CHAPTER 1901. PROFESSIONAL LIABILITY INSURANCE FOR PHYSICIANS AND HEALTH CARE PROVIDERS

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE B. LIABILITY INSURANCE FOR PHYSICIANS AND

HEALTH CARE PROVIDERS

CHAPTER 1901. PROFESSIONAL LIABILITY INSURANCE FOR PHYSICIANS AND

HEALTH CARE PROVIDERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1901.001. DEFINITIONS. In this chapter:

(1) "Health care provider" means:

(A) a person, partnership, professional association,

corporation, facility, or institution, or an officer, employee,

or agent of the person or entity acting in the course and scope

of authority, employment, or agency, as applicable, if the person

or entity is licensed or chartered by this state to provide

health care as:

(i) a registered nurse;

(ii) a hospital;

(iii) a dentist;

(iv) a podiatrist;

(v) a chiropractor;

(vi) an optometrist or therapeutic optometrist;

(vii) a pharmacist;

(viii) a veterinarian;

(ix) a not-for-profit kidney dialysis center;

(x) a blood bank that is a nonprofit corporation chartered to

operate a blood bank and is accredited by the American

Association of Blood Banks;

(xi) a for-profit or not-for-profit nursing home; or

(xii) a for-profit or not-for-profit assisted living facility;

or

(B) a health care practitioner or facility that the

commissioner, in accordance with Section 2203.103(b), determines

is eligible for coverage under this chapter.

(2) "Hospital" means a public or private institution licensed

under Chapter 241 or 577, Health and Safety Code.

(3) "Physician" means a person licensed to practice medicine in

this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.002. APPLICABILITY OF CHAPTER. This chapter applies

to:

(1) an insurer authorized to write or engaged in writing

professional liability insurance for a physician or health care

provider; and

(2) a rating organization acting on behalf of an insurer

described by Subdivision (1).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.003. APPLICABILITY OF OTHER LAW. Chapters 2251 and

2301 and Article 5.13-2 apply to rates and forms for professional

liability insurance for physicians and health care providers

under this chapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.004. ANNUAL REPORTS. (a) An insurer that issues

professional liability insurance policies covering physicians and

health care providers shall file annually with the commissioner a

report of:

(1) all claims and the amounts of those claims;

(2) amounts of claims reserves;

(3) investment income of the insurer derived from medical

professional liability premiums;

(4) information relating to amounts of judgments and settlements

paid on claims; and

(5) other information required by the commissioner.

(b) The commissioner may promulgate a form on which the

information under Subsection (a) must be reported. The form must

require that the information be reported in an accurate manner

and be reasonably calculated to:

(1) facilitate interpretation; and

(2) protect the confidentiality of the physician or health care

provider.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.005. RULES. The commissioner shall establish by rule:

(1) criteria that insurers must follow in establishing

reconsideration procedures under Section 1901.101; and

(2) standards and procedures to be followed in the review of

rates and premiums by the commissioner.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER B. RATE STANDARDS

Sec. 1901.051. CONSIDERATIONS IN SETTING RATES. (a) In setting

rates, an insurer shall consider:

(1) past and prospective loss and expense experience for all

professional liability insurance for physicians and health care

providers written in this state, subject to Subsection (b);

(2) a reasonable margin for underwriting profit and

contingencies;

(3) investment income; and

(4) dividends or savings allowed or returned by the insurer to

the insurer's policyholders or members.

(b) If the department finds that the group or risk to be insured

is not of sufficient size to be credible, an insurer must also

consider in setting rates past and prospective loss and expense

experience for all professional liability insurance for

physicians and health care providers written outside this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.052. GROUPING OF RISKS. In setting rates, an insurer

may group risks by classification, rating schedule, or any other

reasonable method.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.053. MODIFICATION OF CLASSIFICATION RATES. (a) An

insurer may modify classification rates to produce rates for

individual risks in accordance with rating plans that establish

standards for measuring variations in hazards or expense

provisions.

(b) The standards may measure any difference among risks that

can be demonstrated to have a probable effect on losses or

expenses.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.054. LIMITATIONS ON RATES. (a) Rates set under this

chapter may not be excessive or inadequate, as described by this

section, or unreasonable or unfairly discriminatory.

(b) A rate is not excessive unless the rate is unreasonably

high for the insurance coverage provided.

(c) A rate is not inadequate unless the rate is unreasonably low

for the insurance coverage provided and:

(1) is insufficient to sustain projected losses and expenses; or

(2) the use of the rate has or, if continued, will have the

effect of destroying competition or creating a monopoly.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.034(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.034(a), eff. September 1, 2007.

Sec. 1901.0541. USE IN UNDERWRITING OF CERTAIN INFORMATION

RELATED TO LAWSUITS; REFUND. (a) Notwithstanding any other

provision of this code, an insurer may not consider for the

purpose of setting premiums or reducing a claims-free discount

for a particular insured physician's professional liability

insurance a lawsuit filed against the physician if:

(1) before trial, the lawsuit was dismissed by the claimant or

nonsuited; and

(2) no payment was made to the claimant under a settlement

agreement.

(b) An insurer that, in setting premiums or reducing a

claims-free discount for a physician's professional liability

insurance, considers a lawsuit filed against the physician shall

refund to the physician any increase in premiums paid by the

physician that is attributable to that lawsuit or reinstate the

claims-free discount if the lawsuit is dismissed by the claimant

or nonsuited without payment to the claimant under a settlement

agreement. The insurer shall issue the refund or reinstate the

discount on or before the 30th day after the date the insurer

receives written evidence that the lawsuit was dismissed or

nonsuited without payment to the claimant under a settlement

agreement.

(c) This section does not prohibit an insurer from considering

and using aggregate historical loss and expense experience

applicable generally to a classification of physicians'

professional liability insurance to set rates for that

classification to the extent authorized by Chapter 2251 and

Article 5.13-2. Notwithstanding Section 2251.052(c), an insurer

may not assign a physician to a particular classification based

on a factor described by Subsection (a).

Added by Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.035(a), eff. September 1, 2007.

Added by Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.035(a), eff. September 1, 2007.

Sec. 1901.055. CLAIM SURCHARGE. A claim surcharge assessed by

an insurer against a physician or health care provider under a

professional liability insurance policy may be based only on

claims actually paid by an insurer as a result of:

(1) a settlement; or

(2) an adverse judgment or decision of a court.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.056. ABSOLUTE RATES PROHIBITED. (a) In this section,

"absolute rates" means rates, rating plans, or rating

classifications that are filed under Chapter 2251 or Article

5.13-2 by an insurer or authorized rating organization and that

are required to be used, to the exclusion of all others, by each

insurer authorized to write policies.

(b) A provision of this chapter, Chapter 2251, or Article 5.13-2

relating to the regulation of rates, rating plans, and rating

classifications for professional liability insurance for

physicians and health care providers does not:

(1) give the commissioner the power to promulgate uniform or

absolute rates; or

(2) prevent different insurers or organizations authorized to

file rates from filing different rates for risks in a given

classification or modified rates for individual risks made in

accordance with rating plans.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.057. CONSIDERATIONS IN APPROVING RATES. In approving

rates under this chapter, the department shall consider the

impact of risk management courses taken by physicians and health

care providers in this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.034(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.034(b), eff. September 1, 2007.

SUBCHAPTER C. REVIEW OF RATES

Sec. 1901.101. RECONSIDERATION OF RATES AND PREMIUMS. (a) Each

insurer to which this chapter applies shall adopt a procedure for

reconsideration of a rate or premium charged a physician or

health care provider for professional liability insurance

coverage.

(b) The procedure must include:

(1) an opportunity for a hearing before officers or employees

who have responsibility for determining rates and premiums to be

charged for professional liability insurance; and

(2) a requirement that the insurer reconsider the rate or

premium and provide the physician or health care provider a

written explanation of the rate or premium being charged.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.102. APPEAL. A physician or health care provider that

is not satisfied with a decision under procedures established

under Section 1901.101 may appeal to the commissioner for:

(1) a review of the rate or premium; and

(2) a determination of whether the rate or premium being charged

complies with criteria under Sections 1901.051-1901.054 and

1901.057.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER D. BEST PRACTICES FOR NURSING HOMES

Sec. 1901.151. BEST PRACTICES. (a) The commissioner shall

adopt best practices for risk management and loss control that

may be used by for-profit and not-for-profit nursing homes.

(b) In developing or amending the best practices, the

commissioner shall consult with the Health and Human Services

Commission and a task force appointed by the commissioner.

(c) The task force must be composed of representatives of:

(1) insurers that write professional liability insurance for

nursing homes;

(2) the Texas Medical Liability Insurance Underwriting

Association;

(3) nursing homes; and

(4) consumers.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.152. CONSIDERATION OF BEST PRACTICES IN SETTING RATES.

In setting rates for professional liability insurance applicable

to a for-profit or not-for-profit nursing home, an insurer or the

Texas Medical Liability Insurance Underwriting Association may

consider whether the nursing home adopts and implements the best

practices adopted under this subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.153. STANDARD OF CARE FOR CIVIL ACTIONS NOT

ESTABLISHED. The best practices for risk management and loss

control adopted under this subchapter do not establish standards

of care for nursing homes applicable in a civil action against a

nursing home.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER E. POLICY FORMS

Sec. 1901.201. STANDARDIZED POLICY FORMS; APPROVAL OF OTHER

FORMS. (a) The commissioner shall prescribe standardized policy

forms for occurrence, claims-made, and claims-paid professional

liability insurance policies for physicians and health care

providers.

(b) An insurer may not use a form other than a standardized

policy form in writing professional liability insurance for

physicians and health care providers unless the form has been

approved by the commissioner.

(c) An insurer writing professional liability insurance for

physicians and health care providers may use an endorsement if

the endorsement has been filed with and approved by the

commissioner.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER F. COVERAGE

Sec. 1901.251. PREMIUM BASIS. An insurer may not write a

professional liability insurance policy under this chapter on

less than an annual premium basis.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.252. COVERAGE FOR EXEMPLARY DAMAGES. (a) Except as

provided by Subsection (b), a medical professional liability

insurance policy issued to or renewed for a physician or health

care provider in this state may not include coverage for

exemplary damages that may be assessed against the physician or

health care provider.

(b) The commissioner may approve an endorsement form that

provides for coverage for exemplary damages for use on a medical

professional liability insurance policy issued to:

(1) a hospital; or

(2) a for-profit or not-for-profit nursing home or assisted

living facility.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.253. NOTICE OF PREMIUM INCREASE, CANCELLATION, OR

NONRENEWAL. (a) An insurer that issues a professional liability

insurance policy for a physician or health care provider must

provide to the insured written notice of at least 90 days if the

insurer intends to:

(1) increase the premiums on the policy; or

(2) cancel or not renew the policy for a reason other than for

nonpayment of premiums or because the insured is no longer

licensed.

(b) If the insurer intends to increase the premiums, the insurer

shall state in the notice the amount of the increase.

(c) If the insurer intends to cancel or not renew the policy,

the insurer shall state in the notice the reason for cancellation

or nonrenewal.

(d) An insurer may provide notice of cancellation under this

section only within the first 90 days from the effective date of

the policy.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 1901.254. PROHIBITION OF USE OF CERTAIN INFORMATION FOR

PHYSICIAN OR HEALTH CARE PROVIDER. (a) For the purpose of

writing professional liability insurance for physicians and

health care providers, an insurer may not consider whether, or

the extent to which, a physician or health care provider provides

services in this state to individuals who are recipients of

Medicaid or covered by the state child health plan program

established by Chapter 62, Health and Safety Code, including any

consideration resulting in:

(1) denial of coverage;

(2) refusal to renew coverage;

(3) cancellation of coverage;

(4) limitation of the amount, extent, or kind of coverage

available; or

(5) a determination of the rate or premium to be paid.

(b) The commissioner may adopt rules as necessary to implement

this section.

Added by Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.035(b), eff. September 1, 2007.

Added by Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.035(b), eff. September 1, 2007.

Sec. 1901.255. COVERAGE FOR VOLUNTEER HEALTH CARE PROVIDERS.

(a) In this section:

(1) "Charitable organization" has the meaning assigned by

Section 84.003, Civil Practice and Remedies Code.

(2) "Volunteer health care provider" has the meaning assigned by

Section 84.003, Civil Practice and Remedies Code.

(b) An insurer may make available professional liability

insurance covering a volunteer health care provider for an act or

omission resulting in death, damage, or injury to a patient while

the person is acting in the course and scope of the person's

duties as a volunteer health care provider as described by

Chapter 84, Civil Practice and Remedies Code.

(c) This section does not affect the liability of a volunteer

health care provider who is serving as a direct service volunteer

of a charitable organization. Section 84.004(c), Civil Practice

and Remedies Code, applies to the volunteer health care provider

without regard to whether the volunteer health care provider

obtains liability insurance under this section.

(d) An insurer may make professional liability insurance

available under this section to a volunteer health care provider

without regard to whether the volunteer health care provider is a

"health care provider" as defined by Section 1901.001.

Added by Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.036(a), eff. September 1, 2007.

Added by Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.036(a), eff. September 1, 2007.