Senate Bill No. 122–Senators Titus and Wiener
CHAPTER..........
AN ACT relating to malpractice; revising various provisions relating to filings and rates for certain insurers that issue policies of malpractice insurance; providing persons with the right to provide testimony at certain hearings before the Commissioner of Insurance under certain circumstances; establishing various requirements relating to policies of malpractice insurance; authorizing the Commissioner to protect essential medical specialties from certain adverse actions regarding policies of malpractice insurance; requiring the Commissioner to collect certain information and to conduct certain studies relating to policies of malpractice insurance; providing that certain information in certain settlement agreements must not be made confidential; providing penalties; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. NRS 686B.040 is hereby amended to read as
1-2 follows:
1-3 686B.040 [The]
1-4 1. Except as otherwise provided in subsection 2, the
1-5 Commissioner may by rule exempt any person or class of persons or
1-6 any market segment from any or all of the provisions of NRS
1-7 686B.010 to 686B.1799, inclusive, if and to the extent that he finds
1-8 their application unnecessary to achieve the purposes of those
1-9 sections.
1-10 2. The Commissioner may not, by rule or otherwise, exempt
1-11 an insurer from the provisions of NRS 686B.010 to 686B.1799,
1-12 inclusive, with regard to insurance covering the liability of a
1-13 practitioner licensed pursuant to chapter 630, 631, 632 or 633 of
1-14 NRS for a breach of his professional duty toward a patient.
1-15 Sec. 2. NRS 686B.070 is hereby amended to read as follows:
1-16 686B.070 1. Every authorized insurer and every rate service
1-17 organization licensed under NRS [686B.130] 686B.140 which has
1-18 been designated by any insurer for the filing of rates under
1-19 subsection 2 of NRS 686B.090 shall file with the Commissioner all:
1-20 [1.] (a) Rates and proposed increases thereto;
1-21 [2.] (b) Forms of policies to which the rates apply;
1-22 [3.] (c) Supplementary rate information; and
1-23 [4.] (d) Changes and amendments thereof,
1-24 made by it for use in this state.
2-1 2. If an insurer makes a filing for a proposed increase in a
2-2 rate for insurance covering the liability of a practitioner licensed
2-3 pursuant to chapter 630, 631, 632 or 633 of NRS for a breach of
2-4 his professional duty toward a patient, the insurer shall not
2-5 include in the filing any component that is directly or indirectly
2-6 related to the following:
2-7 (a) Capital losses, diminished cash flow from any dividends,
2-8 interest or other investment returns, or any other financial loss
2-9 that is materially outside of the claims experience of the
2-10 professional liability insurance industry, as determined by the
2-11 Commissioner.
2-12 (b) Losses that are the result of any criminal or fraudulent
2-13 activities of a director, officer or employee of the insurer.
2-14 If the Commissioner determines that a filing includes any such
2-15 component, the Commissioner shall, pursuant to NRS 686B.110,
2-16 disapprove the proposed increase, in whole or in part, to the extent
2-17 that the proposed increase relies upon such a component.
2-18 Sec. 3. NRS 686B.090 is hereby amended to read as follows:
2-19 686B.090 1. An insurer shall establish rates and
2-20 supplementary rate information for any market segment based on
2-21 the factors in NRS 686B.060. If an insurer has insufficient
2-22 creditable loss experience, it may use rates and supplementary rate
2-23 information prepared by a rate service organization, with
2-24 modification for its own expense and loss experience.
2-25 2. An insurer may discharge its obligation under subsection 1
2-26 of NRS 686B.070 by giving notice to the Commissioner that it uses
2-27 rates and supplementary rate information prepared by a designated
2-28 rate service organization, with such information about modifications
2-29 thereof as are necessary fully to inform the Commissioner. The
2-30 insurer’s rates and supplementary rate information shall be deemed
2-31 those filed from time to time by the rate service organization,
2-32 including any amendments thereto as filed, subject [, however,] to
2-33 the modifications filed by the insurer.
2-34 Sec. 4. NRS 686B.110 is hereby amended to read as follows:
2-35 686B.110 1. The Commissioner shall consider each proposed
2-36 increase or decrease in the rate of any kind or line of insurance or
2-37 subdivision thereof filed with him pursuant to subsection 1 of NRS
2-38 686B.070. If the Commissioner finds that a proposed increase will
2-39 result in a rate which is not in compliance with NRS 686B.050 [,] or
2-40 subsection 2 of NRS 686B.070, he shall disapprove the proposal.
2-41 The Commissioner shall approve or disapprove each proposal no
2-42 later than 60 days after it is determined by him to be complete
2-43 pursuant to subsection 4. If the Commissioner fails to approve or
2-44 disapprove the proposal within that period, the proposal shall be
2-45 deemed approved.
3-1 2. Whenever an insurer has no legally effective rates as a result
3-2 of the Commissioner’s disapproval of rates or other act, the
3-3 Commissioner shall on request specify interim rates for the insurer
3-4 that are high enough to protect the interests of all parties and may
3-5 order that a specified portion of the premiums be placed in an
3-6 escrow account approved by him. When new rates become legally
3-7 effective, the Commissioner shall order the escrowed funds or any
3-8 overcharge in the interim rates to be distributed appropriately,
3-9 except that refunds to policyholders that are de minimis must not be
3-10 required.
3-11 3. If the Commissioner disapproves a proposed rate and an
3-12 insurer requests a hearing to determine the validity of his action, the
3-13 insurer has the burden of showing compliance with the applicable
3-14 standards for rates established in NRS 686B.010 to 686B.1799,
3-15 inclusive. Any such hearing must be held:
3-16 (a) Within 30 days after the request for a hearing has been
3-17 submitted to the Commissioner; or
3-18 (b) Within a period agreed upon by the insurer and the
3-19 Commissioner.
3-20 If the hearing is not held within the period specified in paragraph (a)
3-21 or (b), or if the Commissioner fails to issue an order concerning the
3-22 proposed rate for which the hearing is held within 45 days after the
3-23 hearing, the proposed rate shall be deemed approved.
3-24 4. The Commissioner shall by regulation specify the
3-25 documents or any other information which must be included in a
3-26 proposal to increase or decrease a rate submitted to him pursuant to
3-27 subsection 1. Each such proposal shall be deemed complete upon its
3-28 filing with the Commissioner, unless the Commissioner, within 15
3-29 business days after the proposal is filed with him, determines that
3-30 the proposal is incomplete because the proposal does not comply
3-31 with the regulations adopted by him pursuant to this subsection.
3-32 Sec. 5. NRS 686B.115 is hereby amended to read as follows:
3-33 686B.115 1. Any hearing held by the Commissioner to
3-34 determine whether rates comply with the provisions of NRS
3-35 686B.010 to 686B.1799, inclusive, must be open to members of the
3-36 public.
3-37 2. All costs for transcripts prepared pursuant to such a hearing
3-38 must be paid by the insurer requesting the hearing.
3-39 3. At any hearing which is held by the Commissioner to
3-40 determine whether rates comply with the provisions of NRS
3-41 686B.010 to 686B.1799, inclusive, and which involves rates for
3-42 insurance covering the liability of a practitioner licensed pursuant
3-43 to chapter 630, 631, 632 or 633 of NRS for a breach of his
3-44 professional duty toward a patient, if a person is not otherwise
3-45 authorized pursuant to this title to become a party to the hearing
3-46 by intervention, the person is entitled to provide testimony at the
4-1 hearing if, not later than 2 days before the date set for the hearing,
4-2 the person files with the Commissioner a written statement which
4-3 states:
4-4 (a) The name and title of the person;
4-5 (b) The interest of the person in the hearing; and
4-6 (c) A brief summary describing the purpose of the testimony
4-7 the person will offer at the hearing.
4-8 4. If a person provides testimony at a hearing in accordance
4-9 with subsection 3:
4-10 (a) The Commissioner may, if he finds it necessary to preserve
4-11 order, prevent inordinate delay or protect the rights of the parties
4-12 at the hearing, place reasonable limitations on the duration of the
4-13 testimony and prohibit the person from providing testimony that is
4-14 not relevant to the issues raised at the hearing.
4-15 (b) The Commissioner shall consider all relevant testimony
4-16 provided by the person at the hearing in determining whether the
4-17 rates comply with the provisions of NRS 686B.010 to 686B.1799,
4-18 inclusive.
4-19 Sec. 6. Chapter 690B of NRS is hereby amended by adding
4-20 thereto the provisions set forth as sections 7 to 16, inclusive, of this
4-21 act.
4-22 Sec. 7. As used in sections 7 to 16, inclusive, of this act,
4-23 unless the context otherwise requires, the words and terms defined
4-24 in sections 8 to 11, inclusive, of this act have the meanings
4-25 ascribed to them in those sections.
4-26 Sec. 8. “Claims-made policy” means a policy of professional
4-27 liability insurance that provides coverage only for claims that arise
4-28 from incidents or events which occur while the policy is in force
4-29 and which are reported to the insurer while the policy is in force.
4-30 Sec. 9. “Extended reporting endorsement” means an
4-31 endorsement to a claims-made policy which requires the payment
4-32 of a separate premium and which provides coverage for claims
4-33 that arise from incidents or events which occur while the claims-
4-34 made policy is in force but which are reported to the insurer after
4-35 the claims-made policy is terminated.
4-36 Sec. 10. “Practitioner” means a practitioner who provides
4-37 health care and who is licensed pursuant to chapter 630, 631, 632
4-38 or 633 of NRS.
4-39 Sec. 11. “Professional liability insurance” means a policy of
4-40 insurance covering the liability of a practitioner for a breach of
4-41 his professional duty toward a patient.
4-42 Sec. 12. If an insurer offers to issue a claims-made policy to
4-43 a practitioner, the insurer shall:
4-44 1. Offer to issue an extended reporting endorsement to the
4-45 practitioner; and
5-1 2. Disclose to the practitioner the cost formula that the
5-2 insurer uses to determine the premium for the extended reporting
5-3 endorsement. The cost formula must be based on:
5-4 (a) An amount that is not more than twice the amount of the
5-5 premium for the claims-made policy at the time of the termination
5-6 of that policy; and
5-7 (b) The rates filed by the insurer and approved by the
5-8 Commissioner.
5-9 Sec. 13. 1. Except as otherwise provided in this section, if
5-10 an insurer issues a policy of professional liability insurance to a
5-11 practitioner who delivers one or more babies per year, the insurer
5-12 shall not set the premium for the policy at a rate that is different
5-13 from the rate set for such a policy issued by the insurer to any
5-14 other practitioner who delivers one or more babies per year if the
5-15 difference in rates is based in whole or in part upon the number of
5-16 babies delivered per year by the practitioner.
5-17 2. If an insurer issues a policy of professional liability
5-18 insurance to a practitioner who delivers one or more babies per
5-19 year, the insurer may set the premium for the policy at a rate that
5-20 is different, based in whole or in part upon the number of babies
5-21 delivered per year by the practitioner, from the rate set for such a
5-22 policy issued by the insurer to any other practitioner who delivers
5-23 one or more babies per year if the insurer:
5-24 (a) Bases the difference upon actuarial and loss experience
5-25 data available to the insurer; and
5-26 (b) Obtains the approval of the Commissioner for the
5-27 difference in rates.
5-28 3. The provisions of this section do not prohibit an insurer
5-29 from setting the premium for a policy of professional liability
5-30 insurance issued to a practitioner who delivers one or more babies
5-31 per year at a rate that is different from the rate set for such a
5-32 policy issued by the insurer to any other practitioner who delivers
5-33 one or more babies per year if the difference in rates is based
5-34 solely upon factors other than the number of babies delivered per
5-35 year by the practitioner.
5-36 Sec. 14. 1. On or before April 1 of each year, the
5-37 Commissioner shall:
5-38 (a) Determine whether there are any medical specialties in this
5-39 state which are essential as a matter of public policy and which
5-40 must be protected pursuant to this section from certain adverse
5-41 actions relating to professional liability insurance that may impair
5-42 the availability of those essential medical specialties to the
5-43 residents of this state; and
5-44 (b) Make a list containing the essential medical specialties
5-45 designated by the Commissioner and provide the list to each
5-46 insurer that issues policies of professional liability insurance to
6-1 practitioners who are practicing in one or more of the essential
6-2 medical specialties.
6-3 2. If an insurer intends to cancel, terminate or otherwise not
6-4 renew a specific policy of professional liability insurance that it
6-5 has issued to a practitioner who is practicing in one or more of the
6-6 essential medical specialties designated by the Commissioner:
6-7 (a) The insurer must provide 120 days’ notice to the
6-8 practitioner before its intended action becomes effective; and
6-9 (b) The Commissioner may require the insurer to delay its
6-10 intended action for a period of not more than 60 days if the
6-11 Commissioner determines that a replacement policy is not readily
6-12 available to the practitioner.
6-13 3. If an insurer intends to cancel, terminate or otherwise not
6-14 renew all policies of professional liability insurance that it has
6-15 issued to practitioners who are practicing in one or more of the
6-16 essential medical specialties designated by the Commissioner:
6-17 (a) The insurer must provide 120 days’ notice of its intended
6-18 action to the Commissioner and the practitioners before its
6-19 intended action becomes effective; and
6-20 (b) The Commissioner may require the insurer to delay its
6-21 intended action for a period of not more than 60 days if the
6-22 Commissioner determines that replacement policies are not readily
6-23 available to the practitioners.
6-24 4. The Commissioner may adopt any regulations that are
6-25 necessary to carry out the provisions of this section.
6-26 5. Until the Commissioner determines which, if any, medical
6-27 specialties are to be designated as essential medical specialties, the
6-28 following medical specialties shall be deemed to be essential
6-29 medical specialties for the purposes of this section:
6-30 (a) Emergency medicine.
6-31 (b) Neurosurgery.
6-32 (c) Obstetrics and gynecology.
6-33 (d) Orthopedic surgery.
6-34 (e) Pediatrics.
6-35 (f) Trauma surgery.
6-36 Sec. 15. 1. The Commissioner shall collect all information
6-37 which is pertinent to monitoring whether an insurer that issues
6-38 professional liability insurance is complying with the applicable
6-39 standards for rates established in NRS 686B.010 to 686B.1799,
6-40 inclusive. Such information must include, without limitation:
6-41 (a) The amount of gross premiums collected with regard to
6-42 each medical specialty;
6-43 (b) Information relating to loss ratios;
6-44 (c) Information reported pursuant to NRS 690B.045; and
6-45 (d) Information reported pursuant to NRS 679B.430 and
6-46 679B.440.
7-1 2. In addition to the information collected pursuant to
7-2 subsection 1, the Commissioner may request any additional
7-3 information from an insurer:
7-4 (a) Whose rates and credit utilization are materially different
7-5 from other insurers in the market for professional liability
7-6 insurance in this state;
7-7 (b) Whose credit utilization shows a substantial change from
7-8 the previous year; or
7-9 (c) Whose information collected pursuant to subsection 1
7-10 indicates a potentially adverse trend.
7-11 3. If the Commissioner requests additional information from
7-12 an insurer pursuant to subsection 2, the Commissioner shall:
7-13 (a) Determine whether the additional information offers a
7-14 reasonable explanation for the results described in paragraphs (a),
7-15 (b) or (c) of subsection Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).2; and
7-16 (b) Take any steps permitted by law that are necessary and
7-17 appropriate to assure the ongoing stability of the market for
7-18 professional liability insurance in this state.
7-19 4. On an ongoing basis, the Commissioner shall:
7-20 (a) Analyze and evaluate the information collected pursuant to
7-21 this section to determine trends in and measure the health of the
7-22 market for professional liability insurance in this state; and
7-23 (b) Prepare and submit a report of his findings and
7-24 recommendations to the Director of the Legislative Counsel
7-25 Bureau for transmittal to members of the Legislature on or before
7-26 November 15 of each year.
7-27 Sec. 16. 1. If an agreement settles a claim or action against
7-28 a practitioner for a breach of his professional duty toward a
7-29 patient, the following terms of the agreement must not be made
7-30 confidential:
7-31 (a) The names of the parties;
7-32 (b) The date of the incidents or events giving rise to the claim
7-33 or action;
7-34 (c) The nature of the claim or action as set forth in the
7-35 complaint and the answer that is filed with the district court; and
7-36 (d) The effective date of the agreement.
7-37 2. Any provision of an agreement to settle a claim or action
7-38 that conflicts with this section is void.
7-39 Sec. 17. 1. The Commissioner of Insurance shall conduct a
7-40 study to determine whether legislation enacting tort reform has
7-41 benefited or will benefit the market for professional liability
7-42 insurance in this state. On or before February 1, 2005, the
7-43 Commissioner shall prepare a report that contains the findings of the
7-44 study and submit the report to the Director of the Legislative
7-45 Counsel Bureau for transmittal to the 73rd Session of the Nevada
7-46 Legislature.
8-1 2. If the constitutionality of any legislation enacting tort reform
8-2 is upheld by the Nevada Supreme Court, the Commissioner shall:
8-3 (a) Not later than 60 days after the date of the decision of the
8-4 Nevada Supreme Court, obtain from each insurer that is offering
8-5 professional liability insurance in this state a rating plan that
8-6 describes the extent to which the insurer will incorporate the
8-7 expected decrease in loss costs into its premiums for professional
8-8 liability insurance;
8-9 (b) Review and evaluate each such rating plan to determine
8-10 whether the rating plan is reasonable;
8-11 (c) Prepare a report which summarizes the rating plans and the
8-12 evaluations made by the Commissioner and which contains
8-13 recommendations as to whether the rating plans should be
8-14 implemented; and
8-15 (d) Submit the report to the Director of the Legislative Counsel
8-16 Bureau for transmittal to the next regular session of the Nevada
8-17 Legislature following submission of the report.
8-18 3. As used in this section, “professional liability insurance”
8-19 means a policy of insurance covering the liability of a practitioner
8-20 who provides health care for a breach of his professional duty
8-21 toward a patient.
8-22 Sec. 18. 1. The provisions of sections 12 and 13 of this act
8-23 apply only to a policy of professional liability insurance, as defined
8-24 in section 11 of this act, which is offered, issued or renewed on or
8-25 after October 1, 2003.
8-26 2. The provisions of section 16 of this act apply only to a cause
8-27 of action which accrues on or after October 1, 2003.
8-28 Sec. 19. This act becomes effective:
8-29 1. Upon passage and approval for the purposes of adopting
8-30 regulations and performing any other preparatory administrative
8-31 tasks that are necessary to carry out the provisions of this act; and
8-32 2. On October 1, 2003, for all other purposes.
8-33 20~~~~~03