Relating to reinsurance program for medical professional liability insurance policies provided by State Accident Insurance Fund Corporation; amending sections 1, 2, 14 and 15, chapter 781, Oregon Laws 2003; and declaring an emergency.


 
 
 
     76th OREGON LEGISLATIVE ASSEMBLY--2011 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 256
 
                         Senate Bill 374
 
Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (at the request of Senate Interim 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 as
introduced.
 
  Extends reinsurance program for medical professional liability
insurance policies provided by State Accident Insurance Fund
Corporation for one year. Requires Director of Department of
Consumer and Business Services to report on performance of
program to Seventy-sixth Legislative Assembly.
  Declares emergency, effective on passage.
 
                        A BILL FOR AN ACT
Relating to reinsurance program for medical professional
  liability insurance policies provided by State Accident
  Insurance Fund Corporation; amending sections 1, 2, 14 and 15,
  chapter 781, Oregon Laws 2003; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. Section 1, chapter 781, Oregon Laws 2003, as amended
by section 1, chapter 574, Oregon Laws 2007, is amended to read:
   { +  Sec. 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, 2007, 2008,
2009, 2010   { - and - }  { + , + } 2011  { + and 2012 + } to
doctors of medicine and doctors of osteopathy licensed under ORS
chapter 677 and nurse practitioners certified by the Oregon State
Board of Nursing who:
  (a) Have a rural practice that meets the criteria established
by the Office of Rural Health that applied as of January 1, 2004,
for purposes of ORS 315.613, excluding urbanized areas, as
defined by the United States Census Bureau according to the most
recent federal decennial census, pursuant to the authority of the
United States Department of Commerce under 13 U.S.C. 141;
  (b) Hold an active, unrestricted license to practice medicine
or are currently certified as a nurse practitioner;
  (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;
and
  (d) Are willing to serve patients with Medicare coverage and
patients receiving medical assistance provided under Medicaid in
at least the same proportion to their total number of patients as
the Medicare and Medicaid populations represent to the total
number of patients in need of care in the rural areas of the
counties in which the doctors or nurse practitioners practice, as
determined by the Office of Rural Health. The Office of Rural
Health shall establish by rule criteria for and procedures for
the annual attestation of compliance by participating doctors and
nurse practitioners with the requirements of this paragraph. The
requirements of this paragraph do not apply to nurse
practitioners participating in the program who are employed by
licensed physicians.
  (2) The reinsurance program established in accordance with this
section must be carried out in accordance with the plan approved
under section 2, chapter 781, Oregon Laws 2003.
  (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 and nurse practitioners 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, chapter 781,
Oregon Laws 2003.
  (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, chapter 781, Oregon Laws 2003, 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
exceeds the amount the director is authorized to credit against
assessments in section 7, chapter 781, Oregon Laws 2003, but the
State Accident Insurance Fund Corporation is liable for all risks
that it covers under this section.
  (6) As used in this section:
  (a) 'Medicaid' means medical assistance provided under 42
U.S.C. 1396a, section 1902 of the Social Security Act.
  (b) 'Medicare' means the 'Health Insurance for the Aged Act,'
Title XVIII of the Social Security Amendments of 1965.
  SECTION 2. Section 2, chapter 781, Oregon Laws 2003, as amended
by section 2, chapter 574, Oregon Laws 2007, is amended to read:
   { +  Sec. 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, chapter 781,
Oregon Laws 2003. The director and the office shall approve the
plan following a determination that the plan:
  (a) Satisfies the purposes of sections 1 to 7, chapter 781,
Oregon Laws 2003.
  (b) Obligates the State Accident Insurance Fund Corporation to
carry out the reinsurance program established under section 1,
chapter 781, Oregon Laws 2003, 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, chapter 781, Oregon
 
Laws 2003, 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 and nurse practitioners 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, chapter 781, Oregon Laws 2003, 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 and nurse practitioners. The reduction of
premium shall be:
  (A) 80 percent for doctors specializing in obstetrics and nurse
practitioners certified for obstetric care;
  (B) 60 percent for doctors specializing in family or general
practice who provide obstetrical services;
  (C) Up to 40 percent for doctors and nurse practitioners
engaging in one or more of the following practices:
  (i) Family practice without obstetrics.
  (ii) General practice.
  (iii) Internal medicine.
  (iv) Geriatrics.
  (v) Pulmonary medicine.
  (vi) Pediatrics.
  (vii) General surgery.
  (viii) Anesthesiology; and
  (D) Up to the following percentages for doctors and nurse
practitioners other than those included in subparagraph (A), (B)
or (C) of this paragraph:
  (i) 35 percent, for calendar year 2008.
  (ii) 25 percent, for calendar year 2009.
  (iii) 15 percent, for calendar year 2010.
  (iv) 15 percent, for calendar year 2011.
   { +  (v) 15 percent, for calendar year 2012. + }
  (b) Notwithstanding section 1 (1)(a), chapter 781, Oregon Laws
2003, a doctor who meets all the criteria for eligibility for a
reduction in premiums established in section 1 (1)(b), (c) and
(d), chapter 781, Oregon Laws 2003, who has a rural practice that
meets the criteria established by the Office of Rural Health that
applied as of January 1, 2004, for the purposes of ORS 315.613,
and is located in an urbanized area of Jackson County, as defined
by the United States Census Bureau according to the most recent
federal decennial census taken pursuant to the authority of the
United States Department of Commerce under 13 U.S.C. 141(a), and
who specializes in obstetrics is eligible for a reduction in
premiums as provided in paragraph (a)(A) of this subsection, and
a doctor who specializes in family practice and provides
obstetrical services, or in general practice and provides
obstetrical services, or a nurse practitioner who is certified in
obstetrical care, is eligible for a reduction in premiums as
provided in paragraph (a)(B) of this subsection.
  (c) If the funds available to provide premium reductions are
insufficient to provide the maximum reduction, the plan shall
provide for lowering or eliminating the amount provided for
premium reductions for the doctors and nurse practitioners
eligible for a reduction in premiums under paragraph (a)(D) of
this subsection. If, after eliminating all premium reductions for
the doctors and nurse practitioners eligible for a reduction in
premiums under paragraph (a)(D) of this subsection, the remaining
funds are insufficient to provide the maximum reductions provided
under the plan, the amounts provided for a reduction in premiums
for doctors and nurse practitioners eligible under paragraph
(a)(C) of this subsection shall be lowered or eliminated.
  (d) 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.
However, the premium reduction for a doctor or nurse practitioner
referred to in paragraph (a)(C) or (D) of this subsection shall
be the lesser of the percentage of the actual premium or the
premium paid by the doctor or nurse practitioner for calendar
year 2007. For a doctor or nurse practitioner who first becomes
eligible for the program on or after January 1, 2008, the premium
reduction shall be the lesser of the percentage of either the
actual premium or the premium for the first eligibility year
determined according to 2007-based rates. When determining the
lesser amount under this paragraph, any step increases in the
premium owing to the claims-made nature of the policy may not be
considered.
  (e) 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, chapter 781, Oregon Laws 2003, at a cost to the
State Accident Insurance Fund Corporation that exceeds an average
of $5 million for each policy year 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.
  SECTION 3. Section 14, chapter 781, Oregon Laws 2003, as
amended by section 4, chapter 574, Oregon Laws 2007, is amended
to read:
   { +  Sec. 14. + } (1) The State Accident Insurance Fund
Corporation shall continue paying reinsurance claims incurred or
made prior to January 1,   { - 2012 - }  { +  2013 + }, from the
Rural Medical Liability Reinsurance Fund until the State Accident
Insurance Fund Corporation has extinguished its liabilities for
reinsurance issued under section 1, chapter 781, Oregon Laws
2003, 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, chapter 781, Oregon Laws
2003, are repealed January 2, 2014.
  (3) The amendments to ORS 656.632 by section 13, chapter 781,
Oregon Laws 2003, become operative January 2, 2014.
  SECTION 4. Section 15, chapter 781, Oregon Laws 2003, as
amended by section 5, chapter 574, Oregon Laws 2007, is amended
to read:
   { +  Sec. 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-fourth   { - and - }
 { + , + } Seventy-fifth  { + and Seventy-sixth + } Legislative
Assemblies on the performance of the program established under
section 1, chapter 781, Oregon Laws 2003.
  (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 5.  { + This 2011 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2011 Act takes effect on its
passage. + }
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