric
2 physicians licensed under chapter 461, and dentists licensed
3 under chapter 466, or based on a claimed performance of
4 professional services without consent if the claim resulted in
5 a final judgment in any amount, or a settlement in any amount.
6 The reports required by this subsection shall contain the
7 information required by subsection (3) and the name, address,
8 and specialty of the employee or agent of the state university
9 board of trustees whose performance or professional services
10 is alleged in the claim or action to have caused personal
11 injury. Such employee or agent shall report such claim to the
12 Department of Health to be included on that employee's or
13 agent's practitioner profile.
14 (6) Each entity required to report closed claims for
15 the classification of insurance set forth in subsection (1)
16 shall also provide to the Office of Insurance Regulation the
17 following financial information, specific to this state and
18 countrywide, if applicable, for the prior calendar year:
19 (a) Direct premiums written.
20 (b) Direct premiums earned.
21 (c) Incurred loss and loss expense developed according
22 to the formula A + B - C + D - E + F + G - H, for which A
23 equals the dollar amount of losses paid, B equals the reserves
24 for reported claims at the end of the current year, C equals
25 the reserves for reported claims at the end of the previous
26 year, D equals the reserves for incurred but not reported
27 claims at the end of the current year, E equals the reserves
28 for incurred but not reported claims at the end of the
29 previous year, F equals loss adjustment expenses paid, G
30 equals the reserves for loss adjustment expenses at the end of
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1 the current year, and H equals the reserves for loss
2 adjustment expenses at the end of the previous year.
3 (d) Incurred expenses allocated separately to
4 commissions, other acquisition costs, general expenses, taxes,
5 licenses, and fees, using appropriate estimates when
6 necessary.
7 (e) Policyholder dividends.
8 (f) Underwriting gain or loss.
9 (g) Net investment income, including net realized
10 capital gains and losses, using appropriate estimates when
11 necessary.
12 (h) Federal income taxes.
13 (i) Net income.
14 (7) The director of the Office of Insurance Regulation
15 may levy an administrative fine of $1,000 per day against any
16 insurer that fails to comply with the reporting requirements
17 of this section.
18 (8)(a)(6)(a) The office shall prepare statistical
19 summaries of the closed claims reports for medical malpractice
20 filed pursuant to this section, for each year that such
21 reports have been filed, and make such summaries and closed
22 claim reports available on the Internet by July 1, 2005.
23 (b) The office shall prepare an annual report by
24 October 1 of each year, beginning in 2004, which shall be
25 available on the Internet, which summarizes and analyzes the
26 closed claim reports for medical malpractice filed pursuant to
27 this section and the annual financial reports filed by
28 insurers writing medical malpractice insurance in this state.
29 The report must include an analysis of closed claim reports of
30 prior years, in order to show trends in the frequency and
31 amount of claims payments, the itemization of economic and
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1 noneconomic damages, the nature of the errant conduct, and
2 such other information as the office determines is
3 illustrative of the trends in closed claims. The report must
4 also analyze the state of the medical malpractice insurance
5 market in Florida, including an analysis of the financial
6 reports of those insurers with a combined market share of at
7 least 80 percent of the net written premium in the state for
8 medical malpractice for the prior calendar year, including a
9 loss ratio analysis for medical malpractice written in Florida
10 and a profitability analysis of each such insurer. The report
11 shall compare the ratios for medical malpractice in Florida
12 compared to other states, based on financial reports filed
13 with the National Association of Insurance Commissioners and
14 such other information as the office deems relevant.
15 (c) The annual report shall also include a summary of
16 the rate filings for medical malpractice which have been
17 approved by the office for the prior calendar year, including
18 an analysis of the trend of direct and incurred losses as
19 compared to prior years.
20 (9)(7) The office commission may adopt rules requiring
21 persons and entities required to report pursuant to this
22 section to also report data related to the frequency and
23 severity of open claims for the reporting period, amounts
24 reserved for incurred claims, changes in reserves from the
25 previous reporting period, and other information considered
26 relevant to the ability of the office to monitor losses and
27 claims development in the Florida medical malpractice
28 insurance market.
29 Section 5. Section 627.41491, Florida Statutes, is
30 created to read:
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1 627.41491 Full disclosure of insurance
2 information.--The Office of Insurance Regulation shall provide
3 health care providers with a comparison of the rates in effect
4 for each medical malpractice insurer, self-insurer risk
5 retention group, and the Florida Medical Malpractice Joint
6 Underwriting Association. The chart shall include comparison
7 of the rates of a variety of specialties and shall reflect the
8 differing rates by geographic region, years in practice, and
9 the discounts and surcharges available, including those
10 required under s. 627.4147(2) for the loss and disciplinary
11 record of the potential insured. Such rate comparison chart
12 shall be made available to the public through the Internet no
13 later than January 1 of each year.
14 Section 6. Section 627.41493, Florida Statutes, is
15 created to read:
16 627.41493 Insurance rate rollback.--
17 (1) For any coverage for medical malpractice insurance
18 subject to this chapter issued or renewed on or after October
19 1, 2007, every insurer shall reduce its rates to levels that
20 are at least 25 percent less than the rates for the same
21 coverage which were in effect on October 1, 2004.
22 (2) Notwithstanding any law to the contrary,
23 commencing October 1, 2007, insurance rates for medical
24 malpractice subject to this chapter must be approved by the
25 director of the Office of Insurance Regulation prior to being
26 used.
27 (3) Any separate affiliate of an insurer is subject to
28 this section.
29 Section 7. Section 627.41495, Florida Statutes, is
30 amended to read:
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1 627.41495 Consumer participation in rate review Public
2 notice of medical malpractice rate filings.--
3 (1) Upon the filing of a proposed rate change by a
4 medical malpractice insurer, self-insurer, or risk retention
5 group, the director of the Office of Insurance Regulation
6 shall require the insurer, self-insurer, or risk retention
7 group to give notice to the public and to the insureds or
8 associations of insureds of the insurer, self-insurer, or risk
9 retention group making the filing or self-insurance fund,
10 which filing would result in an average statewide increase of
11 25 percent or more, pursuant to standards determined by the
12 office, the insurer or self-insurance fund shall mail notice
13 of such filing to each of its policyholders or members.
14 (2) The rate filing shall be available for public
15 inspection. If any insureds or associations of insureds of the
16 insurer, self-insurer, or risk retention group filing the
17 proposed rate change request the director of the Office of
18 Insurance Regulation, within 30 days after the mailing of the
19 notification of the proposed rate changes to the insureds, to
20 hold a hearing, the director shall hold a hearing within 30
21 days after such request. Any consumer may participate in such
22 hearing, and the office shall adopt rules governing such
23 participation.
24 (3) The Public Counsel has standing to request a
25 hearing in according with this section.
26 Section 8. It is the intent of the Legislature that
27 medical malpractice rates be based upon projected losses and
28 expenses that reflect the current state of the law in this
29 state regarding medical malpractice claims. The Legislature
30 finds that there is no justification for basing rates on the
31 prior 5 to 10 years of loss experience and expenses when
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1 significant restrictions on the rights of patients and their
2 families were enacted in 2003 which have significantly
3 impacted both the frequency and severity of medical
4 malpractice claims, including, but not limited to, caps on
5 noneconomic damages, expert witness restrictions, and other
6 barriers to full recovery for victims of medical malpractice
7 and their families. These legislative enactments were not
8 implemented to enrich medical malpractice insurance carriers,
9 but rather to bring about the affordability and greater
10 availability of medical malpractice insurance products to the
11 state's health care providers. Accordingly, notwithstanding
12 any law, rule, policy, or industry standard to the contrary,
13 rates for medical malpractice insurance filed with the Office
14 of Insurance Regulation prior to September 15, 2009, may not
15 be based upon the loss and expense experience of more than 5
16 years prior to that date. For rates filed with the Office of
17 Insurance Regulation on or after September 15, 2009, insurers
18 may base such filings on the loss and expense experience of
19 2004 and thereafter but may not base rates on loss and expense
20 experience prior to that year.
21 Section 9. The Office of Insurance Regulation may
22 adopt rules to administer this act.
23 Section 10. This act shall take effect upon becoming a
24 law.
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2 SENATE SUMMARY
3 Prescribes applicability of consumer protection laws to
the business of insurance. Revises rate standards with
4 respect to medical malpractice insurance. Deletes a
provision under which a medical malpractice insured may
5 be required by the insurer to be a member of a
professional society. Requires additional information in
6 reports relating to professional liability claims and
actions. Authorizes an administrative fine for failure to
7 comply with reporting requirements. Requires disclosure
of information relating to medical malpractice insurers.
8 Requires a rate rollback for medical malpractice
insurance. Provides for consumer participation in rate
9 review. (See bill for details.)
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