S T A T E   O F   N E W   Y O R K
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                                  4669

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            February 4, 2011
                               ___________

Introduced  by M. of A. MORELLE -- read once and referred to the Commit-
  tee 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:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07922-01-1

              

A. 4669                             2

  (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
  (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.

A. 4669                             3

  (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.
  (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 ELEVEN.
  (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  ELEVEN,

A. 4669                             4

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.
  (2) TO THE CLOSED BOOK SHALL BE ALLOCATED ALL ASSETS OF THE POOL AS OF
JUNE  THIRTIETH,  TWO THOUSAND ELEVEN, 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  SUPER-
INTENDENT.
  (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 ELEVEN.
  (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 ELEVEN. 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.

A. 4669                             5

  (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
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 ELEV-
EN. FOR PURPOSES OF THIS SECTION, "MEDICAL MALPRACTICE  INSURANCE  POOL"
SHALL  MEAN THE ENTITY ESTABLISHED PURSUANT TO SUBPARAGRAPH (D) OF PARA-
GRAPH TWO OF SUBSECTION (C) OF SECTION FIVE THOUSAND FIVE HUNDRED TWO OF
THE INSURANCE LAW.
  S 4. This act shall take effect on July 1, 2011.