| (a) The policy.
(1) Approval. The procedures regarding rates, rating
plans, rating rules, rating classifications, territories, and policy
forms applicable to insurance written by the association and related
statistics must comply with Insurance Code Chapter 2203, Subchapter
E.
(2) Duration of policies.
(A) All policies issued by the association must be
written for a term of one year or less, as determined by the association,
to begin at 12:01 a.m. on their respective effective dates.
(B) The association may not issue a policy with an
effective date after a date set under Insurance Code Article 21.49-3, §11
for a plan of suspension to become effective and operative.
(C) All policies must be written on forms approved
by the department, and must contain a provision that requires, as
a condition precedent to settlement or compromise of any claim, the
consent or acquiescence of the insured. If, however, the insured refuses
to consent to any settlement recommended in writing by the association
and elects to contest or continue any legal proceedings, the liability
of the association must not exceed the amount for which the claim
could have been settled plus the cost and expenses incurred up to
the date of the refusal.
(3) Installment payment plan. The association may offer
an installment plan for coverage obtained through the association
or for payment of the stabilization reserve fund charge. The association
may require the policyholder to pay the stabilization reserve fund
charge as an annual lump sum.
(4) Limits of liability.
(A) No individual or organization may be insured by
a policy issued, or caused to be issued, by the association for an
amount exceeding a total of $1 million per occurrence (for all coverages
combined) and $3 million aggregate per annum (for all coverages combined).
As used in this paragraph, the terms "individual" and "organization"
mean each physician, health care provider, health care practitioner,
and health care facility holding a separate license or accreditation
from the appropriate licensing or accrediting agency as applicable.
(B) If provided, general liability limits must be the
same as medical liability limits subject to the maximum policy limits
specified in subparagraph (A) of this paragraph.
(5) Special provisions.
(A) The association may issue policies with deductibles.
(B) The association may issue policies subject to retrospective
rating plans.
(C) Policies of excess medical liability insurance
and excess general liability insurance written by the association
must:
(i) be on a following form basis to the underlying
medical liability insurance or underlying general liability insurance
coverage over which it is written;
(ii) be issued subject to review of the underlying
coverage if review is deemed necessary by the association or its representatives;
(iii) not be issued in those cases where the net retention
at risk by the primary carrier is less than $100,000 per occurrence
or less than $300,000 aggregate per annum after applying any applicable
deductible;
(iv) be issued only when the underlying insurance coverage
is underwritten by a member of the association and the underlying
insurance coverage does not have a deductible in excess of $25,000;
(v) terminate automatically if the underlying primary
medical liability insurance policy or underlying primary general liability
insurance is not maintained for any reason, except exhaustion by payment
of a loss or losses. If the aggregate underlying primary medical liability
insurance or general liability insurance is exhausted by the payment
of a loss or losses occurring during the policy period, the insurance
provided by the excess policy must apply in the same manner as if
the underlying primary insurance was in full force and effect;
(vi) not be accepted for a hospital or other institutional
health care provider or health care facility if the applicant does
not provide evidence that all physicians, surgeons, podiatrists, dentists,
pharmacists, chiropractors, or other health care providers or health
care practitioners with staff privileges are insured for their individual
medical liability with limits of liability of at least $100,000 per
occurrence and $300,000 aggregate per annum; and
(vii) not be accepted for physicians, surgeons, podiatrists,
dentists, pharmacists, chiropractors, or other health care providers
or health care practitioners who employ or contract with other physicians,
surgeons, podiatrists, dentists, pharmacists, chiropractors, or other
health care providers or health care practitioners if the applicant
does not provide evidence that all employed physicians, surgeons,
podiatrists, dentists, pharmacists, chiropractors, or other health
care providers or health care practitioners who are eligible to obtain
coverage from the association are insured for their individual medical
liability with limits of liability of at least $100,000 per occurrence
and $300,000 aggregate per annum.
(D) No hospital or other institutional health care
provider, health care facility or physicians, surgeons, podiatrists,
dentists, pharmacists, chiropractors, or other health care providers
or health care practitioners that have employed or contracted physicians,
surgeons, podiatrists, dentists, pharmacists, chiropractors, or other
health care providers or health care practitioners can be accepted
for coverage in the association without evidence that all physicians,
surgeons, podiatrists, dentists, pharmacists, chiropractors, or other
health care providers, or health care practitioners with staff privileges
or employed or contracted by the applicant are insured for their individual
medical liability with limits of at least $100,000 per occurrence
and $300,000 aggregate per annum.
(E) For purposes of this section, the term "health
care providers or health care practitioners" does not include personnel
at or below the level of employed registered nurse. Insurance required
for physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors,
health care practitioners, or other health care providers with hospital
staff privileges or employed or contracted by the applicant must be
limited to any one of the following entities:
(i) an insurance company authorized and licensed to
write and writing health care liability or medical liability insurance
in Texas under Insurance Code Chapter 801;
(ii) an insurance company eligible to write and writing
health care liability or medical liability insurance in Texas as a
surplus lines carrier under Insurance Code Chapter 981;
(iii) the Texas Medical Liability Insurance Underwriting
Association, established under Insurance Code Chapter 2203;
(iv) a self-insurance trust created to provide health
care liability or medical liability insurance, established under Insurance
Code Chapter 2212;
(v) a risk retention group or purchasing group writing
health care liability or medical liability insurance in Texas, registered
under Insurance Code Chapter 2201;
(vi) a plan of self-insurance of an institution of
higher education that provides health care liability or medical liability
coverage, established under Education Code Chapter 59; or
(vii) a plan of self-insurance that meets each of the
following criteria:
(I) the plan's liabilities must be fully funded, and
the plan must be solvent. The plan must have a minimum net worth equal
to the lesser of $1 million or that amount of net worth that results
in a capitalization ratio of 5%. As used in this subclause, "net worth"
is calculated by determining the excess, if any, of the plan's total
assets over the plan's total liabilities. As used in this subclause,
"capitalization ratio" means the ratio of the plan's net worth (as
the numerator) to the plan's total assets (as the denominator). Notwithstanding
the preceding, the net worth requirements in this subclause do not
apply to a plan that lawfully has taxing authority over a segment
of the Texas public, provided that the taxing authority may be used
to meet the plan's liabilities and other obligations;
(II) the plan must annually obtain from a qualified
actuary who is a member in good standing of the American Academy of
Actuaries an actuarial analysis that reflects that its operations
are viable. Notwithstanding the preceding, an actuarial opinion filed
with the department under Insurance Code §802.002 may be accepted
for purposes of this subsection;
(III) financial statements of the plan must annually
be audited by an independent certified public accountant who is a
member in good standing of the American Institute of Certified Public
Accountants (AICPA). The audits must use generally accepted auditing
standards and must result in a report that attests to whether the
financial statements comply with generally accepted accounting principles
adopted by the AICPA. Notwithstanding the preceding, an audit report
filed with the department under Insurance Code Chapter 401 may be
accepted for purposes of this subsection; and
Cont'd... |
