SS SCS HCS HB 1837 -- MEDICAL MALPRACTICE INSURANCE AND
ENFORCEMENT POWERS OF THE DEPARTMENT OF INSURANCE

This bill changes the laws regarding medical malpractice
insurance and the enforcement powers of the Department of
Insurance.

MEDICAL MALPRACTICE INSURANCE

The bill:

(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)  Requires the malpractice association's articles of
association and bylaws to specify and define the types of
assessments its members and former members might have to pay to
cover losses and expenses incurred by the association;

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

(4)  Requires the Director of the Department of Insurance to
establish risk reporting categories and reporting standards for
insurers to annually report medical malpractice insurance
premiums, losses, exposures, and other information the director
may require.  The director will compile this information in a
manner appropriate for assisting medical malpractice insurers in
developing future base rates, schedule rating, or individual risk
rating factors and other aspects of their rating plans;

(5)  Requires the director to annually establish and publish a
market rate reflecting the mean of the actual rates charged for
each risk reporting category and publish comparisons of the base
rates charged by each insurer;

(6)  Allows the director to issue administrative orders and seek
other remedies specified in the bill to assure compliance for
violations of the provisions relating to reporting medical
malpractice information;

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

(8)  Prohibits an insurer from increasing malpractice insurance
rates by more than 15% or refusing to renew a policy without at
least 60 days' written notification unless requested by the
insured or due to changes in the insured's practice or risk
characteristics.  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; and

(9)  Creates the Health Care Stabilization Fund Feasibility Board
within the department to analyze medical malpractice data to
determine whether a health care stabilization fund should be
established in Missouri.  The board will consist of 10 members
including the department director, a medical doctor, a doctor of
osteopathy, a licensed nurse, a representative of Missouri's
hospitals, a family physician, and two members each from the
Senate and House of Representatives.  As part of its duties, the
board will conduct a comprehensive study on whether a health care
stabilization fund is feasible within Missouri, or specified
geographic regions thereof, or for specific medical specialties.
If the board determines that a fund is feasible, it will
recommend to the General Assembly the structure, design, and
funding.  The director will appoint the members of the board,
other than the General Assembly members, no later than January 1,
2007.  The board will meet at least quarterly submitting annual
reports on its progress with a final report and recommendations
to the Governor and General Assembly by December 31, 2010, when
the board expires.

ENFORCEMENT POWERS OF THE DEPARTMENT OF INSURANCE

The bill:

(1)  Allows the Director of the Department of Insurance, upon
determining that a person has violated or attempted to violate
provisions of the insurance laws, to order the following relief:

(a)  An order directing the person to cease and desist from
engaging in the act, practice, omission, or course of business;

(b)  A curative order or order directing the person to take other
action necessary to comply with the insurance laws;

(c)  Order a civil penalty or forfeiture; and

(d)  Award reasonable costs of the investigation;

(2)  Authorizes fines of up to $100,000 and imprisonment of up to
10 years if a person violates a cease and desist order.
Currently, a person may be punished by a maximum $1,000 fine and
up to one year in jail;

(3)  Allows the director to suspend or revoke a corporation's or
insurer's certificate of authority for violating insurance laws
or for a felony or misdemeanor conviction.  The director must
provide 30 days' notice and a hearing, if requested, before
revocation;

(4)  Allows the director to seek redress in county circuit
courts.  The court can issue injunctions, freeze assets, or take
other action as specified.  A consumer restitution fund is
created for preserving and distributing disgorgement or
restitution funds obtained through enforcement procedures to
aggrieved consumers; and

(5)  Classifies various violations of insurance laws into five
categories from level one through level five.  Maximum fines are
established at each level with level one being the least and
level five the highest.  All fines collected will go to fund
public schools as required by Article IX, Section 7, of the
Missouri Constitution.

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