HB 1157

1
A bill to be entitled
2An act relating to insurance; amending s. 501.212, F.S.;
3specifying that pt. II of ch. 501, F.S., the Deceptive and
4Unfair Trade Practice Act, applies to the business of
5insurance; creating s. 624.156, F.S.; providing
6applicability of pt. II of ch. 501, F.S., to the business
7of insurance; amending s. 627.062, F.S.; providing that
8rate standards for medical malpractice insurance apply to
9a separate affiliate of an insurer; revising provisions
10relating to application of discounts or surcharges;
11requiring a medical malpractice liability insurer to file
12a surcharge or discount schedule with the Director of the
13Office of Insurance Regulation before applying certain
14rates or surcharges; requiring the office to consider
15certain factors in determining an insurer's rate base;
16requiring a medical malpractice insurer to provide
17specified information when submitting a rate filing;
18providing penalties; providing legislative findings and
19intent with regard to medical malpractice rates; requiring
20medical malpractice insurance rates to be approved by the
21Director of the Office of Insurance Regulation after a
22specified date; providing the Financial Services
23Commission with rulemaking authority; amending s.
24627.4147, F.S.; deleting provisions authorizing an insurer
25covered by a medical malpractice insurance contract to
26require an insured to be a member in good standing of
27certain professional societies; creating s. 627.41491,
28F.S.; requiring the office to publish a medical
29malpractice insurance rate comparison chart and to post
30the chart on its Internet website; amending s. 627.41495,
31F.S.; requiring a medical malpractice insurer or self-
32insurance fund to provide notice to its policyholders or
33members and the consumer advocate of specified decreases
34in rates; granting the consumer advocate standing with
35regard to rate hearings; requiring the Director of the
36Office of Insurance Regulation to hold a rate hearing
37within a specified period of time after receiving a
38request for a hearing; amending s. 627.912, F.S.; revising
39requirements for reporting professional liability claims
40and actions; requiring fines to be imposed under certain
41circumstances; providing an effective date.
42
43Be It Enacted by the Legislature of the State of Florida:
44
45     Section 1.  Subsection (4) of section 501.212, Florida
46Statutes, is amended to read:
47     501.212  Application.-This part does not apply to:
48     (4)  Any person or activity regulated under laws
49administered by:
50     (a)  The Office of Insurance Regulation of the Financial
51Services Commission;
52     (a)(b)  Banks and savings and loan associations regulated
53by the Office of Financial Regulation of the Financial Services
54Commission;
55     (b)(c)  Banks or savings and loan associations regulated by
56federal agencies; or
57     (c)(d)  Any person or activity regulated under the laws
58administered by the former Department of Insurance which are now
59administered by the Department of Financial Services, other than
60laws relating to the regulation of the business of insurance.
61     Section 2.  Section 624.156, Florida Statutes, is created
62to read:
63     624.156  Applicability of consumer protection laws to the
64business of insurance.-Notwithstanding any provision of law to
65the contrary, the business of insurance is subject to ss.
66501.201-501.213, the Florida Deceptive and Unfair Trade
67Practices Act, and the protections afforded consumers under that
68act apply to insurance consumers.
69     Section 3.  Paragraphs (a) and (e) of subsection (7) of
70section 627.062, are amended, present paragraph (f) of that
71subsection is redesignated as paragraph (g) and amended, and new
72paragraphs (f), (h), (i), and (j) are added to that subsection
73to read:
74     627.062  Rate standards.-
75     (7)(a)  The provisions of This subsection applies apply
76only with respect to rates for medical malpractice insurance and
77shall control to the extent of any conflict with other
78provisions of this section. Any separate affiliate of an insurer
79is subject to this subsection.
80     (e)  The insurer must apply a discount or surcharge,
81exclusive of any other discounts, credits, or rate
82differentials, based on the health care provider's loss
83experience and disciplinary action taken by the Federal
84Government, the state, a health care facility, or a health care
85plan or must shall establish an alternative method giving due
86consideration to the provider's loss experience and disciplinary
87record. The insurer must include in the filing a copy of the
88surcharge or discount schedule or a description of the
89alternative method used, and must provide a copy of such
90schedule or description, as approved by the office, to
91policyholders at the time of renewal and to prospective
92policyholders at the time of application for coverage. A medical
93malpractice liability insurer may not use any rate or charge any
94premium unless the insurer has filed such schedule or
95alternative method with the Director of the Office of Insurance
96Regulation and the director has approved such schedule or
97alternative method.
98     (f)  In reviewing any rate filing under this subsection,
99the office shall consider as part of the insurer's rate base the
100insurer's loss cost adjustment expenses or defense cost and
101containment expenses only to the extent that the expenses are at
102or below the national average for such expenses, as determined
103by the office, for the prior calendar year. An insurer's loss
104cost adjustment expenses or defense cost and containment
105expenses in excess of the national average may not be used to
106justify a rate or rate change.
107     (g)(f)  Each medical malpractice insurer must make a rate
108filing under this section, sworn to by at least two executive
109officers of the insurer, at least once each calendar year.
110     1.  Effective July 1, 2011, a rate filing must be
111accompanied by a certification by the chief executive officer or
112chief financial officer of a medical malpractice insurer and the
113chief actuary of a medical malpractice insurer, under oath and
114subject to the penalty of perjury, on a form approved by the
115commission, that the signing officer and actuary have reviewed
116the rate filing and that, based on the signing officer's and
117actuary's knowledge:
118     a.  The rate filing does not contain any untrue statement
119of a material fact or any omission to state a material fact
120necessary in order to make the statements made, in light of the
121circumstances under which such statements were made, not
122misleading.
123     b.  The factors described in paragraph (2)(b), including,
124but not limited to, investment income, fairly present in all
125material respects the basis of the rate filing for the periods
126presented in the rate filing.
127     c.  The rate filing reflects all premium savings that are
128reasonably expected to result from legislative enactments,
129including, but not limited to, chapters 2003-416 and 2006-6,
130Laws of Florida, and is in accordance with generally accepted
131and reasonable actuarial techniques.
132     2.  A signing officer or actuary knowingly making a false
133certification under this paragraph commits a violation of s.
134626.9541(1)(e) and is subject to the penalties provided in s.
135626.9521.
136     3.  Failure by the signing officer and actuary to provide
137such certification shall result in the rate filing being
138disapproved without prejudice to be refiled.
139     (h)  It is the intent of the Legislature that medical
140malpractice rates be based upon projected losses and expenses
141that reflect the current restrictions on the recovery of
142individuals in medical malpractice claims in this state,
143including, but not limited to, those provisions contained in
144chapters 2003-416 and 2006-6, Laws of Florida. The Legislature
145finds that there is no justification for basing rates on the
146prior 10 years of loss experience and expenses when in the
147intervening years significant restrictions on the legal rights
148and recoveries of patients and their families have been enacted.
149Accordingly, notwithstanding any law, rule, policy, or industry
150practice to the contrary, rates for medical malpractice
151insurance filed with the office after July 1, 2011, may not be
152based upon the loss and expense experience of more than 5 years
153prior to that date.
154     (i)  Notwithstanding any law to the contrary, beginning
155July 1, 2011, insurance rates for medical malpractice subject to
156this chapter must be approved by the Director of the Office of
157Insurance Regulation prior to being used.
158     (j)  The commission may adopt rules pursuant to ss.
159120.536(1) and 120.54 to administer this subsection.
160     Section 4.  Subsection (3) of section 627.4147, Florida
161Statutes, is renumbered as subsection (2), and present
162subsection (2) of that section is amended to read:
163     627.4147  Medical malpractice insurance contracts.-
164     (2)  Each insurer covered by this section may require the
165insured to be a member in good standing, i.e., not subject to
166expulsion or suspension, of a duly recognized state or local
167professional society of health care providers which maintains a
168medical review committee. No professional society shall expel or
169suspend a member solely because he or she participates in a
170health maintenance organization licensed under part I of chapter
171641.
172     Section 5.  Section 627.41491, Florida Statutes, is created
173to read:
174     627.41491  Public rate comparison information.-The office
175shall publish a chart comparing the rates in effect for the
176Florida Medical Malpractice Joint Underwriting Association and
177each medical malpractice insurer, self-insurer, and risk
178retention group. The chart shall include comparisons of the
179rates of a variety of specialties and shall reflect the
180differing rates by geographic region, years in practice, and
181discounts and surcharges available, including those required
182under s. 627.062(7)(e) for the loss and disciplinary record of
183the potential insured. Such rate comparison chart shall be made
184available to the public on the office website and shall be
185updated at least annually beginning January 1, 2013.
186     Section 6.  Section 627.41495, Florida Statutes, is amended
187to read:
188     627.41495  Public notice of medical malpractice rate
189filings; consumer advocate participation in rate review.-
190     (1)  Upon the filing of a proposed rate change by a medical
191malpractice insurer or self-insurance fund, which filing would
192result in an average statewide increase or decrease of 10 25
193percent or more, pursuant to standards determined by the office,
194the insurer or self-insurance fund shall mail notice of such
195filing to each of its policyholders or members and the consumer
196advocate appointed pursuant to s. 627.0613.
197     (2)  The consumer advocate shall have standing to request
198or intervene and to participate in a rate hearing in accordance
199with the requirements of this section. The office shall receive
200into evidence as part of the record any materials, information,
201or studies submitted by the members of the public or the
202consumer advocate.
203     (3)  The consumer advocate and any policyholder or member
204of the insurer or self-insurer may request a rate hearing on the
205proposed rate change within 30 days after the mailing of the
206notification of the proposed rate change. The Director of the
207Office of Insurance Regulation shall hold the hearing within 30
208days after receiving a request for a hearing.
209     (4)(2)  The rate filing shall be available for public
210inspection.
211     Section 7.  Paragraphs (h) and (i) of subsection (2) and
212subsection (4) of section 627.912, Florida Statutes, are amended
213to read:
214     627.912  Professional liability claims and actions; reports
215by insurers and health care providers; annual report by office.-
216     (2)  The reports required by subsection (1) shall contain:
217     (h)  The total number, names, and health care provider
218professional license numbers of all defendants involved in the
219claim and any nonparty health care provider who appeared on the
220jury verdict form in any case.
221     (i)  The date and amount of judgment or settlement, if any,
222including the itemization of the verdict from the jury verdict
223form.
224     (4)  There shall be no liability on the part of, and no
225cause of action of any nature shall arise against, any person or
226entity reporting hereunder or its agents or employees or the
227office or its employees for any action taken by them under this
228section. The office shall may impose a fine of up to $250 per
229day per case, but not to exceed a total of $10,000 per case,
230against an insurer, commercial self-insurance fund, medical
231malpractice self-insurance fund, or risk retention group that
232violates the requirements of this section, except that the
233office shall may impose a fine of $250 per day per case, not to
234exceed a total of $1,000 per case, against an insurer providing
235professional liability insurance to a member of The Florida Bar,
236which insurer violates the provisions of this section. If a
237health care practitioner or health care facility violates the
238requirements of this section, it shall be considered a violation
239of the chapter or act under which the practitioner or facility
240is licensed and shall be grounds for a fine or disciplinary
241action as such other violations of the chapter or act. The
242office may adjust a fine imposed under this subsection by
243considering the financial condition of the licensee, premium
244volume written, ratio of violations to compliancy, and other
245mitigating factors as determined by the office.
246     Section 8.  This act shall take effect July 1, 2011.


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