S T A T E O F N E W Y O R K
________________________________________________________________________
11542
I N A S S E M B L Y
June 23, 2010
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Morelle) --
read once and referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to establishing a medical
malpractice insurance rate recommendation association; and to amend
the state finance law, in relation to creating the medical malpractice
insurance fund
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The insurance law is amended by adding a new section 2352
to read as follows:
S 2352. PHYSICIANS AND SURGEONS DATA COLLECTION AND ADVISORY ASSOCI-
ATION. IN THIS SECTION:
(A)(1) "PHYSICIANS AND SURGEONS DATA COLLECTION AND ADVISORY ASSOCI-
ATION" OR "ASSOCIATION" MEANS THE ASSOCIATION ESTABLISHED PURSUANT TO
THIS SECTION.
(2) "MEDICAL MALPRACTICE INSURANCE" HAS THE MEANING ASCRIBED TO IT BY
SUBSECTION (B) OF SECTION FIVE THOUSAND FIVE HUNDRED ONE OF THIS CHAP-
TER.
(B) A NON-PROFIT, UNINCORPORATED ASSOCIATION IS HEREBY CREATED
CONSISTING OF ALL INSURERS AUTHORIZED TO WRITE PERSONAL INJURY LIABILITY
INSURANCE AND ENGAGED IN WRITING, WITHIN THIS STATE, ON A DIRECT BASIS,
INSURANCE POLICIES PROVIDING PHYSICIANS AND SURGEONS MEDICAL MALPRACTICE
INSURANCE. A PLAN APPROVED BY THE SUPERINTENDENT PURSUANT TO SUBPARA-
GRAPH (D) OF PARAGRAPH TWO OF SUBSECTION (C) OF SECTION FIVE THOUSAND
FIVE HUNDRED TWO OF THIS CHAPTER SHALL ALSO BE A MEMBER. EVERY SUCH
INSURER SHALL BE A MEMBER OF THE ASSOCIATION AND SHALL REMAIN A MEMBER
AS A CONDITION OF ITS AUTHORITY TO CONTINUE TO TRANSACT PERSONAL INJURY
LIABILITY INSURANCE IN THIS STATE.
(C)(1) THE ASSOCIATION SHALL, PURSUANT TO THE PROVISIONS OF THIS ARTI-
CLE AND THE PLAN OF OPERATIONS:
(A) COLLECT AND COMPILE PHYSICIANS AND SURGEONS MEDICAL MALPRACTICE
PREMIUM EXPOSURE, LOSS AND EXPENSE STATISTICS, AND SUCH OTHER INFORMA-
TION AS THE SUPERINTENDENT MAY DEEM NECESSARY OR EXPEDIENT WITH RESPECT
TO PHYSICIANS AND SURGEONS MEDICAL MALPRACTICE INSURANCE; AND
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD12265-02-0
A. 11542 2
(B) PROVIDE TO THE SUPERINTENDENT PHYSICIANS AND SURGEONS MEDICAL
MALPRACTICE RATES OR RATE INFORMATION PURSUANT TO SUBSECTION (F) OF THIS
SECTION.
(2) THE ASSOCIATION SHALL BE A RATE SERVICE ORGANIZATION FOR ALL
PURPOSES UNDER THIS CHAPTER EXCEPT FOR SUBSECTIONS (B), (C), (D), (F),
(G), (H), (I), (J), (K), (L), (P), (Q), (R), (S), AND (T) OF SECTION TWO
THOUSAND THREE HUNDRED THIRTEEN, SECTION TWO THOUSAND THREE HUNDRED
FIFTEEN, AND PARAGRAPH NINE OF SUBSECTION (A) OF SECTION TWO THOUSAND
THREE HUNDRED SIXTEEN OF THIS CHAPTER.
(D)(1) WITHIN SIXTY DAYS FOLLOWING THE EFFECTIVE DATE OF THIS SECTION,
THE GOVERNING BODY OF THE ASSOCIATION SHALL SUBMIT TO THE SUPERINTEN-
DENT, FOR APPROVAL, A PROPOSED PLAN OF OPERATION, WHICH SHALL INCLUDE:
(A) PRELIMINARY ASSESSMENT OF ALL MEMBERS FOR INITIAL EXPENSES NECESSARY
TO COMMENCE OPERATIONS; (B) ESTABLISHMENT OF NECESSARY FACILITIES; (C)
MANAGEMENT OF THE ASSOCIATION; (D) ALLOCATION OF SUFFICIENT RESOURCES
FOR DATA-GATHERING; AND (E) ASSESSMENT OF MEMBERS TO DEFRAY EXPENSES.
(2) THE GOVERNING BODY OF THE ASSOCIATION MAY AMEND THE PLAN OF OPERA-
TION SUBJECT TO THE SUPERINTENDENT'S APPROVAL, OR SHALL AMEND IT AT THE
SUPERINTENDENT'S DIRECTION.
(3) THE ASSOCIATION SHALL, FOR EXPENSES THAT IT INCURS IN ITS OPERA-
TION, ASSESS MEMBERS ON THE BASIS OF DIRECT WRITTEN PREMIUMS, LESS
RETURNS, RECEIVED BY THE MEMBER DURING THE PRIOR CALENDAR YEAR, ON POLI-
CIES OF PHYSICIANS AND SURGEONS MEDICAL MALPRACTICE INSURANCE, WITH
RESPECT TO RISKS RESIDENT IN THIS STATE. NOTHING IN THIS PARAGRAPH
SHALL PREVENT THE ASSOCIATION FROM ALSO OBTAINING FUNDS FROM ANY OTHER
SOURCE.
(E)(1)(A) THE GOVERNING BODY OF THE ASSOCIATION SHALL BE COMPRISED OF
SEVEN VOTING MEMBERS. THREE MEMBERS SHALL REPRESENT THE INSURERS AUTHOR-
IZED TO WRITE PERSONAL INJURY LIABILITY INSURANCE AND ENGAGED IN WRIT-
ING, WITHIN THIS STATE, ON A DIRECT BASIS, INSURANCE POLICIES PROVIDING
PHYSICIANS AND SURGEONS MEDICAL MALPRACTICE INSURANCE, AND SHALL BE
SELECTED IN SUCH MANNER AS IS DETERMINED BY THE MEMBERS OF THE ASSOCI-
ATION. ONE MEMBER SHALL BE A REPRESENTATIVE OF A PLAN APPROVED BY THE
SUPERINTENDENT FOR THE EQUITABLE DISTRIBUTION OF POLICIES FROM THE ASSO-
CIATION AUTHORIZED PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH TWO OF
SUBSECTION (C) OF SECTION FIVE THOUSAND FIVE HUNDRED TWO OF THIS CHAP-
TER. THE REMAINING THREE MEMBERS SHALL BE APPOINTED BY THE SUPERINTEN-
DENT AND REPRESENT THE INTERESTS OF: (I) INJURED PARTIES; (II) PHYSI-
CIANS AND SURGEONS; AND (III) HOSPITALS.
(B) ANY VACANCY IN THE GOVERNING BODY SHALL BE FILLED IN THE SAME
MANNER AS THE INITIAL APPOINTMENT.
(C) THE GOVERNING BODY SHALL SELECT A CHIEF EXECUTIVE OFFICER WHO
SHALL SERVE AT THE PLEASURE OF THE GOVERNING BODY, AND WHOSE TERMS AND
CONDITIONS OF EMPLOYMENT SHALL BE APPROVED BY THE GOVERNING BODY.
(D) NO RESTRICTION IN THIS SUBSECTION SHALL APPLY IF COMPLIANCE IS
PREVENTED BY THE FAILURE OF ANY APPOINTING AUTHORITY TO MAKE AN APPOINT-
MENT OR OF THE SUPERINTENDENT TO APPROVE SUCH APPOINTMENT.
(2) THE GOVERNING BODY OF THE ASSOCIATION SHALL HAVE CHARGE OF THE
GENERAL ACTIVITIES OF THE ASSOCIATION, INCLUDING CONTROL AND SUPERVISION
OVER ITS FINANCES, AND AUTHORITY TO ESTABLISH BUDGETS, APPROVE ASSESS-
MENTS, AND IMPOSE FINES ON MEMBERS OF THE ASSOCIATION.
(3)(A) THE ASSOCIATION SHALL HAVE AN ACTUARIAL COMMITTEE. THE ACTUARI-
AL COMMITTEE SHALL REVIEW METHODOLOGY AND DATA COLLECTION PROCESSES USED
TO DEVELOP RATES AND OTHER INFORMATION AS THE SUPERINTENDENT MAY
REQUIRE.
A. 11542 3
(B) THE MEMBERS OF THE GOVERNING BODY REPRESENTING THE INJURED
PARTIES, PHYSICIANS AND SURGEONS, AND HOSPITALS SHALL TOGETHER APPOINT
ONE INDEPENDENT CASUALTY ACTUARY WHO IS A FELLOW OR ASSOCIATE OF THE
CASUALTY ACTUARIAL SOCIETY TO SERVE AS A MEMBER OF THE ACTUARIAL COMMIT-
TEE. THE APPOINTMENT OF THE ACTUARY AND THE ACTUARY'S COMPENSATION AND
TERMS AND CONDITIONS OF RETENTION SHALL BE REASONABLE AND CUSTOMARY FOR
SUCH PROFESSIONAL. THE ASSOCIATION SHALL PAY THE ACTUARY, WHO SHALL HAVE
THE SAME ACCESS TO THE ASSOCIATION DATA AND DOCUMENTS AS THE OTHER
MEMBERS OF THAT COMMITTEE.
(F)(1) EVERY MEMBER SHALL FILE WITH THE ASSOCIATION A STATISTICAL
REPORT, AS REQUIRED BY THE SUPERINTENDENT, BUT NOT LESS THAN ANNUALLY,
SHOWING A CLASSIFICATION SCHEDULE OF ITS PREMIUMS AND LOSSES ON ITS
PHYSICIANS AND SURGEONS MEDICAL MALPRACTICE INSURANCE, AND SUCH OTHER
INFORMATION AS THE SUPERINTENDENT MAY DEEM NECESSARY OR EXPEDIENT FOR
THE ADMINISTRATION OF THE PROVISIONS OF THIS ARTICLE. THE SUPERINTENDENT
FROM TIME TO TIME MAY PRESCRIBE THE FORM OF THE REPORT, INCLUDING
STATISTICAL DATA CONFORMING TO ESTABLISHED CLASSIFICATIONS.
(2) THE ASSOCIATION SHALL RETAIN ALL DATA USED IN ITS CALCULATIONS AND
ANY OTHER DATA AS THE SUPERINTENDENT MAY REQUIRE FOR SUCH PERIOD OF TIME
AS THE SUPERINTENDENT SHALL DIRECT.
(3) IN ORDER TO ASSIST THE SUPERINTENDENT TO ESTABLISH PHYSICIANS AND
SURGEONS MEDICAL MALPRACTICE RATES, THE ASSOCIATION SHALL PROVIDE TO THE
SUPERINTENDENT ON OR BEFORE APRIL FIRST OF EACH YEAR A REPORT IN A FORM
PRESCRIBED BY THE SUPERINTENDENT CONTAINING SUCH RATING AND OTHER INFOR-
MATION AS THE SUPERINTENDENT MAY REQUEST.
S 2. The insurance law is amended by adding a new section 9112 to read
as follows:
S 9112. MEDICAL MALPRACTICE INSURANCE FUND ASSESSMENT. (A) FOR
PURPOSES OF THIS SECTION:
(1) "CLOSED BOOK" SHALL MEAN THE MEDICAL MALPRACTICE INSURANCE POOL'S
ACTUAL AND ESTIMATED LIABILITIES WITH RESPECT TO POLICIES OF MEDICAL
MALPRACTICE ISSUED THROUGH THE POOL FROM JULY FIRST, TWO THOUSAND
THROUGH JUNE THIRTIETH, TWO THOUSAND TEN.
(2) "MEDICAL MALPRACTICE INSURANCE" SHALL HAVE THE MEANING ASCRIBED TO
IT BY SUBSECTION (B) OF SECTION FIVE THOUSAND FIVE HUNDRED ONE OF THIS
CHAPTER.
(3) "MEDICAL MALPRACTICE INSURANCE POOL" OR "POOL" SHALL MEAN THE
ENTITY ESTABLISHED PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH TWO OF
SUBSECTION (C) OF SECTION FIVE THOUSAND FIVE HUNDRED TWO OF THIS CHAP-
TER.
(4) "LIABILITY INSURANCE" SHALL MEAN "PERSONAL INJURY LIABILITY INSUR-
ANCE" AND "PROPERTY DAMAGE LIABILITY INSURANCE," AS DEFINED IN PARA-
GRAPHS THIRTEEN AND FOURTEEN OF SUBSECTION (A) OF SECTION ONE THOUSAND
ONE HUNDRED THIRTEEN OF THIS CHAPTER.
(5) "NET DIRECT WRITTEN PREMIUMS" SHALL MEAN GROSS DIRECT PREMIUMS
WRITTEN ON POLICIES OF LIABILITY INSURANCE, INCLUDING THE LIABILITY
COMPONENT OF MULTIPLE PERIL PACKAGE POLICIES AS COMPUTED BY THE SUPER-
INTENDENT, LESS RETURN PREMIUMS FOR THE UNUSED OR UNABSORBED PORTIONS OF
PREMIUM DEPOSITS AND DIVIDENDS PAID TO POLICYHOLDERS ON SUCH DIRECT
BUSINESS.
(B)(1) THE MEDICAL MALPRACTICE INSURANCE POOL SHALL SUBMIT TO THE
SUPERINTENDENT NO LATER THAN AUGUST THIRTY-FIRST, TWO THOUSAND TEN, OR
THIRTY DAYS AFTER THE ENACTMENT OF THIS SECTION, WHICHEVER IS LATER, A
PLAN TO OPERATE THE CLOSED BOOK FOR THE EXCLUSIVE BENEFIT OF THE POLI-
CIES AND CONTRACTS INCLUDED THEREIN.
A. 11542 4
(2) TO THE CLOSED BOOK SHALL BE ALLOCATED ALL ASSETS OF THE POOL AS OF
JUNE THIRTIETH, TWO THOUSAND TEN, AND ANY EARNINGS THEREON, AS WELL AS
OTHER ASSETS, NOT INCONSISTENT WITH SECTION ONE THOUSAND THREE HUNDRED
ONE OF THIS CHAPTER, DEEMED BY THE SUPERINTENDENT AVAILABLE FOR THE
PAYMENT OF LOSSES AND CLAIMS, AT VALUES DETERMINED BY THE SUPERINTEN-
DENT.
(3) NONE OF THE ASSETS, INCLUDING THE REVENUE THEREFROM, ALLOCATED IN
ACCORDANCE WITH PARAGRAPH TWO OF THIS SUBSECTION SHALL REVERT TO THE
BENEFIT OF POLICYHOLDERS WITH RESPECT TO POLICIES ISSUED ON OR AFTER
JULY FIRST, TWO THOUSAND TEN.
(C) THE SUPERINTENDENT SHALL ANNUALLY, ON OR BEFORE APRIL FIRST,
DETERMINE WHETHER THE CLOSED BOOK HAS SUFFICIENT MONIES TO FUND ITS
ESTIMATED CLAIM PAYMENTS, CLAIM ADJUSTMENT EXPENSES, AND ALL OTHER
EXPENSES FOR THE SUBSEQUENT TWELVE MONTHS, WITH RESPECT TO POLICIES OF
MEDICAL MALPRACTICE INSURANCE ISSUED THROUGH THE POOL FROM JULY FIRST,
TWO THOUSAND THROUGH JUNE THIRTIETH, TWO THOUSAND TEN. IF THE SUPER-
INTENDENT DETERMINES THAT THE MONIES ARE INSUFFICIENT TO FUND THE ESTI-
MATED EXPENSES AND PAYMENTS, THE SUPERINTENDENT SHALL ASSESS EACH INSUR-
ANCE COMPANY AUTHORIZED TO WRITE LIABILITY INSURANCE PRIOR TO IMPOSING A
SURCHARGE ON PREMIUMS FOR POLICIES PROVIDING COVERAGE FOR PHYSICIANS'
AND SURGEONS' MEDICAL MALPRACTICE INSURANCE PURSUANT TO SECTION FORTY OF
CHAPTER TWO HUNDRED SIXTY-SIX OF THE LAWS OF NINETEEN HUNDRED EIGHTY-SIX
AS AMENDED.
(D) THE SUPERINTENDENT SHALL DETERMINE THE ASSESSMENT IMPOSED PURSUANT
TO SUBSECTION (A) OF THIS SECTION ON THE BASIS OF NET DIRECT WRITTEN
PREMIUMS RECEIVED BY INSURERS DURING THE PRIOR CALENDAR YEAR, ON POLI-
CIES OF LIABILITY INSURANCE, WITH RESPECT TO PROPERTY OR RISKS RESIDENT
IN THIS STATE; PROVIDED, HOWEVER, THAT THE ASSESSMENT ON EACH INSURER
SHALL NOT EXCEED ONE-HALF PERCENT OF THE INSURANCE COMPANY'S NET DIRECT
WRITTEN PREMIUMS RECEIVED DURING THE PRIOR CALENDAR YEAR. AN INSURANCE
COMPANY SHALL PAY THE ASSESSMENT ON A QUARTERLY BASIS IN A MANNER
PRESCRIBED BY THE SUPERINTENDENT ON THE FIFTEENTH DAY OF FEBRUARY, MAY,
AUGUST AND NOVEMBER OF EACH YEAR.
(E) AN INSURANCE COMPANY SHALL INCLUDE A SURCHARGE ON PREMIUMS FOR
LIABILITY INSURANCE POLICIES ON PROPERTIES OR RISKS LOCATED OR RESIDENT
IN THIS STATE TO OFFSET THE ASSESSMENTS PAID UNDER THIS SECTION BY THE
INSURANCE COMPANY. THE AMOUNT OF THE PREMIUM SURCHARGE SHALL BE EQUIV-
ALENT TO THE SUPERINTENDENT'S DETERMINATION PURSUANT TO SUBSECTION (B)
OF THIS SECTION. THE AMOUNT CHARGED ON THE POLICY SHALL BE SEPARATELY
SHOWN FROM THE PREMIUM FOR COVERAGE ON THE POLICY AND CLEARLY IDENTI-
FIED.
(F) AN AMOUNT EQUAL TO ANY ASSESSMENT IMPOSED BY THIS SECTION AND PAID
TO THE SUPERINTENDENT BY AN INSURANCE COMPANY:
(1) SHALL BE DEDUCTED FROM GROSS DIRECT PREMIUMS FOR ALL PURPOSES
UNDER ARTICLE THIRTY-THREE OF THE TAX LAW;
(2) SHALL BE ALLOWED AS A CREDIT AGAINST AMOUNTS IMPOSED PURSUANT TO
SECTION ONE THOUSAND ONE HUNDRED TWELVE OF THIS CHAPTER; AND
(3) IF APPLIED AS A CREDIT AGAINST AMOUNTS IMPOSED PURSUANT TO SECTION
ONE THOUSAND ONE HUNDRED TWELVE OF THIS CHAPTER, SHALL ALSO NOT BE
REFUNDABLE UNDER SECTION NINE THOUSAND ONE HUNDRED NINE OF THIS ARTICLE.
(G) IF ANY INSURANCE COMPANY DOES NOT PAY THE ASSESSMENT IMPOSED BY
THIS SECTION, THE PROVISIONS OF SECTION NINE THOUSAND ONE HUNDRED NINE
OF THIS ARTICLE SHALL APPLY.
(H) ALL MONIES RECEIVED BY THE SUPERINTENDENT THAT ARE COLLECTED FROM
INSURANCE COMPANIES SHALL BE PAID TO THE MEDICAL MALPRACTICE INSURANCE
FUND ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-H OF THE STATE FINANCE
A. 11542 5
LAW BY THE TENTH DAY OF THE QUARTER FOLLOWING RECEIPT OF THE
COLLECTIONS.
S 3. The state finance law is amended by adding a new section 89-h to
read as follows:
S 89-H. MEDICAL MALPRACTICE INSURANCE FUND. 1. THERE IS HEREBY ESTAB-
LISHED IN THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE COMMISSION-
ER OF TAXATION AND FINANCE A SPECIAL FUND TO BE KNOWN AS THE MEDICAL
MALPRACTICE INSURANCE FUND.
2. THE FUND SHALL CONSIST OF ALL MONIES RECEIVED BY THE STATE PURSUANT
TO SECTION NINE THOUSAND ONE HUNDRED TWELVE OF THE INSURANCE LAW, AND
ALL OTHER GRANTS, BEQUESTS OR OTHER MONIES APPROPRIATED, CREDITED OR
TRANSFERRED THERETO FROM ANY OTHER FUND OR SOURCE.
3. MONIES IN THE MEDICAL MALPRACTICE INSURANCE FUND SHALL BE KEPT
SEPARATE AND APART AND SHALL NOT BE COMMINGLED WITH ANY OTHER MONIES IN
THE CUSTODY OF THE COMPTROLLER AND SHALL ONLY BE EXPENDED AS SPECIFIED
IN THIS SECTION AND IN SUCH AMOUNTS AS APPROVED BY THE DIVISION OF THE
BUDGET.
4. THE MONIES RECEIVED BY THE FUND SHALL BE EXPENDED TO PAY CLAIMS AND
NECESSARY EXPENSES, AS CERTIFIED BY THE SUPERINTENDENT OF INSURANCE,
ARISING FROM POLICIES OF MEDICAL MALPRACTICE INSURANCE, AS SUCH TERM IS
DEFINED IN SUBSECTION (B) OF SECTION FIVE THOUSAND FIVE HUNDRED ONE OF
THE INSURANCE LAW, ISSUED THROUGH THE MEDICAL MALPRACTICE INSURANCE POOL
FROM JULY FIRST, TWO THOUSAND THROUGH JUNE THIRTIETH, TWO THOUSAND TEN.
FOR PURPOSES OF THIS SECTION, "MEDICAL MALPRACTICE INSURANCE POOL" SHALL
MEAN THE ENTITY ESTABLISHED PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH
TWO OF SUBSECTION (C) OF SECTION FIVE THOUSAND FIVE HUNDRED TWO OF THE
INSURANCE LAW.
S 4. This act shall take effect immediately.