72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 221
B-Engrossed
House Bill 3630
Ordered by the Senate August 20
Including House Amendments dated June 10 and Senate Amendments
dated August 20
Sponsored by COMMITTEE ON JUDICIARY
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Requires State Accident Insurance Fund Corporation to establish
reinsurance program for medical professional liability policies
of certain rural doctors.
Establishes Rural Medical Liability Reinsurance Fund for
payment of reinsurance of medical professional liability
insurance claims incurred prior to January 1, 2008.
Creates Professional Panel for Analysis of Medical Professional
Liability Insurance.
Requires Office for Oregon Health Policy and Research to make
recommendations concerning methods to attract and retain doctors
in rural areas.
{ + Requires Director of Department of Consumer and Business
Services to report to Legislative Assembly on performance of
reinsurance program. + }
Sunsets January 2, 2014.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to physicians; creating new provisions; amending ORS
656.632; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + (1) The State Accident Insurance Fund
Corporation shall establish a reinsurance program for medical
professional liability insurance policies issued by authorized
insurers in the calendar years 2004, 2005, 2006 and 2007 to
doctors of medicine and doctors of osteopathy licensed under ORS
chapter 677 who:
(a) Have a rural practice according to the criteria established
by the Office of Rural Health for purposes of ORS 316.143;
(b) Hold an active, unrestricted license to practice medicine;
and
(c) Have an in-force policy of medical professional liability
insurance with an authorized insurer with minimum limits of
coverage of $1 million per occurrence and $1 million aggregate.
(2) The reinsurance program established in accordance with this
section must be carried out in accordance with the plan approved
under section 2 of this 2003 Act.
(3) The coverage provided under the reinsurance program shall
be priced by the State Accident Insurance Fund Corporation, in
accordance with rate standards or percentage reductions
determined by the Director of the Department of Consumer and
Business Services after consultation with the Office of Rural
Health, at rates that will significantly reduce premiums for
doctors to whom this section applies so as to make the medical
professional liability insurance reasonably affordable.
(4)(a) The State Accident Insurance Fund Corporation may
provide coverage as authorized in this section on such terms and
conditions as the State Accident Insurance Fund Corporation
determines to be reasonable, subject to the requirements and
other terms of the plan approved under section 2 of this 2003
Act.
(b) Notwithstanding paragraph (a) of this subsection, the State
Accident Insurance Fund Corporation must make all reasonable
efforts consistent with the goals of sections 1 to 7, 10 to 12
and 14 of this 2003 Act to transfer any assumed reinsurance
liability.
(5) The State Accident Insurance Fund Corporation is not
required to provide coverage for risks under this section that
exceed the amount the director is authorized to credit against
assessments in section 7 of this 2003 Act, but the State Accident
Insurance Fund Corporation is liable for all risks that it covers
under this section. + }
SECTION 2. { + (1) The State Accident Insurance Fund
Corporation shall submit to the Director of the Department of
Consumer and Business Services and to the Office of Rural Health
a plan for carrying out the provisions of section 1 of this 2003
Act. The director and the office shall approve the plan following
a determination that the plan:
(a) Satisfies the purposes of sections 1 to 7 of this 2003 Act.
(b) Obligates the State Accident Insurance Fund Corporation to
carry out the reinsurance program established under section 1 of
this 2003 Act by any appropriate coverage, which may consist of
financial reinsurance, on an insurer-to-insurer basis.
(c) Provides administrative management for the reinsurance
program.
(d) Is financially sound.
(e) Facilitates payments from the Rural Medical Liability
Reinsurance Fund established by section 5 of this 2003 Act and is
otherwise fair and reasonable to the participating primary
insurers and their insureds.
(f) Establishes appropriate underwriting and rating standards.
(g) Minimizes transactional and claim costs for the State
Accident Insurance Fund Corporation and for primary users.
(h) Is appropriate in relation to the insurance market in this
state.
(i) Effectively reduces premiums for medical professional
liability insurance for doctors eligible for coverage under the
plan.
(2)(a) The plan approved under this section must provide, to
the extent funds are available from the credit provided in
section 7 of this 2003 Act for the annual assessment owed by the
State Accident Insurance Fund Corporation under ORS 656.612, for
a reduction in premiums as provided in this subsection for
medical professional liability insurance for eligible doctors of
medicine and doctors of osteopathy. The reduction of premium
shall be:
(A) Up to 80 percent for doctors specializing in obstetrics;
(B) Up to 60 percent for doctors specializing in family or
general practice who provide obstetrical services; and
(C) Up to 40 percent for all other eligible doctors.
(b) If the funds available to provide premium reductions are
insufficient to provide the maximum reduction, the plan shall
provide for proportional reductions to all eligible doctors.
(c) Premium reductions shall be a percentage of the actual
premium charged for medical professional liability insurance in
the market of authorized insurers for limits purchased of up to
$1 million per occurrence and $3 million annual aggregate.
(d) Premium reductions shall be effective beginning with the
first premium payment in each calendar year under the reinsurance
program.
(3) The plan adopted under this section may not obligate the
State Accident Insurance Fund Corporation to provide coverage
under section 1 of this 2003 Act at a cost to the State Accident
Insurance Fund Corporation that exceeds an average of $10 million
for each policy year for the four years for which the coverage is
provided. The cost to the State Accident Insurance Fund
Corporation shall be the actuarially determined costs of the
reinsurance program.
(4)(a) The State Accident Insurance Fund Corporation shall
submit the plan required under this section to the director and
the office not later than September 30, 2003.
(b) The director and the office shall approve, disapprove or
require changes to the plan as promptly as reasonably possible in
order to enable the State Accident Insurance Fund Corporation to
have the plan operational by January 1, 2004. The plan may be
implemented only after joint approval by the director and the
office. + }
SECTION 3. { + (1) For the purposes of the reinsurance program
for medical professional liability insurance established under
section 1 of this 2003 Act, the State Accident Insurance Fund
Corporation is subject as a domestic insurer to ORS 731.248,
731.252, 731.256, 731.258, 731.260, 731.296 to 731.316, 731.488,
731.574, 731.592, 731.594, 731.730, 731.731, 731.735, 731.737,
731.988, 731.992, 733.010 to 733.060, 733.140 to 733.170 and
733.210. The requirements of the Director of the Department of
Consumer and Business Services under ORS 733.010 to 733.060,
733.140 to 733.170 and 733.210 govern in the case of a conflict
between those requirements and the requirements of any accounting
system prescribed by the Oregon Department of Administrative
Services.
(2) The State Accident Insurance Fund Corporation is an
authorized assuming insurer with respect to reinsurance for
medical professional liability insurance for the purposes of ORS
731.509. + }
SECTION 4. { + In addition to the purposes and functions for
which the State Accident Insurance Fund Corporation is created
under ORS 656.752, the State Accident Insurance Fund Corporation
is also created for the purpose of carrying out the reinsurance
program for medical professional liability insurance established
under section 1 of this 2003 Act. + }
SECTION 5. { + (1) The Rural Medical Liability Reinsurance
Fund is established separate and distinct from the General Fund
and shall be held by the State Treasurer. The Rural Medical
Liability Reinsurance Fund is established for the purpose of
providing coverage under the reinsurance program established
under section 1 of this 2003 Act. Interest earned by the Rural
Medical Liability Reinsurance Fund shall be credited to the fund.
(2) The State Accident Insurance Fund Corporation shall provide
the resources necessary to support and fund coverage provided by
the corporation as authorized under section 1 of this 2003 Act.
(3) All moneys received by the State Accident Insurance Fund
Corporation for payment to the Rural Medical Liability
Reinsurance Fund shall be deposited to and shall become part of
the Rural Medical Liability Reinsurance Fund.
(4) All payments authorized to be made by the State Accident
Insurance Fund Corporation for coverage under the reinsurance
program established under section 1 of this 2003 Act shall be
made from the Rural Medical Liability Reinsurance Fund.
(5) Any excess or residual moneys remaining in the Rural
Medical Liability Reinsurance Fund after the State Accident
Insurance Fund Corporation has made all payments for which the
corporation is obligated under section 1 of this 2003 Act, other
than moneys that are owed to the State Accident Insurance Fund
Corporation, shall be transferred to the Consumer and Business
Services Fund. + }
SECTION 6. { + (1) If an insurer obtains coverage with the
State Accident Insurance Fund Corporation for medical
professional liability insurance issued by the insurer to a
doctor to whom section 1 of this 2003 Act applies, the insurer
shall reduce the premium charged to the doctor in a manner that
fully recognizes savings made available by coverage offered under
section 1 of this 2003 Act.
(2) An insurer to which subsection (1) of this section applies
shall demonstrate the difference in its rates for medical
professional liability insurance for purposes of subsection (1)
of this section in its filing of rates with the Director of the
Department of Consumer and Business Services. + }
SECTION 7. { + (1) When the State Accident Insurance Fund
Corporation provides coverage through the reinsurance program
established under section 1 of this 2003 Act, the Director of the
Department of Consumer and Business Services shall credit the
purchase price or the amount of the payment, net of any income,
to the annual assessment owing by the State Accident Insurance
Fund Corporation to the Department of Consumer and Business
Services under ORS 656.612. The amount the director credits under
this subsection may not exceed an average of $10 million for each
policy year for the four years that coverage is provided under
section 1 of this 2003 Act.
(2) The director shall establish by rule the accounting
procedures and requirements by which the credit is determined for
the assessment under ORS 656.612. + }
SECTION 8. { + Notwithstanding ORS 656.632 and 656.634, the
State Accident Insurance Fund Corporation may transfer funds from
the Industrial Accident Fund to the Rural Medical Liability
Reinsurance Fund for the purposes of sections 1 to 7 and 10 to 12
of this 2003 Act and the amendments to ORS 656.632 by section 9
of this 2003 Act. + }
SECTION 9. ORS 656.632 is amended to read:
656.632. (1) The Industrial Accident Fund is continued. This
fund shall be held by the State Treasurer and by the State
Treasurer deposited in such banks as are authorized to receive
deposits of general funds of the state.
(2) All moneys received by the State Accident Insurance Fund
Corporation { + for workers' compensation purposes + } under
this chapter, shall be paid forthwith to the State Treasurer and
shall become a part of the Industrial Accident Fund. However, any
assessments collected for the Director of the Department of
Consumer and Business Services under this chapter and deposited
in the Industrial Accident Fund may thereafter be transferred to
the director and deposited in the Consumer and Business Services
Fund.
(3) All payments authorized to be made by the State Accident
Insurance Fund Corporation { + for workers' compensation
purposes + } by this chapter, including all salaries, clerk hire
and all other expenses, shall be made from the Industrial
Accident Fund.
SECTION 10. { + (1) There is created the Professional Panel
for Analysis of Medical Professional Liability Insurance
consisting of six members appointed as follows:
(a) The President of the Senate shall appoint two members, one
of whom must have professional expertise in gathering, evaluating
or applying research data.
(b) The Speaker of the House of Representatives shall appoint
two members, one of whom must have professional expertise in
gathering, evaluating or applying research data.
(c) The Governor shall appoint two members, one of whom must
have professional expertise in gathering, evaluating or applying
research data.
(2) Members of the panel may not have a financial or
professional affiliation with:
(a) Medical care providers;
(b) Insurers providing professional liability insurance; or
(c) Personal injury litigation.
(3) The panel shall:
(a) Advise the State Accident Insurance Fund Corporation in its
selection of the consulting firm required under section 11 of
this 2003 Act;
(b) Establish a work plan to be carried out by the consulting
firm;
(c) Review and approve the work product of the consulting firm;
and
(d) Evaluate the data reported by the consulting firm and make
findings incorporating the data. The findings shall be included
in the report required under subsection (10) of this section.
(4) The panel is subject to the provisions of ORS 171.605 to
171.635.
(5) The panel shall use the services of permanent legislative
staff to the greatest extent practicable.
(6) All agencies of state government, as defined in ORS
174.111, are directed to assist the panel in the performance of
its duties and, to the extent permitted by laws relating to
confidentiality, to furnish such information and advice as the
members of the panel consider necessary to perform their duties.
(7) A majority of the members of the panel constitutes a quorum
for the transaction of business.
(8) Official action by the panel requires the approval of a
majority of the members of the panel.
(9) The panel shall elect one of its members to serve as
chairperson.
(10) The panel shall submit a report to the Governor and to the
Legislative Assembly in the manner provided by ORS 192.245, no
later than December 15, 2004.
(11) Members of the panel who are not members of the
Legislative Assembly are not entitled to compensation, but may be
reimbursed for actual and necessary travel and other expenses
incurred by them in the performance of their official duties, in
the manner and amounts provided for in ORS 292.495. Claims for
expenses shall be paid out of funds in the Rural Medical
Liability Reinsurance Fund established under section 5 of this
2003 Act.
(12) The panel may seek public and private funds to assist in
the work of the panel. + }
SECTION 11. { + (1) The State Accident Insurance Fund
Corporation shall select a consulting firm to perform services
required under this section. The firm selected must be a regional
or national consulting firm with at least 10 accredited casualty
actuaries on staff and must possess demonstrated accounting,
financial and research capabilities. The firm must also have
experience in the casualty insurance industry and particularly in
the field of medical professional liability insurance.
(2) Under the direction of the Professional Panel for Analysis
of Medical Professional Liability Insurance created under section
10 of this 2003 Act, the consulting firm shall gather, analyze
and evaluate data on the availability, costs and transaction of
medical professional liability insurance that consider Oregon
market trends on premiums and losses, other factors affecting the
competitiveness of the Oregon market and regulatory options for
minimizing cyclical trends.
(3) The costs of the services of the consulting firm selected
under subsection (1) of this section shall be paid by the State
Accident Insurance Fund Corporation from the amount available for
credit to the annual assessment owing by the State Accident
Insurance Fund Corporation under section 7 of this 2003 Act. The
cost of services may not exceed two percent of the maximum
average amount that may be credited to the State Accident
Insurance Fund Corporation for one year under section 7 of this
2003 Act. + }
SECTION 12. { + The Office for Oregon Health Policy and
Research and the Office of Rural Health shall make
recommendations to the Governor and to the Seventy-third
Legislative Assembly concerning methods to attract and retain
doctors in rural areas of the state. + }
SECTION 13. ORS 656.632, as amended by section 9 of this 2003
Act, is amended to read:
656.632. (1) The Industrial Accident Fund is continued. This
fund shall be held by the State Treasurer and by the State
Treasurer deposited in such banks as are authorized to receive
deposits of general funds of the state.
(2) All moneys received by the State Accident Insurance Fund
Corporation { - for workers' compensation purposes - } under
this chapter, shall be paid forthwith to the State Treasurer and
shall become a part of the Industrial Accident Fund. However, any
assessments collected for the Director of the Department of
Consumer and Business Services under this chapter and deposited
in the Industrial Accident Fund may thereafter be transferred to
the director and deposited in the Consumer and Business Services
Fund.
(3) All payments authorized to be made by the State Accident
Insurance Fund Corporation { - for workers' compensation
purposes - } by this chapter, including all salaries, clerk hire
and all other expenses, shall be made from the Industrial
Accident Fund.
SECTION 14. { + (1) The State Accident Insurance Fund
Corporation shall continue paying reinsurance claims incurred or
made prior to January 1, 2008, from the Rural Medical Liability
Reinsurance Fund until the State Accident Insurance Fund
Corporation has extinguished its liabilities for reinsurance
issued under section 1 of this 2003 Act by payment of claims or
by purchase of reinsurance. Purchase of reinsurance under this
subsection shall be subject to approval by the Director of the
Department of Consumer and Business Services.
(2) Sections 1 to 8 and 10 to 12 of this 2003 Act are repealed
January 2, 2014.
(3) The amendments to ORS 656.632 by section 13 of this 2003
Act become operative January 2, 2014. + }
SECTION 15. { + (1) The Director of the Department of Consumer
and Business Services shall report in the manner provided by ORS
192.245 to the Seventy-third and Seventy-fourth Legislative
Assemblies on the performance of the program established under
section 1 of this 2003 Act.
(2) The State Accident Insurance Fund Corporation shall provide
all data and other information required by the director to
prepare the reports required under this section. + }
SECTION 16. { + This 2003 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2003 Act takes effect on
its passage. + }
----------