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

                                  2908

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 20, 2015
                               ___________

Introduced  by M. of A. WEPRIN -- Multi-Sponsored by -- M. of A. BRENNAN
  -- read once and referred to the Committee on Insurance

AN ACT to amend the insurance  law,  in  relation  to  establishing  the
  medical   liability   insurance  association;  and  repealing  certain
  provisions of such law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Article 55 of the insurance law is REPEALED and a new arti-
cle 55 is added to read as follows:
                                ARTICLE 55
                 MEDICAL LIABILITY INSURANCE ASSOCIATION
SECTION 5500. TITLE AND PURPOSE.
        5501. DEFINITIONS.
        5502. MEDICAL LIABILITY INSURANCE ASSOCIATION.
        5503. PLAN OF OPERATION.
        5504. POLICIES.
        5505. RATES.
        5506. PROCEDURES.
        5507. PARTICIPATION.
        5508. DIRECTORS.
        5509. APPEALS.
        5510. ANNUAL STATEMENT.
        5511. EXAMINATIONS.
        5512. IMMUNITY.
        5513. OTHER PROVISIONS.
        5514. EVALUATION.
  S  5500.  TITLE AND PURPOSE. THIS ARTICLE MAY BE CITED AS THE "MEDICAL
LIABILITY INSURANCE ASSOCIATION ACT". THE PURPOSE OF THIS ARTICLE IS  TO
ESTABLISH THE MEDICAL LIABILITY INSURANCE ASSOCIATION AS THE PROVIDER OF
MEDICAL  MALPRACTICE  INSURANCE, TO THOSE INSUREDS UNABLE TO OBTAIN SUCH
COVERAGE IN THE VOLUNTARY MARKET.
  S 5501. DEFINITIONS. IN THIS ARTICLE:
  (A) "ASSOCIATION" MEANS THE MEDICAL LIABILITY INSURANCE ASSOCIATION.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                      [ ] is old law to be omitted.
                                                           LBD07524-01-5

A. 2908                             2

  (B) "MEDICAL MALPRACTICE  INSURANCE"  MEANS  INSURANCE  AGAINST  LEGAL
LIABILITY  OF THE INSURED, AND AGAINST LOSS, DAMAGE, OR EXPENSE INCIDENT
TO A CLAIM OF SUCH LIABILITY ARISING OUT OF THE DEATH OR INJURY  OF  ANY
PERSON  DUE  TO MEDICAL, DENTAL, PODIATRIC, CERTIFIED NURSE-MIDWIFERY OR
HOSPITAL  MALPRACTICE  BY  ANY  LICENSED PHYSICIAN, DENTIST, PODIATRIST,
CERTIFIED  NURSE-MIDWIFE,  CERTIFIED  REGISTERED  NURSE  ANESTHETIST  OR
HOSPITAL.
  (C) "HOSPITAL" MEANS:
  (1)  ANY  FACILITY  DEFINED  AS  A HOSPITAL UNDER SECTION TWENTY-EIGHT
HUNDRED ONE OF THE PUBLIC HEALTH LAW AND ISSUED AN OPERATING CERTIFICATE
AS A HOSPITAL OR NURSING HOME, AND THOSE DISTINCT PARTS  OF  A  FACILITY
WHICH  ARE  SUBJECT TO THE POWERS OF VISITATION, EXAMINATION, INSPECTION
AND INVESTIGATION OF THE DEPARTMENT  OF  MENTAL  HYGIENE  WHICH  PROVIDE
HOSPITAL OR NURSING HOME SERVICE.
  (2) ANY AMBULANCE SERVICE WHICH IS REGISTERED OR CERTIFIED UNDER ARTI-
CLE  THIRTY  OF THE PUBLIC HEALTH LAW AND WHICH IS DESIGNED AND EQUIPPED
TO PROVIDE DEFINITIVE ACUTE MEDICAL CARE PURSUANT  TO  RULES  AND  REGU-
LATIONS  OF  THE  COMMISSIONER OF HEALTH IN ACCORDANCE WITH SUCH ARTICLE
CONCERNING THE REQUIREMENTS FOR AN ADVANCED LIFE SUPPORT SYSTEM.  SUCH A
SERVICE MUST INCLUDE, BUT NOT BE LIMITED TO, THE PROVISION  OF  ADVANCED
LIFE SUPPORT SERVICES.
  (3)  ANY  COMMUNITY  MENTAL  HEALTH CENTER OPERATED BY A COUNTY, CITY,
TOWN OR VILLAGE, HOLDING AN OPERATING CERTIFICATE ISSUED BY AN OFFICE OF
THE DEPARTMENT OF MENTAL HYGIENE.
  (4) ANY CERTIFIED PUBLIC OR VOLUNTARY  NON-PROFIT  HOME  CARE  SERVICE
AGENCY  WHICH  POSSESSES  A  VALID  CERTIFICATE OF APPROVAL ISSUED UNDER
ARTICLE TWENTY-EIGHT OR THIRTY-SIX OF THE PUBLIC HEALTH LAW.
  (D) "NET DIRECT PREMIUMS"  MEANS  GROSS  DIRECT  PREMIUMS  WRITTEN  ON
PERSONAL  INJURY  LIABILITY INSURANCE, INCLUDING THE LIABILITY COMPONENT
OF MULTIPLE PERIL PACKAGE POLICIES AS COMPUTED  BY  THE  SUPERINTENDENT,
LESS  RETURN  PREMIUMS  FOR THE UNUSED OR UNABSORBED PORTIONS OF PREMIUM
DEPOSITS.
  (E) "PERSONAL INJURY LIABILITY INSURANCE" MEANS ALL FORMS OF INSURANCE
WRITTEN UNDER PARAGRAPH THIRTEEN OF SUBSECTION (A) OF SECTION ONE  THOU-
SAND  ONE  HUNDRED  THIRTEEN  OF  THIS  CHAPTER, INCLUDING THE LIABILITY
COMPONENT OF MULTIPLE PERIL PACKAGE POLICIES.
  S 5502. MEDICAL  LIABILITY  INSURANCE  ASSOCIATION.  (A)  THE  MEDICAL
LIABILITY INSURANCE ASSOCIATION IS ESTABLISHED, CONSISTING OF ALL INSUR-
ERS  AUTHORIZED TO WRITE AND ENGAGED IN WRITING, WITHIN THIS STATE, ON A
DIRECT BASIS, MEDICAL MALPRACTICE INSURANCE. EVERY SUCH INSURER SHALL BE
AND REMAIN A MEMBER OF THE ASSOCIATION AS A CONDITION OF  ITS  AUTHORITY
TO TRANSACT MEDICAL MALPRACTICE INSURANCE IN THIS STATE.
  (B)  THE  ASSOCIATION SHALL BE A NON-PROFIT UNINCORPORATED ASSOCIATION
CONSTITUTING A LEGAL ENTITY SEPARATE AND DISTINCT FROM ITS MEMBERS.  ALL
FUNDS  AND  RESERVES  OF  THE  ASSOCIATION  SHALL BE SEPARATELY HELD AND
INVESTED. IT SHALL MAINTAIN COMPLETE ACCOUNTS OF ALL MONIES RECEIVED AND
ALL LOSSES AND EXPENSES INCURRED  IN  CONNECTION  WITH  ITS  OPERATIONS,
INCLUDING INVESTMENT INCOME ON PREMIUMS RECEIVED FROM INSUREDS.
  (C)  THE PURPOSE OF THE ASSOCIATION IS TO PROVIDE A MARKET FOR MEDICAL
MALPRACTICE INSURANCE FOR THOSE INSUREDS UNABLE TO OBTAIN SUCH  COVERAGE
IN  THE  VOLUNTARY  MARKET AND SUBJECT TO REGULATION PURSUANT TO SECTION
TWO THOUSAND THREE HUNDRED SEVENTEEN OF THIS CHAPTER.
  (D) THE MEDICAL MALPRACTICE  INSURANCE  POOL  OF  NEW  YORK  STATE  IS
DISSOLVED AS OF THE EFFECTIVE DATE OF THIS ARTICLE AND ALL OF THE POOL'S
ASSETS  AND  LIABILITIES WILL BE ASSUMED BY THE MEDICAL LIABILITY INSUR-
ANCE ASSOCIATION AS OF SUCH DATE. THE MEDICAL LIABILITY INSURANCE  ASSO-

A. 2908                             3

CIATION SHALL ENTER INTO ANY NECESSARY AGREEMENTS WITH THE MEDICAL MALP-
RACTICE  INSURANCE POOL OF NEW YORK STATE TO ACCOMPLISH: THE DISSOLUTION
OF THE POOL; THE ASSUMPTION BY THE ASSOCIATION OF THE POOL'S ASSETS  AND
LIABILITIES;  AND, THE REMOVAL OF THE POOL'S ASSETS AND LIABILITIES FROM
MEMBERS' BOOKS. THE HISTORICAL NET IMPACT OF  THE  POOL  ON  A  MEMBER'S
FINANCIAL  STATEMENT  AS  OF THE EFFECTIVE DATE OF THIS ARTICLE SHALL BE
REMOVED BY REDUCING TO ZERO ANY ASSET OR LIABILITY DIRECTLY RELATING  TO
THE  POOL  AND  REFLECTED  IN  THE  MEMBER'S MOST RECENT FILED STATUTORY
FINANCIAL STATEMENT, WITH ANY NET DIFFERENCE REFLECTED AS  A  CHARGE  OR
CREDIT TO SURPLUS.
  (E)  THE ASSOCIATION SHALL, PURSUANT TO THE PROVISIONS OF THIS ARTICLE
AND THE PLAN OF OPERATION WITH RESPECT TO MEDICAL MALPRACTICE INSURANCE,
HAVE THE POWER:
  (1) TO ISSUE, OR TO CAUSE TO  BE  ISSUED,  POLICIES  OF  INSURANCE  TO
PHYSICIAN,  DENTIST  AND PODIATRIST APPLICANTS SUBJECT TO PRIMARY LIMITS
SPECIFIED IN THE PLAN OF OPERATION NOT IN EXCESS OF  ONE  MILLION  THREE
HUNDRED  THOUSAND  DOLLARS  FOR EACH CLAIMANT UNDER ONE POLICY AND THREE
MILLION NINE HUNDRED THOUSAND DOLLARS FOR ALL CLAIMANTS UNDER ONE POLICY
IN ANY ONE YEAR, AND EXCESS COVERAGE AS PROVIDED IN THIS PARAGRAPH. EACH
APPLICANT SHALL BE ENTITLED  TO  PURCHASE  A  POLICY  PROVIDING  PRIMARY
LIMITS NOT TO EXCEED ONE MILLION THREE HUNDRED THOUSAND DOLLARS FOR EACH
CLAIMANT  AND THREE MILLION NINE HUNDRED THOUSAND DOLLARS FOR ALL CLAIM-
ANTS IN ANY ONE YEAR. IN ADDITION, ANY APPLICANT INSURED BY THE  ASSOCI-
ATION  IN  AN  AMOUNT EQUAL TO OR GREATER THAN ONE MILLION THREE HUNDRED
THOUSAND DOLLARS FOR EACH CLAIMANT AND THREE MILLION NINE HUNDRED  THOU-
SAND  DOLLARS  FOR  ALL CLAIMANTS IN ANY ONE YEAR OR ANY OTHER APPLICANT
COVERED UNDER A POLICY OR POLICIES  PROVIDING  SUCH  PRIMARY  LEVELS  OF
INSURANCE AGAINST LIABILITY FOR MEDICAL, DENTAL OR PODIATRIC MALPRACTICE
THAT IS ISSUED BY AN AUTHORIZED INSURER, SHALL BE ENTITLED TO PURCHASE A
POLICY  FROM  THE  ASSOCIATION PROVIDING EXCESS COVERAGE OF AT LEAST ONE
MILLION DOLLARS PER CLAIMANT AND THREE MILLION DOLLARS FOR ALL CLAIMANTS
IN ANY ONE YEAR.
  (2) TO ISSUE, OR CAUSE TO BE ISSUED, POLICIES OF INSURANCE,  INCLUDING
INCIDENTAL LIABILITY COVERAGES, TO HOSPITAL APPLICANTS SUBJECT TO LIMITS
SPECIFIED  IN  THE  PLAN  OF  OPERATION WITH LIMITS NOT IN EXCESS OF ONE
MILLION DOLLARS FOR EACH CLAIMANT AND SIX MILLION DOLLARS FOR ALL CLAIM-
ANTS IN ANY ONE YEAR; PROVIDED THAT POLICIES FOR COVERAGE IN  EXCESS  OF
ONE  MILLION DOLLARS FOR EACH CLAIMANT AND THREE MILLION DOLLARS FOR ALL
CLAIMANTS IN ANY ONE YEAR SHALL BE ISSUED ONLY  UPON  THE  OBTAINING  OF
REINSURANCE  FOR SUCH EXCESS COVERAGE FOR THE TERM OF THE POLICY AND THE
EXCESS COVERAGE SHALL REMAIN IN EFFECT ONLY SO LONG AS REINSURANCE IS IN
EFFECT. THE ASSOCIATION SHALL OBTAIN SUCH REINSURANCE, IF AVAILABLE, FOR
COVERAGE IN EXCESS OF ONE MILLION DOLLARS FOR EACH  CLAIMANT  AND  THREE
MILLION  DOLLARS  FOR  ALL CLAIMANTS IN ANY ONE YEAR. IF THE ASSOCIATION
FAILS TO OBTAIN SUCH REINSURANCE, THE SUPERINTENDENT MAY ORDER IT TO  DO
SO  FOR  THE  TERM  OF THE POLICY FROM SOURCES FOUND BY HIM OR HER TO BE
AVAILABLE. THE RATES CHARGED BY THE ASSOCIATION FOR COVERAGE  IN  EXCESS
OF  THREE  MILLION DOLLARS SHALL NOT BE SUBJECT TO PRIOR APPROVAL BY THE
SUPERINTENDENT, AND SHALL EQUAL THE CHARGES TO THE ASSOCIATION FOR  SUCH
REINSURANCE.
  (3)  TO  UNDERWRITE  SUCH INSURANCE AND TO ADJUST AND PAY LOSSES OR TO
APPOINT SERVICE COMPANIES TO PERFORM THOSE FUNCTIONS.
  S 5503. PLAN OF  OPERATION.  (A)  THE  ASSOCIATION  SHALL  OPERATE  IN
ACCORDANCE WITH A PLAN OF OPERATION APPROVED BY THE SUPERINTENDENT WHICH
PROVIDES FOR ECONOMIC, FAIR AND NONDISCRIMINATORY ADMINISTRATION AND FOR
THE PROMPT AND EFFICIENT PROVISION OF MEDICAL MALPRACTICE INSURANCE.

A. 2908                             4

  (B)  THE PLAN SHALL CONTAIN OTHER PROVISIONS INCLUDING BUT NOT LIMITED
TO ESTABLISHMENT OF NECESSARY FACILITIES, MANAGEMENT OF THE ASSOCIATION,
ASSESSMENT OF MEMBERS TO DEFRAY LOSSES AND  EXPENSES,  SERVICE  CHARGES,
ACCEPTANCE AND CESSION OF REINSURANCE, APPOINTMENT OF SERVICING CARRIERS
OR  OTHER  SERVICING ARRANGEMENTS AND PROCEDURES FOR DETERMINING AMOUNTS
OF INSURANCE TO BE PROVIDED BY THE ASSOCIATION.
  (C) AMENDMENTS TO THE PLAN OF OPERATION MAY BE MADE BY  THE  BOARD  OF
DIRECTORS OF THE ASSOCIATION, SUBJECT TO THE APPROVAL OF THE SUPERINTEN-
DENT, OR SHALL BE MADE AT THE DIRECTION OF THE SUPERINTENDENT.
  (D) THE ASSOCIATION SHALL BE SUBJECT TO THE PROVISIONS OF THIS CHAPTER
APPLICABLE TO PROPERTY/CASUALTY INSURERS IN THE CONDUCT OF ITS BUSINESS,
IN  ORDER  TO PROVIDE FOR THE FAIR TREATMENT OF POLICYHOLDERS AND CLAIM-
ANTS.
  (E) THE ASSOCIATION SHALL, ON THE  EFFECTIVE  DATE  OF  THIS  ARTICLE,
ASSUME  THE  PLAN OF OPERATION PREVIOUSLY APPROVED FOR THE MEDICAL MALP-
RACTICE INSURANCE ASSOCIATION OF NEW YORK STATE UNTIL SUCH TIME  AS  THE
PLAN MAY BE AMENDED.
  S  5504. POLICIES. (A) NO POLICY FORM SHALL BE USED BY THE ASSOCIATION
UNLESS IT HAS BEEN FILED WITH THE SUPERINTENDENT AND EITHER  HE  OR  SHE
HAS  APPROVED  IT,  OR  THIRTY  DAYS  HAVE ELAPSED AND HE OR SHE HAS NOT
DISAPPROVED IT AS MISLEADING OR VIOLATIVE OF PUBLIC POLICY.
  (B)(1) EXCEPT AS PROVIDED IN PARAGRAPH  TWO  OF  THIS  SUBSECTION,  NO
CANCELLATION  NOTICE  OR NONRENEWAL NOTICE SHALL BE EFFECTIVE UNLESS THE
ASSOCIATION, AT LEAST FORTY-FIVE DAYS PRIOR TO  THE  EFFECTIVE  DATE  OF
SUCH  CANCELLATION  OR THE END OF THE POLICY PERIOD, AS THE CASE MAY BE,
MAILS OR DELIVERS SUCH NOTICE TO THE INSURED AT THE ADDRESS SHOWN ON THE
POLICY AND TO SUCH INSURED'S LICENSED REPRESENTATIVE.
  (2) WHERE THE CANCELLATION IS FOR NONPAYMENT OF  PREMIUM  OR  LOSS  OF
LICENSE  TO  PRACTICE  OR,  IF  THE  INSURED IS A HOSPITAL, IT NO LONGER
POSSESSES A  VALID  OPERATING  CERTIFICATE  UNDER  SECTION  TWENTY-EIGHT
HUNDRED ONE-A OF THE PUBLIC HEALTH LAW, SUCH CANCELLATION NOTICE MUST BE
MAILED OR DELIVERED AT LEAST FIFTEEN DAYS PRIOR TO THE EFFECTIVE DATE OF
THE CANCELLATION.
  (3)  UPON  WRITTEN  REQUEST  BY  AN INSURED OR SUCH INSURED'S LICENSED
REPRESENTATIVE, THE ASSOCIATION SHALL MAIL OR DELIVER  LOSS  INFORMATION
AS  PROVIDED  IN  SUBSECTION  (G) OF SECTION THREE THOUSAND FOUR HUNDRED
TWENTY-SIX OF THIS CHAPTER TO SUCH INSURED OR  SUCH  INSURED'S  LICENSED
REPRESENTATIVE WITHIN TEN BUSINESS DAYS OF SUCH REQUEST.
  (4)  ALL  CANCELLATION  NOTICES  OR NONRENEWAL NOTICES SHALL STATE THE
GROUNDS UPON WHICH THE POLICY IS CANCELLED OR NONRENEWED AND THAT,  UPON
WRITTEN REQUEST OF AN INSURED OR SUCH INSURED'S LICENSED REPRESENTATIVE,
THE  ASSOCIATION  WILL  FURNISH  THE  FACTS ON WHICH THE CANCELLATION OR
NONRENEWAL IS BASED. GROUNDS FOR NONRENEWAL SHALL BE LIMITED TO THE SAME
GROUND AS FOR  CANCELLATION.  ALL  CANCELLATION  NOTICES  OR  NONRENEWAL
NOTICES SHALL ALSO PROVIDE OR BE ACCOMPANIED BY A STATEMENT ADVISING THE
INSURED  OF  THE  AVAILABILITY  OF  THE  LOSS  INFORMATION  SPECIFIED IN
SUBSECTION (G) OF SECTION THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF THIS
CHAPTER.
  (C) A POLICY OF INSURANCE ISSUED BY THE ASSOCIATION MAY BE  TERMINATED
OTHER THAN FOR NON-PAYMENT OF PREMIUMS IF THE INSURED:
  (1)  IS NOT COMPLYING SUBSTANTIALLY WITH ANY TERM OR CONDITION OF SUCH
CONTRACT.
  (2) HAS KNOWINGLY MADE, OR CAUSED TO BE MADE, ANY FALSE  STATEMENT  OR
MISREPRESENTATION OF A MATERIAL FACT FOR USE IN APPLYING FOR INSURANCE.
  (D) ANY TERMINATION SHALL APPLY TO CARE OR SERVICES PROVIDED AFTER THE
EFFECTIVE  DATE  OF  TERMINATION,  EXCEPT  THAT  INSURANCE  COVERAGE MAY

A. 2908                             5

CONTINUE FOR UP TO THIRTY DAYS AFTER TERMINATION WITH RESPECT TO CARE OR
SERVICES TO PATIENTS WHICH ARE A CONTINUATION OF A TREATMENT BEGUN PRIOR
TO THE EFFECTIVE DATE OF TERMINATION.
  (E)(1)  THE ASSOCIATION SHALL ISSUE OR RENEW POLICIES OF MEDICAL MALP-
RACTICE INSURANCE FOR PHYSICIANS ON A CLAIMS-MADE OR  OCCURRENCE  BASIS,
AS PRESCRIBED BY THE SUPERINTENDENT BY REGULATION.
  (2) A CLAIMS-MADE POLICY SHALL CONTAIN THE FOLLOWING PROVISIONS:
  (A) IF THE INSURED HAS PURCHASED A CLAIMS-MADE POLICY FROM AN ADMITTED
INSURER  OR  THE  ASSOCIATION  FOR  A PERIOD OF FIVE OR MORE CONSECUTIVE
YEARS AND THE INSURED, AFTER ATTAINING THE AGE OF SIXTY-FIVE  OR  OLDER,
RETIRES  PERMANENTLY AND TOTALLY FROM THE PRACTICE OF MEDICINE OR IF THE
INSURED HAS PURCHASED A CLAIMS-MADE POLICY FOR A PERIOD OF TEN  OR  MORE
CONSECUTIVE YEARS AND THE INSURED, AFTER ATTAINING THE AGE OF FIFTY-FIVE
OR OLDER, RETIRES PERMANENTLY FROM THE PRACTICE OF MEDICINE, THE ASSOCI-
ATION SHALL, WITHOUT CHARGING AN ADDITIONAL PREMIUM THEREFOR AT THE TIME
OF,  OR  SUBSEQUENT  TO,  SUCH  RETIREMENT,  ALSO  COVER ALL OCCURRENCES
BETWEEN THE INCEPTION DATE OF THE FIRST  SUCH  CONSECUTIVE  POLICY  FROM
SUCH  ASSOCIATION  AND  SUCH  RETIREMENT  DATE  WHICH, SUBSEQUENT TO THE
TERMINATION DATE, ARE REPORTED IN ACCORDANCE WITH STATUTORY  AND  POLICY
REQUIREMENTS;
  (B)  IF THE INSURED DIES OR BECOMES PERMANENTLY DISABLED AND UNABLE TO
PRACTICE MEDICINE WHILE COVERED BY SUCH POLICY  THE  ASSOCIATION  SHALL,
WITHOUT  CHARGING  AN  ADDITIONAL  PREMIUM  THEREFOR  AT THE TIME OF, OR
SUBSEQUENT TO, SUCH EVENT, ALSO COVER ALL OCCURRENCES BETWEEN THE INCEP-
TION DATE OF THE FIRST SUCH CONSECUTIVE POLICY FROM SUCH ASSOCIATION AND
THE DEATH OR DISABILITY OF THE INSURED; AND
  (C) THE ASSOCIATION SHALL MAKE AVAILABLE AND SHALL ADVISE THE  INSURED
OF  THE  AVAILABILITY  AND  COST OF COVERAGE FOR OCCURRENCES BETWEEN THE
INCEPTION DATE OF THE FIRST SUCH CONSECUTIVE POLICY  FROM  SUCH  ASSOCI-
ATION AND THE TERMINATION OF SUCH POLICY WHICH, SUBSEQUENT TO THE TERMI-
NATION  DATE,  ARE  REPORTED  IN  ACCORDANCE  WITH  STATUTORY AND POLICY
REQUIREMENTS, PURSUANT TO SUCH TERMS AND CONDITIONS AS MAY BE  SPECIFIED
BY  THE  SUPERINTENDENT BY REGULATION. THE INSURED SHALL HAVE THE OPTION
OF PURCHASING SUCH COVERAGE EITHER IN A SINGLE PAYMENT OR IN THREE ANNU-
AL INSTALLMENTS WITH AN ADDITIONAL FINANCE CHARGE.
  (3) SUCH REGULATION SHALL ALSO PROVIDE THAT  IF  THE  COVERAGE  OF  AN
INSURED  WHO  CONTINUES TO PRACTICE IN THIS STATE IS TRANSFERRED FROM AN
ADMITTED INSURER OR THE ASSOCIATION TO ANOTHER ADMITTED INSURER  OR  THE
ASSOCIATION  WITHOUT  ANY GAP IN COVERAGE, THE INSURED SHALL BE ENTITLED
TO THE BENEFITS OF THIS PROVISION AS IF SUCH INSURED  HAD  BEEN  CONTIN-
UOUSLY  COVERED  BY  THE  SUCCESSOR  ENTITY  DURING THE ENTIRE PERIOD OF
CONSECUTIVE YEARS OF COVERAGE.
  (F) THE ASSOCIATION SHALL, ON THE  EFFECTIVE  DATE  OF  THIS  ARTICLE,
ASSUME AND UTILIZE THE POLICY FORMS APPROVED FOR THE MEDICAL MALPRACTICE
INSURANCE  POOL OF NEW YORK STATE UNTIL SUCH TIME AS THEY MAY BE AMENDED
BY THE ASSOCIATION.
  S 5505. RATES. (A) THE RATES, RATING PLANS, RATING RULES, RATING CLAS-
SIFICATIONS, TERRITORIES AND  STATISTICS  APPLICABLE  TO  THE  INSURANCE
WRITTEN  BY  THE ASSOCIATION SHALL BE SUBJECT TO ARTICLE TWENTY-THREE OF
THIS CHAPTER, GIVING DUE CONSIDERATION TO THE PAST AND PROSPECTIVE  LOSS
AND  EXPENSE EXPERIENCE FOR MEDICAL MALPRACTICE INSURANCE WRITTEN AND TO
BE WRITTEN IN THIS STATE, TRENDS IN THE FREQUENCY AND SEVERITY OF  LOSS-
ES, THE INVESTMENT INCOME OF THE ASSOCIATION, AND SUCH OTHER INFORMATION
AS THE SUPERINTENDENT MAY REQUIRE.
  (B) ALL RATES SHALL BE ON AN ACTUARIALLY SOUND BASIS, BE CALCULATED TO
BE  SELF-SUPPORTING,  BE  BASED  UPON REASONABLE STANDARDS, AND MAY GIVE

A. 2908                             6

CONSIDERATION  TO  SUCH  FACTORS  AS  THE  EXPERIENCE  OF  THE  INSURED,
GEOGRAPHICAL AREA AND SPECIALTIES OF PRACTICE.  THE SUPERINTENDENT SHALL
TAKE ALL APPROPRIATE STEPS TO MAKE AVAILABLE TO THE ASSOCIATION THE LOSS
AND  EXPENSE  EXPERIENCE OF INSURERS PREVIOUSLY WRITING MEDICAL MALPRAC-
TICE INSURANCE IN THIS STATE.  THE PREMIUMS SHALL BE FIXED AT THE LOWEST
POSSIBLE RATES CONSISTENT WITH THE MAINTENANCE OF SOLVENCY OF THE  ASSO-
CIATION AND OF REASONABLE RESERVES AND SURPLUS THEREFOR.
  (C)  THE  ASSOCIATION  SHALL,  ON  THE EFFECTIVE DATE OF THIS ARTICLE,
ASSUME AND UTILIZE THE RATES, RATING PLANS, RATING RULES, RATING CLASSI-
FICATIONS TERRITORIES AND STATISTICS APPROVED FOR AND APPLICABLE TO  THE
MEDICAL  MALPRACTICE INSURANCE POOL OF NEW YORK STATE UNTIL SUCH TIME AS
THEY MAY BE AMENDED BY THE ASSOCIATION.
  S 5506. PROCEDURES. (A) ANY LICENSED PHYSICIAN,  DENTIST,  PODIATRIST,
CERTIFIED  NURSE-MIDWIFE,  CERTIFIED  REGISTERED  NURSE  ANESTHETIST  OR
HOSPITAL IS ENTITLED TO APPLY TO THE ASSOCIATION FOR  COVERAGE  PURSUANT
TO THIS ARTICLE.  APPLICATION MAY BE MADE DIRECTLY TO THE ASSOCIATION BY
THE  APPLICANT,  IN WHICH EVENT NO SERVICE FEE SHALL BE CHARGED.  IF THE
APPLICANT AUTHORIZES A BROKER OR AGENT TO MAKE THE APPLICATION, THE ONLY
CHARGE FOR SUCH SERVICES SHALL BE A SERVICE FEE AS LIMITED BY  THE  PLAN
OF  OPERATION  AND  IN  COMPLIANCE  WITH  THE  PROCEDURE  ESTABLISHED IN
SUBSECTIONS (C) AND (D) OF SECTION TWO THOUSAND ONE HUNDRED NINETEEN  OF
THIS CHAPTER.
  (B)  A POLICY SHALL BE ISSUED WHEN THE ASSOCIATION DETERMINES THAT THE
APPLICANT IS DULY LICENSED AND  RECEIVES  THE  PREMIUM  OR  THE  PORTION
PRESCRIBED IN THE PLAN OF OPERATION.
  S  5507.  PARTICIPATION.  EVERY  MEMBER  OF  THE  ASSOCIATION SHALL BE
SUBJECT TO ASSESSMENT ON  THE  BASIS  DESCRIBED  IN  SUBSECTION  (C)  OF
SECTION  FIVE  THOUSAND  FIVE  HUNDRED  THIRTEEN  OF THIS ARTICLE IN THE
PROPORTION THAT THE NET DIRECT PREMIUMS OF THE  MEMBER  (EXCLUDING  THAT
PORTION  OF  PREMIUMS  ATTRIBUTABLE TO THE OPERATION OF THE ASSOCIATION)
WRITTEN DURING THE PRECEDING CALENDAR YEAR BEARS TO  THE  AGGREGATE  NET
DIRECT PREMIUMS WRITTEN IN THIS STATE BY ALL MEMBERS OF THE ASSOCIATION.
EACH MEMBER'S PARTICIPATION IN THE ASSOCIATION SHALL BE DETERMINED ANNU-
ALLY ON THE BASIS OF SUCH NET DIRECT PREMIUMS WRITTEN DURING THE PRECED-
ING  CALENDAR  YEAR,  AS  REPORTED  IN  THE  ANNUAL STATEMENTS AND OTHER
REPORTS FILED BY THE MEMBER WITH THE SUPERINTENDENT.
  S 5508. DIRECTORS. (A) THE ASSOCIATION SHALL BE GOVERNED BY A BOARD OF
SEVEN VOTING DIRECTORS.  THE SUPERINTENDENT OR HIS OR HER  DULY  AUTHOR-
IZED  REPRESENTATIVE  SHALL  SERVE  AS A NON-VOTING DIRECTOR.  THE SEVEN
DIRECTORS SHALL BE ELECTED BY CUMULATIVE VOTING BY THE  MEMBERS  OF  THE
ASSOCIATION, WHOSE VOTES IN SUCH ELECTION SHALL BE WEIGHED IN ACCORDANCE
WITH  EACH  MEMBER'S  NET  DIRECT  PREMIUMS WRITTEN DURING THE PRECEDING
CALENDAR YEAR. THE SEVEN DIRECTORS SERVING ON THE BOARD SHALL BE ELECTED
ANNUALLY AT A MEETING OF THE MEMBERS.
  (B) THE DIRECTORS SHALL SERVE WITHOUT COMPENSATION BUT SHALL BE  REIM-
BURSED  FOR THEIR ACTUAL AND NECESSARY EXPENSES INCURRED IN THE PERFORM-
ANCE OF THEIR DUTIES UNDER THIS ARTICLE.
  S 5509. APPEALS. ANY APPLICANT TO THE ASSOCIATION, ANY PERSON  INSURED
UNDER  THIS  ARTICLE, OR THEIR REPRESENTATIVES, OR ANY AFFECTED INSURER,
MAY APPEAL TO THE SUPERINTENDENT WITHIN THIRTY DAYS  AFTER  ANY  RULING,
ACTION  OR  DECISION BY OR ON BEHALF OF THE ASSOCIATION, WITH RESPECT TO
THOSE ITEMS THE PLAN OF OPERATION DEFINED AS APPEALABLE MATTERS.
  S 5510. ANNUAL STATEMENT. (A) THE ASSOCIATION SHALL  ANNUALLY  FILE  A
STATEMENT IN THE OFFICE OF THE SUPERINTENDENT ON OR BEFORE THE FIRST DAY
OF  MARCH.  THE  STATEMENT  SHALL  BE  IN A FORM APPROVED BY AND CONTAIN

A. 2908                             7

INFORMATION PRESCRIBED BY THE SUPERINTENDENT WITH RESPECT TO ITS  TRANS-
ACTIONS, CONDITION, OPERATIONS AND AFFAIRS DURING THE PRECEDING YEAR.
  (B)  THE  SUPERINTENDENT  MAY, AT ANY TIME, REQUIRE THE ASSOCIATION TO
FURNISH ADDITIONAL INFORMATION WITH RESPECT TO ITS TRANSACTIONS,  CONDI-
TION  OR  ANY MATTER CONNECTED THEREWITH WHICH HE OR SHE CONSIDERS TO BE
MATERIAL AND WHICH WILL ASSIST HIM OR HER IN EVALUATING THE SCOPE, OPER-
ATION AND EXPERIENCE OF THE ASSOCIATION.
  S 5511. EXAMINATIONS. (A) THE SUPERINTENDENT SHALL MAKE AN EXAMINATION
INTO THE AFFAIRS OF THE ASSOCIATION AT LEAST ANNUALLY.  THE  EXAMINATION
SHALL  BE  CONDUCTED  AND  THE  REPORT FILED IN THE MANNER PRESCRIBED IN
ARTICLE THREE OF THIS CHAPTER.
  (B) THE EXPENSES OF THE EXAMINATION SHALL BE PAID BY THE ASSOCIATION.
  S 5512. IMMUNITY. NO LIABILITY OR CAUSE OF ACTION SHALL EXIST  AGAINST
THE  ASSOCIATION,  ITS AGENTS OR EMPLOYEES, THE SUPERINTENDENT OR HIS OR
HER AUTHORIZED REPRESENTATIVES OR ANY LICENSED AGENT OR BROKER  FOR  ANY
STATEMENTS MADE IN GOOD FAITH BY THEM DURING ANY PROCEEDINGS OR CONCERN-
ING ANY MATTERS WITHIN THE SCOPE OF THIS ARTICLE.
  S  5513. OTHER PROVISIONS. (A) THE ASSOCIATION SHALL NOT BE CONSIDERED
AN AUTHORIZED INSURER FOR THE PURPOSES OF ARTICLE  SEVENTY-SIX  OF  THIS
CHAPTER.
  (B)  THE  ASSOCIATION  SHALL  NEITHER  BE SUBJECT TO THE PROVISIONS OF
ARTICLE SEVENTY-FOUR OF THIS CHAPTER NOR BE  REQUIRED  TO  MAINTAIN  ANY
MINIMUM SURPLUS.
  (C)  THE  ASSOCIATION  SHALL  CONDUCT  ITS  BUSINESS SO LONG AS IT HAS
ASSETS SUFFICIENT TO PAY ITS EXPENSES AND CLAIMS  ARISING  UNDER  EITHER
POLICIES  ISSUED BY THE ASSOCIATION OR ASSUMED FROM THE MEDICAL MALPRAC-
TICE INSURANCE POOL OF NEW YORK STATE.  THE ASSOCIATION  IS  AUTHORIZED,
SUBJECT  TO  THE  WRITTEN  PRIOR  APPROVAL  OF THE SUPERINTENDENT AND AS
CIRCUMSTANCES AND CASH FLOW DEMANDS REQUIRE, TO ASSESS AND ISSUE A  CASH
CALL TO ITS MEMBERS ON AN ANNUAL BASIS SUFFICIENT TO PROVIDE THE ASSOCI-
ATION  WITH  THE  FUNDS  NECESSARY,  WHEN  COMBINED  WITH PREMIUMS TO BE
RECEIVED, TO CONDUCT ITS BUSINESS  DURING  SUCH  YEAR.  EACH  ASSESSMENT
SHALL  BE FOR ONE YEAR ONLY AND MEMBERS SHALL NOT ANTICIPATE ANY ASSESS-
MENTS NOT APPROVED  BY  THE  SUPERINTENDENT  OR  ANTICIPATE  ANY  FUTURE
ASSESSMENTS IN PREPARING THEIR FINANCIAL STATEMENTS. ANY SUCH ASSESSMENT
ON  A MEMBER SHALL BE INCLUDED IN SUCH MEMBER'S FUTURE RATE REQUESTS AND
SHALL BE INCLUDED IN ANY POLICY SURCHARGE IMPOSED ON A  MEMBER  PURSUANT
TO  THE  PROVISIONS OF SECTION FORTY OF CHAPTER TWO HUNDRED SIXTY-SIX OF
THE LAWS OF NINETEEN HUNDRED EIGHTY-SIX, AS AMENDED.
  S 5514. EVALUATION. THE SUPERINTENDENT SHALL FROM TIME TO TIME  REPORT
TO  THE  GOVERNOR  AND  THE LEGISLATURE EVALUATING THE OPERATION OF THIS
ARTICLE.
  S 2. Subsections (b) and (c) of section 7436 of the insurance law,  as
added  by  chapter  266  of  the  laws  of  1986, are amended to read as
follows:
  (b) If the order of liquidation,  rehabilitation  or  conservation  is
entered against an insurer which has issued medical malpractice policies
on  a  claims-made  basis, then notwithstanding the entry of such order,
the superintendent shall comply with the  requirements  for  claims-made
policies  as  set forth in subsections (b), (c) and (d) of section three
thousand four hundred thirty-six of this chapter  [and  paragraphs  two,
three  and  four of subsection (f) of section five thousand five hundred
four of this chapter].
  (c) In the event that an insured, who has been issued a medical  malp-
ractice  policy  on  a  claim-made  basis by an insurer against which an
order of liquidation has been entered pursuant to this article,  chooses

A. 2908                             8

to  purchase coverage from a successor insurer, the superintendent shall
expedite the transfer of coverage that  has  been  accrued,  for  claims
based  on  occurrences  prior to the termination of the policy which are
reported  after  the termination of the policy, to the successor insurer
of each insured, in accordance  with  the  requirement  for  claims-made
policies  as  set forth in subsections (b), (c) and (d) of section three
thousand four hundred thirty-six [and paragraphs two, three and four  of
subsection (f) of section five thousand five hundred four] of this chap-
ter.
  S 3. Subparagraph (H) of paragraph 1 of subsection (a) of section 7603
of  the  insurance law, as amended by chapter 89 of the laws of 1989, is
amended to read as follows:
  (H) any obligation for the return of unearned premiums on  any  policy
specified  in subparagraphs (A), (B), (C), (D), (E), (F) and (G) hereof,
which shall, for the purposes of this article, be deemed to include  the
obligations  of an insurer and the medical malpractice insurance associ-
ation under medical malpractice claims-made policies to pay to successor
entities the actuarially appropriate amounts for the provision of cover-
age to comply with the requirements of subsections (b), (c) and  (d)  of
section  three  thousand  four  hundred  thirty-six [and paragraphs two,
three and four of subsection (f) of section five thousand  five  hundred
four] of this chapter.
  S  4. Paragraph 1 of subsection (a) of section 9111-b of the insurance
law, as amended by chapter 147 of the laws of 2000, is amended  to  read
as follows:
  (1)  For  the  privilege  of  conducting business in this state and in
addition to any other requirements  therefor,  every  insurance  company
subject  to  the  franchise  tax  imposed  by subdivision (a) of section
fifteen hundred ten of the tax law, other than insurance companies whose
premiums are received solely as consideration for  accident  and  health
insurance  policies,  shall  pay  a  franchise tax of one percent of all
gross direct premiums, less return premiums thereon, written during  the
"event  year",  as  such  term  is defined in the following sentence, on
risks located or residing in  this  state.  For  the  purposes  of  this
section,  "event  year"  shall  mean (A) the calendar year preceding the
February fifth on which the superintendent fails to  provide  a  certif-
ication  to  the  [state]  commissioner of taxation and finance that the
return of premium amounts to the hospital excess liability pool that has
been authorized by subsection (a) of section five thousand five  hundred
seventeen-a  of  this  chapter  has  been  made or (B) the calendar year
preceding the year in which a final judicial determination  invalidating
some or all of the provisions of such section five thousand five hundred
seventeen-a requires a return from the hospital excess liability pool of
any or all of the premium amounts returned to such pool pursuant to such
section  five  thousand  five  hundred seventeen-a [or (C) calendar year
nineteen hundred ninety-nine if the superintendent directs and the asso-
ciation fails to make the transfer and deposit to  the  hospital  excess
liability  pool pursuant to subsection (d) of section five thousand five
hundred nine of this chapter or (D) the calendar year preceding the year
in which a final judicial determination invalidating some or all of  the
provisions  of  such  section five thousand five hundred nine requires a
return from the hospital excess liability pool of  any  or  all  of  the
amounts  transferred  and  deposited to such pool pursuant to subsection
(d) of section five thousand five hundred nine].
  S 5. This act shall  take  effect  on  the  first  of  September  next
succeeding the date on which it shall have become a law.