hb72.html

05 LC 33 0564

House Bill 72

By: Representatives Powell of the 29th and Dodson of the 75th

A BILL TO BE ENTITLED
AN ACT

To amend Title 31 of the Official Code of Georgia Annotated, relating to health, so as to provide for legislative findings; to provide a short title; to provide for definitions; to provide for the establishment of hospital insurance authorities and the powers, duties, and management thereof; to provide for contracts establishing such authorities; to provide that an authority shall not be considered an insurance company; to provide for certificates of authority by the Commissioner of Insurance authorizing the establishment of a group self-insurance fund; to provide for applications to the Commissioner of Insurance; to provide for funds to be maintained and requirements relating thereto; to provide for the investment of assets in the fund; to provide for joint and several liability for the legal obligations of the fund; to provide for contracts between an authority and a fund administrator; to provide for a fidelity bond and errors and omissions insurance; to provide for revocation, suspension, and refusal by the Commissioner of Insurance to renew a certificate of authority; to provide for exemptions from taxation; to provide for periodic examinations; to provide for fund deficiencies and assessments upon members; to provide for rules and regulations; to provide for hearings; to provide for an excess loss funding program; to provide for audits of funds; to provide for other related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 31 of the Official Code of Georgia Annotated, relating to health, is amended by adding at its end a new Chapter 46 to read as follows:

"CHAPTER 46

31-46-1.

The General Assembly finds that there presently exists a crisis in the field of hospital liability insurance. Hospitals in this state are having increasing difficulty in locating liability insurance and, when such hospitals are able to locate such insurance, the insurance is extremely costly. The result of this crisis is the potential for a diminution of the availability of access to health care services and the resultant effect on the health and well-being of the citizens of this state. The General Assembly finds that the state has a significant interest in ensuring the availability of liability insurance for hospitals which provide indigent care in this state at reasonable cost to the facilities. The General Assembly further finds that the provision of such insurance to the hospitals will result in the increased availability of health care services for the citizens of this state which is of substantial benefit to the state and its citizens.

31-46-2.

This chapter shall be known and may be cited as the 'Georgia Hospital Insurance Authority Act.'

31-46-3.

This chapter, being for the health and welfare of the state and its inhabitants, shall be liberally construed to effect its purposes.

31-46-4.

As used in this chapter, the term:

(1) 'Administrator' means any person who administers a group self-insurance fund other than the hospital insurance authority.

(2) 'Bond,' 'bonds,' or 'revenue bonds' means revenue bonds, refunding notes, notes, interim certificates, bond anticipation notes, and other evidences of indebtedness of a hospital insurance authority issued under this chapter.

(3) 'Commissioner' means the Commissioner of Insurance.

(4) 'Group self-insurance fund' or 'fund' means a pool of public moneys established by a hospital insurance authority from contributions of its members in order to pool the risks of medical malpractice liability.

(5) 'Hospital insurance authority' means an association formed by medical facilities by the execution of a contract for the development and administration of one or more programs of insurance for public and private medical facilities which provide indigent health care services in this state.

(6) 'Hospital insurance authority program' means a plan and activities carried out under such plan by a hospital insurance authority to reduce risk of loss on account of medical malpractice liability, and to administer one or more group self-insurance funds, including the processing and defense of claims brought against members of the authority.

(7) 'Medical facility' means any hospital in this state having less than 200 licensed beds and its credentialed physicians and where such hospital, as of January 1, 2005, did not participate in a captive or self-insurance trust program established for liability insurance purposes.

31-46-5.

(a) Without limiting the generality of any provisions of this chapter, the general purpose of an authority is declared to be that of providing or procuring insurance for public and private medical facilities which provide any indigent health care services in this state. The authority may develop, market, finance, and maintain one or more programs of insurance for such public and private medical facilities that desire to participate in such program, and the authority shall be authorized to do any and all things deemed by the authority to be necessary, convenient, or desirable for and incident to the efficient and proper development and operation of such types of undertakings.

(b) A group of medical facilities may execute a contract among themselves to form and become members of a hospital insurance authority. After a hospital insurance authority has been formed, any medical facility may, subject to the bylaws and requirements of such authority, become a member and, through participation in the authority, may:

(1) Pool its medical malpractice liability risks in whole or in part with those of other medical facilities; or

(2) Jointly purchase medical malpractice liability insurance with other medical facilities participating in and belonging to the hospital insurance authority, the participating medical facilities to be coinsured under a master policy or policies with the total premium apportioned among such participants.

(1) To have a seal and alter the same at pleasure;

(2) To adopt, amend, and repeal bylaws and rules consistent with this chapter to regulate its affairs, to carry into effect the powers and purposes of the authority, and to conduct its business;

(3) To acquire by purchase, lease, or otherwise, with the exception of eminent domain, and to hold, lease, and dispose of real and personal property of every kind and character for its corporate purposes;

(4) To acquire in its own name by purchase, on such terms and conditions and in such manner as it may deem proper, real property or rights of easements therein or franchises necessary or convenient for its corporate purposes and to use the same so long as its corporate existence shall continue; to lease or make contracts with respect to the use of the same; or to dispose of the same in any manner it deems to the best advantage of the authority;

(5) To appoint, select, and employ officers, agents, consultants, and employees, including, but not limited to, fiscal agents, actuaries, accountants, risk managers, health care and financial experts, and attorneys, and fix their respective compensations;

(6) To appoint, select, and employ an executive director;

(7) To make contracts and leases and to execute all instruments necessary or convenient and to dispose by conveyance of its title in fee simple of real and personal property of every kind and character. Any and all persons, firms, and corporations; the state; and any and all political subdivisions, departments, institutions, or agencies of the state are authorized to enter into contracts, leases, or agreements with the authority upon such terms and for such purposes as they deem advisable. The authority is specifically authorized to convey title, in fee simple, to any and all of its lands and any improvements thereon to any persons, firms, corporations, municipalities, the State of Georgia, or the United States government, or any agency or department thereof;

(8) To invest and reinvest funds;

(9) To provide, obtain, or purchase insurance or reinsurance agreements or both under such terms and conditions as the authority deems appropriate;

(10) To settle and pay claims under such insurance agreements under such conditions and terms as the authority deems appropriate;

(11) To accept loans or grants of money or materials or property of any kind from the United States of America or any agency or instrumentality thereof upon such terms and conditions as the United States of America or such agency or instrumentality may impose;

(12) To accept loans or grants of money or materials or property of any kind from the State of Georgia or any agency or instrumentality or political subdivision thereof upon such terms and conditions as the State of Georgia or such agency or instrumentality or political subdivision may impose;

(13) To exercise any power usually possessed by private corporations performing similar functions which is not in conflict with the Constitution and laws of this state;

(14) To sell, convey, mortgage, pledge, assign, lease, exchange, transfer, or otherwise dispose of all or any part of its property or assets;

(15) To borrow money for any corporate purposes from any bank, banks, or other lending institutions and to execute evidences of such indebtedness and to secure the same;

(16) To fix, alter, charge, and collect premiums from participating medical facilities for insurance provided by or procured by the authority, such rates to be at least sufficient to provide for payment of all expenses of the authority, the conservation, maintenance, and operation of the authority on a sound actuarial basis, the payment of principal and interest on its notes, bonds, and other evidences of indebtedness or obligation, and to fulfill the terms and provisions of any agreement made with the purchasers and holders of any such notes, bonds, or other evidences of indebtedness or obligation; and

(17) To do all things necessary or convenient to carry out the powers expressly given in this chapter.

(d) No part of the revenues or assets of the authority may inure to the benefit of or be distributable to its members or officers or other private persons. Any net earnings of the authority beyond that necessary for retirement of authority indebtedness or to implement the public purposes of this chapter shall inure to the benefit of the state. Upon termination or dissolution, all rights and properties of the authority shall pass to and are vested in the state, subject to the rights of lienholders and other creditors.

(e) All arrangements and agreements made under the authority of this chapter shall be in writing. A medical facility may become a member of a hospital insurance authority by the adoption of a resolution or ordinance by the governing authority of the medical facility. The hospital insurance authority shall operate under such name and style as shall be provided in the contract creating such authority and shall have the power to bring and defend actions in all courts.

(f) All books, records, and files maintained by any administrator of any fund established by the authority, including but not limited to audit data and all active and inactive claim files, shall at all times be the sole property of the authority and shall be surrendered immediately to the authority upon demand.

31-46-6.

Each contract establishing a hospital insurance authority shall provide for a board of trustees which shall govern the authority. Such board shall be authorized to administer the authority in accordance with the provisions of the contract establishing the authority and shall be authorized to adopt such bylaws, rules, and regulations as may be necessary or desirable in administering such authority.

31-46-7.

A hospital insurance authority created pursuant to this chapter is not an insurance company or an insurer under Title 33, and the development and administration by such authority of one or more group self-insurance funds shall not constitute doing business as an insurer.

31-46-8.

(a) No hospital insurance authority shall establish a group self-insurance fund or funds until such authority has been issued a certificate of authority by the Commissioner of Insurance as provided in this Code section and under such rules and regulations as the Commissioner may promulgate to assure compliance with this chapter.

(b) The Commissioner shall not be authorized to issue any certificate of authority pursuant to this Code section prior to April 30, 2006. Any application for a certificate of authority pursuant to this Code section which is filed prior to March 1, 2006, shall be updated by the applicant in order to comply with any statute, rule, or regulation which may be promulgated or enacted prior to the issuance of the certificate of authority.

(c) When applying for a certificate of authority, a hospital insurance authority shall file with the Commissioner an application setting forth:

(1) The name of the authority;

(2) The location of the authoritýs principal office;

(3) The names and addresses of the members of the authority;

(4) The names and addresses of the members of each fund;

(5) The name and address of a Georgia resident designated and appointed as each fund́s proposed registered agent for service of process in this state;

(6) The names and addresses of the members of the board of trustees of the authority;

(7) A copy of the bylaws of the authority;

(8) A copy of the intergovernmental contract establishing the authority;

(9) A copy of the agreement or agreements establishing each fund;

(10) A copy of any agreements between the authority, any fund of the authority, and any administrator of a fund;

(11) A statement of the financial condition of the authority and each fund of the authority listing all of their assets and liabilities as of the end of the last preceding month prior to the date of the application on such a form as may be prescribed by the Commissioner;

(12) A copy of each contract, endorsement, and application form proposed to be issued or used in connection with each fund. Such contracts, endorsements, applications, or revisions thereto shall be filed with and approved by the Commissioner prior to their use; and

(13) A copy of the rates, rating systems, and rules proposed to be used in connection with each fund. Such rates, rating systems, rules, and any revisions thereto shall be filed with and approved by the Commissioner prior to their use.

31-46-9.

(a) The Commissioner shall examine the application made under Code Section 36-85-5 to determine whether the authority and any established fund will be able to comply with this chapter and applicable rules and regulations. If the Commissioner finds that the authority and any established fund are capable of complying with such requirements, he shall issue a certificate of authority to the authority.

(b) If the Commissioner refuses to issue a certificate of authority, he shall issue an order setting forth the reasons for refusal and forward it to the authority. A copy of the order shall be sent to each member of the fund.

(c) Except as otherwise provided in subsection (b) of Code Section 36-85-5, the Commissioner shall approve or disapprove the application for a certificate of authority within 60 days of receipt by him of the application and all of the supporting information requested.

(d) The Commissioner may refuse to issue or renew or may suspend or revoke the certificate of authority of any authority, in accordance with Code Section 36-85-12, for failure of the authority to comply with any provision of this chapter or with any of the rules, regulations, or orders of the Commissioner issued pursuant thereto.

(e) The certificate shall be renewed annually in accordance with rules and regulations promulgated by the Commissioner.

31-46-10.

Each fund formed pursuant to this chapter shall possess and thereafter maintain minimum surplus in an amount such as the Commissioner may reasonably establish or subsequently require for the protection of the members. The Commissioner may authorize a fund to maintain a deposit with the Commissioner consisting of securities eligible for deposit by domestic insurance companies in accordance with Chapter 12 of Title 33 or, for a period not to exceed 60 months, to post a surety bond in lieu of maintaining the minimum surplus required by this Code section.

31-46-11.

The investable assets of a fund may be invested in securities or other investments permitted by the laws of this state for the investment of assets constituting the legal reserves of property and casualty insurance companies or in such other securities or investments as the Commissioner may permit such insurers to invest their funds under Title 33. Such investments shall be subject to the same terms, conditions, and limitations which apply to property and casualty insurance companies under Title 33.

31-46-12.

Each medical facility shall be jointly and severally liable for all legal obligations of a fund which arise out of an event which occurred while such medical facility was a member of such fund; provided, however, that a fund shall not assume a risk greater than an amount to be determined by the Commissioner; and provided, further, that this legal obligation may be enforced by an assessment against such member as provided in the bylaws of the authority.

31-46-13.

(a) If an authority contracts with an administrator, the authority and the administrator must enter into a written agreement which shall be subject to review and approval by the Commissioner in accordance with this Code section and which shall contain at least the following:

(1) A contractual provision obligating the administrator to obtain and maintain such bonds, deposits, or insurance coverage as may be required to be maintained by this chapter; and

(2) A requirement that errors and omissions coverage or other appropriate liability insurance in an amount which is not less than that specified by the rules and regulations of the Commissioner be maintained at all times by the administrator.

(b) The terms of any such agreement shall be reasonable and equitable, and the agreement and any amendments thereto shall be filed with the Commissioner at least 30 days prior to their use. Any such agreement and any and all amendments thereto which have not been specifically disapproved by the Commissioner within 30 days after the filing thereof shall be deemed to be approved.

(c) A copy of the agreement and any and all amendments thereto shall be furnished to each authority or fund member upon request.

31-46-14.

(a) The Commissioner shall require each administrator to have and maintain a fidelity bond in an amount which the Commissioner deems appropriate but which is not less than $100,000.00.

(b) Errors and omissions coverage or other appropriate liability insurance in an amount which is not less than that specified by the rules and regulations of the Commissioner shall be maintained at all times by an administrator of a fund; and a certificate by the insurer or other appropriate evidence of such coverage shall be filed with the Commissioner by the fund.

(c) Each administrator shall maintain an office in this state for the payment, processing, and adjustment of the claims of the fund or funds which it represents.

31-46-15.

(a) The Commissioner may revoke, suspend, or refuse to issue or renew the certificate of authority of any authority when and if, after investigation, he finds that:

(1) Any certificate of authority issued to the authority was obtained by fraud;

(2) There was any material misrepresentation in the application for the certificate of authority;

(3) The authority, any fund established by the authority, the administrator of a fund, or any marketing representative has otherwise shown itself to be untrustworthy or incompetent;

(4) The authority, any fund established by the authority, the administrator of a fund, or any marketing representative has violated any of the provisions of this chapter or the rules and regulations of the Commissioner promulgated pursuant to this chapter;

(5) The authority, any fund established by the authority, or the administrator of a fund has misappropriated, converted, illegally withheld, or refused to pay over upon proper demand any moneys which belong to a member or a person otherwise entitled thereto and which have been entrusted to the authority, fund, or administrator in its fiduciary capacities; or

(6) The authority or any fund established by the authority is found to be in an unsound condition or in such condition as to render its future transaction of business in this state hazardous to its members.

(b) Before the Commissioner shall revoke, suspend, or refuse to issue or renew the certificate of authority of any authority, he shall give the authority an opportunity to be fully heard and to introduce evidence in its behalf. In lieu of revoking, suspending, or refusing to issue or renew the certificate of authority of any authority for any of the causes enumerated in this Code section, after hearing as provided in this Code section, the Commissioner may place the fund and its administrator on probation for a period of time not to exceed one year when, in his judgment, he finds that the public interest and the interests of the fund́s members would not be harmed by the continued operation of the fund. At any hearing provided for by this Code section, the Commissioner or his designee shall have authority to administer oaths to witnesses. Any witness testifying falsely after taking an oath commits the offense of perjury.

(1) Written approval is first obtained from the Commissioner; and

(2) The Commissioner determines that all claims and other legal obligations of the fund have been paid or that adequate provisions for such payment have been made.

31-46-16.

Hospital insurance authorities and funds established by such authorities shall be exempt from state and local taxes and fees.

31-46-17.

The Commissioner shall have the authority to require and conduct periodic examinations to verify the solvency of funds in the same manner and under the same conditions as insurers are examined under Chapter 2 of Title 33.

31-46-18.

(a) If the assets of a fund are at any time insufficient to enable a fund to discharge its legal liabilities and other obligations and to maintain the reserves and surplus required of it under this chapter, the authority shall forthwith make up the deficiency or levy an assessment upon the members of the fund for the amount needed to make up the deficiency.

(b) If the authority fails to make up the deficiency or to make the required assessment of the fund members within 30 days after the Commissioner orders it to do so or if the deficiency is not fully made up within 60 days after the date on which any such assessment is made or within such longer period of time as may be specified by the Commissioner, the fund shall be deemed to be insolvent and shall be proceeded against in the same manner as are domestic insurers under Chapter 37 of Title 33; and the Commissioner shall have the same powers and limitations in such proceedings as are provided under that chapter, except as otherwise provided for in this chapter.

(c) If the liquidation of a fund is ordered, an assessment shall be levied upon its members for such an amount as the Commissioner determines to be necessary to discharge all liabilities of the fund, including the reasonable costs of liquidation.

31-46-19.

The Commissioner shall have authority to promulgate rules and regulations to effectuate the provisions of this chapter.

31-46-20.

Any party which is aggrieved by any act, determination, order, or any other action of the Commissioner taken pursuant to this chapter may request a hearing before the Commissioner or otherwise proceed in accordance with Chapter 13 of Title 50, the 'Georgia Administrative Procedure Act.'

31-46-21.

(a) A hospital insurance authority shall maintain at all times an excess loss funding program acceptable to the Commissioner. An excess loss funding program may consist of excess insurance, self-funding from unobligated surplus of a fund, any combination of the foregoing, or any other funding program acceptable to the Commissioner.

(b) The excess loss funding program of an authority shall be approved by the Commissioner as a condition to the issuance and maintenance of a certificate of authority of any authority which establishes a fund or funds authorized pursuant to this article. An authority may be permitted to purchase excess insurance:

(1) From insurers authorized to transact business in this state; or

(2) From approved surplus lines carriers.

31-46-22.

Each fund established under this chapter shall have an annual audit of its books and accounts performed by a certified public accountant. Such audit shall be conducted in accordance with generally accepted accounting principles. A copy of such audit shall be made available to fund members."

SECTION 2.

All laws and parts of laws in conflict with this Act are repealed.