HCS HB 1837 -- MALPRACTICE INSURANCE

SPONSOR:  Yates

COMMITTEE ACTION:  Voted "do pass" by the Committee on Insurance
Policy by a vote of 14 to 0.

This substitute changes the laws regarding malpractice insurance.
The substitute:

(1)  Allows limited liability companies, corporations, limited
liability partnerships, partnerships, and other entities formed
for the practice of law or medicine to become members of an
association providing malpractice insurance to its members;

(2)  Makes associations writing malpractice insurance subject to
reporting, notification, and rating requirements;

(3)  Requires the Director of the Department of Insurance to
submit an annual report to the General Assembly regarding the
actual and base rates charged for malpractice insurance and any
changes from the previous year's rates;

(4)  Requires insurers writing medical malpractice insurance to
Missouri health care providers to submit an annual report by
June 1 of each year containing policy information including the
following:

(a)  Number of policies written, canceled, renewed, and not
renewed;

(b)  Total premiums collected and losses paid; and

(c)  Claims pending, paid, and closed;

(5)  Requires insurers to report to the director and the
appropriate licensing board any malpractice claims paid;

(6)  Specifies that any malpractice insurer failing to report
required claims information in a timely manner will be subject to
penalties applicable to insurance companies under Section
374.215, RSMo;

(7)  Removes the 30-day period the director has to approve a
malpractice insurance policy to be used by an association;

(8)  Requires the surcharge paid to the association by
policyholders in the first year to be paid in the form of cash or
cash equivalent and not in the form of a promissory note;

(9)  Prohibits medical malpractice insurers from charging rates
that are excessive, inadequate, or unfairly discriminatory.
Rates will be based upon Missouri loss experience only, not
experience from other states unless the failure to do so will
jeopardize the financial stability of the insurer;

(10)  Allows insurers to charge an additional premium surcharge
or discount based on the health care provider's loss experience,
training, and other factors;

(11)  Specifies that no insurer can increase malpractice
insurance rates by more than 25% or refuse to renew a policy
without at least 60 days' written notification.  Insurers cannot
cease issuing policies in this state without 180 days' written
notice to the insured and the director.  If an insurer fails to
give notice, the policyholder has the right to continue coverage
under the policy;

(12)  Requires, by June 30, 2007, the department to establish
risk-reporting categories by physician specialty for medical
malpractice insurance base rates.  Annually, insurers will report
actual rates charged including assessments for each
risk-reporting category.  The department will annually publish a
report containing market rates reflecting the median actual rates
charged for each risk-reporting category;

(13)  Defines "base rate" and "schedule rating or individual risk
rating credits or debits";

(14)  Allows the department to establish reporting standards for
premiums received and policies written by category.  The
department will publish this information in a manner appropriate
for assisting insurers in developing future base rates;

(15)  Establishes penalty provisions for violations of Sections
383.100 - 383.125 and Sections 383.302 - 383.312; and

(16)  Requires, by January 1, 2011, all insurers writing medical
malpractice insurance to offer policies which will apply to
injuries resulting from acts or omissions occurring during the
policy period, regardless of the timing of the filing of a claim.

FISCAL NOTE:  No impact on General Revenue Fund in FY 2007,
FY 2008, and FY 2009.  Estimated Cost on Other State Funds of
$123,563 in FY 2007, $120,524 in FY 2008, and $123,555 in FY
2009.

PROPONENTS:  Supporters say that the bill will help decrease the
cost of medical malpractice insurance.  Doctors are leaving the
state because of the high cost of insurance.  Reporting and
publishing of the rates companies charge will help consumers to
be informed and shop around for insurance.  It will also help to
increase competition.

Testifying for the bill were Representative Yates; Lancer Gates,
D.O.; Missouri State Medical Association; Missouri Academy of
Family Physicians; Missouri Doctors Mutual Insurance Company; and
Missouri Association of Osteopathic Physicians and Surgeons.

OPPONENTS:  Those who oppose the bill say that there are too many
reporting requirements.  Tort reform is already helping to
stabilize the market and to increase competition.  The bill will
force rate increases.  No one will enter a market that is over
regulated.  If Missouri's rates are so high, wouldn't the use of
other state's claims experience make sense.

Testifying against the bill were the Missouri Insurance
Coalition; and American Insurance Coalition.

OTHERS:  Others testifying on the bill say the data collection
portion of the bill is very important.  The department could
absorb the additional cost of this data collection.  Competition
promotes fair rates.

Others testifying on the bill were Missouri Physicians Mutual;
and Department of Insurance.

Marc Webb, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 2nd Regular Session
Last Updated November 29, 2006 at 9:44 am