40-3403. Health care stabilization fund, establishment and administration; board of governors, membership, organization, meetings, executive director and staff and general powers and duties; duties of
40-3403
40-3403. Health care stabilization fund, establishment andadministration; board of governors, membership, organization, meetings,executive director and staff and general powers and duties; duties ofcommissioner of insurance; liability of fund; payments from fund;qualification of health care provider for coverage under fund, termination;liability of provider for acts of other providers; university of Kansas medicalcenter private practice foundation reserve fund, establishment, transfers from;provider coverage options, election; eligibility of psychiatric hospitals andcertain inactive providers for coverage; termination of fund liability forcertain providers.(a) For the purpose of paying damages for personal injury or deatharising out of the rendering of or the failure to render professionalservices by a health care provider, self-insurer or inactive health careprovider subsequent to the time that such health care provider orself-insurer has qualified for coverage under the provisions of thisact, there is hereby established the health care stabilization fund. Thefund shall be held in trust in the state treasuryandaccounted for separately from other state funds.The board of governors shall administer the fund orcontract for theadministration of the fund with an insurance company authorized to dobusiness in this state.
(b) (1) There is hereby created a board of governorswhich shall be composed of such members and shall have such powers, dutiesand functions as are prescribed by this act. The board ofgovernors shall:
(A) Administer the fund and exercise andperform other powers, dutiesand functions required of the board under the health care providerinsuranceavailability act;
(B) provide advice, information and testimony to the appropriatelicensingor disciplinary authority regarding the qualifications of a health careprovider;
(C) prepare and publish, on or before October 1 of each year, asummary of the fund's activity during the preceding fiscal year, includingbut not limited to the amount collected from surcharges, the highest andlowest surcharges assessed, the amount paid from the fund, the number ofjudgments paid from the fund, the number of settlements paid from the fundand the amount in the fund at the end of the fiscal year; and
(D) have the authority to grant exemptions from the provisionsofsubsection (m) of this section when a health care provider temporarily leavesthe state for the purpose of obtaining additional education or training or toparticipate in religious, humanitarian or government service programs.Whenever a health care provider has previously left the state for one of thereasons specified in this paragraph and returns to the state and recommencespractice, the board of governors may refund any amount paid by the health careprovider pursuant to subsection (m) of this section if no claims have beenfiled against such health care provider during the provider's temporary absencefrom the state.
(2) The board shall consist of 10 persons appointed by thecommissioner of insurance,as provided by this subsection (b) andas follows:
(A) Three members who are licensed to practicemedicine andsurgery in Kansas who are doctors of medicine and who are on a list ofnominees submitted to the commissioner by the Kansas medical society;
(B) three members who arerepresentatives of Kansas hospitals and who are on a list of nomineessubmitted to the commissioner by the Kansas hospital association;
(C) two members who are licensed to practicemedicine and surgery in Kansas who are doctors of osteopathic medicine andwho are on a list of nominees submitted to the commissioner by the Kansasassociation of osteopathic medicine;
(D) onemember who is licensed to practice chiropractic in Kansas and who is on alist of nominees submitted to the commissioner by the Kansas chiropracticassociation;
(E) one member who is alicensed professional nurse authorized to practice as a registered nurseanesthetist who is on a list ofnominees submitted to the commissioner by the Kansasassociation of nurse anesthetists.
(3) When avacancy occursin themembership of the board of governors created by this act, the commissionershallappoint a successor of like qualifications from a list of three nomineessubmitted tothecommissioner by the professional society or association prescribed by thissection forthe category of health care provider required for the vacant position on theboard ofgovernors. Allappointments made shall be for a term of office of four years, but no membershall beappointed for more than two successive four-year terms. Each member shallserveuntil a successor is appointed and qualified. Whenever a vacancy occurs in themembership of the board of governors created by this act for any reason otherthanthe expiration of a member's term of office, the commissioner shall appoint asuccessor of like qualifications to fill the unexpired term. In each case of avacancyoccurring in the membership of the board of governors, the commissioner shallnotifytheprofessional society or association which represents the category of healthcareprovider required for the vacant position and request a list of threenominations ofhealthcare providers from which to make the appointment.
(4) The board of governors shall organize on July 1 of each year and shallelect achairperson and vice-chairperson from among itsmembership.Meetings shall be called by the chairperson or by a written notice signed bythree members of the board.
(5) The board of governors, in addition to other duties imposedbythis act, shall study and evaluate the operation of the fund and make suchrecommendations to the legislature as may be appropriate to ensure theviability of the fund.
(6) (A) The board shall appoint an executivedirector who shall be in the unclassified service under the Kansas civilservice act and may appoint such attorneys, legal assistants, claims managersand compliance auditors who shall also be in the unclassified service under theKansas civil service act. Such executive director, attorneys, legalassistants, claims managers and compliance auditors shall receive compensationfixed by the board, in accordance with appropriation acts of the legislature,not subject to approval of the governor.
(B) The board may appoint such additionalemployees, andprovide all office space, services, equipment, materials and supplies, and allbudgeting, personnel, purchasing and related management functions required bythe board in the exercise of the powers, duties and functions imposed orauthorized by the health care provider insurance availability act or may enterinto a contract with the commissioner of insurance for the provision, by thecommissioner, of all or any part thereof.
(7) The commissioner shall:
(A) Provide technical and administrative assistance to the board ofgovernors withrespect to administration of the fund upon request of the board;
(B) provide such expertise as the board may reasonably request withrespect to evaluation of claims or potential claims.
(c) Subject to subsections (d), (e), (f), (i), (k), (m), (n), (o), (p) and(q), thefund shall be liable to pay: (1) Any amount due from a judgment or settlementwhich is in excess of the basic coverage liability of all liable residenthealth care providers or resident self-insurers for any personal injury ordeath arising out of the rendering of or the failure to render professionalservices within or without this state;
(2) subject to the provisions ofsubsection (m), any amount due from a judgment or settlement which is in excessof the basic coverage liability of all liable nonresident health care providersor nonresident self-insurers for any such injury or death arising out of therendering or the failure to render professional services within this state butin no event shall the fund be obligated for claims against nonresident healthcare providers or nonresident self-insurers who have not complied with this actor for claims against nonresident health care providers or nonresidentself-insurers that arose outside of this state;
(3) subject to the provisionsof subsection (m), any amount due from a judgment or settlement against aresident inactive health care provider, an optometrist or pharmacist whopurchased coverage pursuant to subsection (n)or a physicaltherapist who purchased coverage pursuant to subsection (o), for any suchinjury or deatharising out of the rendering of or failure to render professional services;
(4) subject to the provisions of subsection (m), any amount due from ajudgment orsettlement against a nonresident inactive health care provider, anoptometrist or pharmacist who purchased coverage pursuant to subsection (n)or a physical therapist who purchased coverage pursuant tosubsection (o),for any injury or death arising out of the rendering or failure to renderprofessional services within this state, but in no event shall the fund beobligated for claims against: (A) Nonresident inactive health care providerswho have not complied with this act; or (B) nonresident inactive health careproviders for claims that arose outside of this state, unless such health careprovider was a resident health care provider or resident self-insurer at thetime such act occurred;
(5) subject to subsection (b) of K.S.A. 40-3411, and amendments thereto,reasonable and necessary expenses for attorney feesincurred in defending the fund against claims;
(6) any amounts expended forreinsurance obtained to protect the best interests of the fund purchased by theboard of governors, which purchase shall be subject to theprovisions of K.S.A.75-3738 through 75-3744, and amendments thereto, but shall not be subject tothe provisions of K.S.A. 75-4101 and amendments thereto;
(7) reasonable andnecessary actuarial expenses incurred in administering the act, includingexpenses for any actuarial studies contracted for by the legislativecoordinating council, which expenditures shall not be subject to the provisionsof K.S.A. 75-3738 through 75-3744, and amendments thereto;
(8) periodically to theplan or plans, any amount due pursuant to subsection (a)(3) of K.S.A. 40-3413and amendments thereto;
(9) reasonable and necessary expenses incurred bythe board of governors in the administration of thefund or in the performance of other powers, duties or functions of the boardunder the health care provider insurance availability act;
(10) return of any unearned surcharge;
(11) subject to subsection (b) of K.S.A. 40-3411, and amendmentsthereto, reasonable and necessaryexpenses for attorney fees and other costs incurred in defending a personengaged or who was engaged in residency training or the private practicecorporations or foundations and their full-time physician faculty employed bythe university of Kansas medical center or any nonprofit corporationorganized to administer the graduate medical education programs of communityhospitals or medical care facilities affiliated with the university of Kansasschool of medicine from claims for personal injury ordeath arising out of the rendering of or the failure to render professionalservices by such health care provider;
(12) notwithstanding the provisions ofsubsection (m), any amount due from a judgment or settlement for an injury ordeath arising out of the rendering of or failure to render professionalservices by a person engaged or who was engaged in residency training or theprivate practice corporations or foundations and their full-time physicianfaculty employed by the university of Kansas medical center or any nonprofitcorporation organized to administer the graduate medical education programs ofcommunity hospitals or medical care facilities affiliated with the universityof Kansas school of medicine;
(13) subject to the provisions of K.S.A. 65-429 and amendments thereto,reasonableand necessary expenses for the development and promotion of risk managementeducation programs and for the medical care facility licensure and riskmanagement survey functions carried out under K.S.A. 65-429 and amendmentsthereto;
(14) notwithstanding the provisions of subsection (m), anyamount, but not less than the required basic coverage limits, owed pursuantto a judgment or settlement for any injury or death arising out of therendering of or failure to render professional services by a person, other thana person described in clause (12) of this subsection (c), who was engagedin apostgraduate program of residency training approved by the state board ofhealing arts but who, at the time the claim was made, was no longer engaged insuch residency program;
(15) subject to subsection (b) of K.S.A. 40-3411, and amendmentsthereto, reasonable and necessary expenses for attorneyfees and other costs incurred in defending a person described in clause (14) ofthis subsection (c);
(16) expenses incurred by the commissioner in the performance of dutiesand functions imposed upon the commissioner by the health care providerinsurance availability act, and expenses incurred by the commissioner in theperformance of duties and functions under contracts entered into between theboard and the commissioner as authorized by this section; and
(17) periodically to the state general fund reimbursements of amounts paidto members of the health care stabilization fund oversight committee forcompensation, travel expenses and subsistence expenses pursuant to subsection(e) of K.S.A. 40-3403b, and amendments thereto.
(d) All amounts for which the fund is liable pursuant to subsection (c)shall be paid promptly and in full except that, if the amount for which thefund is liable is $300,000 or more, it shall be paid, by installment paymentsof $300,000 or 10% of the amount of the judgment including interest thereon,whichever is greater, per fiscal year, the first installment to be paid within60 days after the fund becomes liable and each subsequent installment to bepaid annually on the same date of the year the first installment was paid,until the claim has been paid in full. Any attorney fees payable from suchinstallment shall be similarly prorated.
(e) In no event shall the fund be liable to pay in excess of$3,000,000 pursuant to any one judgment or settlement against any onehealth care provider relating to any injury or death arising out of therendering of or the failure to render professional services on and afterJuly 1, 1984, and before July 1, 1989, subject to an aggregatelimitation for all judgments or settlements arising from all claims made in anyone fiscal year in the amount of $6,000,000 for each health care provider.
(f) The fund shall not be liable to pay in excess of the amounts specifiedin the option selected by the health care provider pursuant to subsection (l)for judgments or settlements relating to injury or death arising out of therendering of or failure to render professional services by such health careprovider on or after July 1, 1989.
(g) A health care provider shall be deemed to have qualified forcoverage under the fund:
(1) On and afterJuly 1, 1976, if basic coverage is then in effect;
(2) subsequent toJuly 1, 1976, at such time as basic coverage becomeseffective; or
(3) upon qualifying as a self-insurer pursuant to K.S.A. 40-3414 andamendmentsthereto.
(h) A health care provider who is qualified for coverage under thefund shall have no vicarious liability or responsibility for any injury ordeath arising out of the rendering of or the failure to render professionalservices inside or outside this state by any other health care provider whois also qualified for coverage under the fund. The provisions of thissubsection shall apply to all claims filed on or afterJuly 1, 1986.
(i) Notwithstanding the provisions of K.S.A. 40-3402 and amendmentsthereto, if the board of governors determines due to the number of claimsfiled against a health care provider or the outcome of those claims thatan individual health care provider presents a material risk of significantfuture liability to the fund, the board of governors is authorized by avote of a majority of the members thereof, after notice and an opportunityfor hearing in accordance with the provisions of the Kansasadministrative procedure act, to terminate the liability of the fund forall claims against the health care provider for damages for death or personalinjury arising out of the rendering of or the failure to render professionalservices after the date of termination. The date of termination shall be 30days after the date of the determination by the board of governors. The boardof governors, upon termination of the liability of the fund under thissubsection, shall notify the licensing or other disciplinary board havingjurisdiction over the health care provider involved of the name of the healthcare provider and the reasons for the termination.
(j) (1) Upon the payment of moneys from the health care stabilizationfund pursuant to subsection (c)(11), the board ofgovernors shall certify to thedirector of accounts and reports the amount of such payment, and thedirector of accounts and reports shall transfer an amount equal to theamount certified, reduced by any amount transferred pursuant to paragraph(3) or (4) of this subsection (j), from the stategeneral fund to the health carestabilization fund.
(2) Upon the payment of moneys from the health care stabilization fundpursuant to subsection (c)(12), the board of governorsshall certify to thedirector of accounts and reports the amount of such payment which is equalto the basic coverage liability of self-insurers, and the director ofaccounts and reports shall transfer an amount equal to the amountcertified, reduced by any amount transferred pursuant to paragraph (3)or (4) of thissubsection (j), from the state general fund to the health carestabilization fund.
(3) The university of Kansas medical center private practice foundationreserve fund is hereby established in the state treasury.If the balance in suchreserve fund is less than $500,000 on July 1 of any year, theprivate practice corporations or foundations referred to in subsection (c) ofK.S.A. 40-3402, and amendments thereto, shall remit the amountnecessary to increase such balance to $500,000 to the state treasurer forcredit to such reserve fund as soon after such July 1 date as ispracticable. Upon receipt of each such remittance, the state treasurer shallcredit the same to such reserve fund. Whencompliance with the foregoing provisions of this paragraph have beenachieved on or after July 1 of any year in which the same are applicable,the state treasurer shall certify to theboard of governors that such reserve fund has been funded forthe year in the manner requiredby law. Moneys in such reserve fund may be invested or reinvested inaccordance with the provisions of K.S.A. 40-3406, and amendments thereto,and any income or interest earned by such investments shall be credited tosuch reserve fund. Upon payment of moneys from the health carestabilization fund pursuant to subsection (c)(11) or (c)(12) with respectto any private practice corporation or foundation or any of its full-timephysician faculty employed by the university of Kansas, the director ofaccounts and reports shall transfer an amount equal to the amount paid fromthe university of Kansas medical center private practice foundation reservefund to the health care stabilization fund or, if the balance in suchreserve fund is less than the amount so paid, an amount equal to thebalance in such reserve fund.
(4) The graduate medical education administration reserve fund is herebyestablished in the state treasury. If the balance in such reserve fund is lessthan $40,000 on July 1 of any year, the nonprofit corporations organized toadminister the graduate medical education programs of community hospitals ormedical care facilities affiliated with the university of Kansas school ofmedicine shall remit the amount necessary to increase such balance to $40,000to the state treasurer for credit to such reserve fund as soon after such July1 date as is practicable. Upon receipt of each such remittance, the statetreasurer shall credit the same to such reserve fund. When compliance with theforegoing provisions of this paragraph have been achieved on or after July 1 ofany year in which the same are applicable, the state treasurer shall certify tothe board of governors that such reserve fund has been funded for the year inthe manner required by law. Moneys in such reserve fund may be invested orreinvested in accordance with the provisions of K.S.A. 40-3406, and amendmentsthereto, and any income or interest earned by such investments shall becredited to such reserve fund. Upon payment of moneys from the health carestabilization fund pursuant to subsection (c)(11) or (c)(12) with respect toany nonprofit corporations organized to administer the graduate medicaleducation programs of community hospitals or medical care facilities affiliatedwith the university of Kansas school of medicine the director of accounts andreports shall transfer an amount equal to the amount paid from the graduatemedical education administration reserve fund to the health care stabilizationfund or, if the balance in such reserve fund is less than the amount so paid,an amount equal to the balance in such reserve fund.
(5) Upon payment ofmoneys from the health care stabilization fundpursuant to subsection (c)(14) or (c)(15), the board ofgovernors shall certify tothe director of accounts and reports the amount of such payment, and thedirector of accounts and reports shall transfer an amount equal to theamount certified from the state general fund to the health care stabilizationfund.
(k) Notwithstanding any other provision of the health care providerinsurance availability act, no psychiatric hospital licensed under K.S.A.75-3307b and amendments thereto shall be assessed a premium surcharge or beentitled to coverage under the fund if such hospital has not paid anypremium surcharge pursuant to K.S.A. 40-3404 and amendments thereto priorto January 1, 1988.
(l) On or after July 1, 1989, every health care provider shall make anelection to be covered by one of the following options provided in thissubsection (l) which shall limit the liability of the fund with respect tojudgments or settlements relating to injury or death arising out of therendering of or failure to render professional services on or after July 1,1989.Such election shall be made at the time the health care provider renews thebasic coverage in effect on July 1,1989, or, if basiccoverage is not in effect, such election shall be made at the time suchcoverage is acquired pursuant to K.S.A. 40-3402, and amendments thereto.Notice of the election shall be provided by the insurer providing the basiccoverage in the manner and form prescribed by the board ofgovernors and shall continue to be effective from year to year unlessmodified by a subsequentelection made prior to the anniversary date of the policy. The health careprovider may at any subsequent election reduce the dollar amount of thecoverage for the next and subsequent fiscal years, but may not increase thesame, unless specifically authorized by the board of governors.Any election of fund coverage limits, whenever made, shall be with respect tojudgments or settlements relating to injury or death arising out of therendering of or failure to render professional services on or after theeffective date of such election of fund coverage limits.Suchelection shall be made for persons engaged in residency training andpersons engaged in other postgraduate training programs approved by thestate board of healing arts at medical care facilities or mental healthcenters in this state by the agency or institution paying the surchargelevied under K.S.A. 40-3404, and amendments thereto, for such persons. Theelection of fund coverage limits for a nonprofit corporation organized toadminister the graduate medical education programs of community hospitals ormedical care facilities affiliated with the university of Kansas school ofmedicine shall be deemed to be effective at the highest option. Suchoptions shall be as follows:
(1) OPTION 1. The fund shall not be liable to pay in excess of$100,000pursuant to any one judgment or settlement for any party against suchhealth care provider, subject to an aggregate limitation for all judgmentsor settlements arising from all claims made in the fiscal year in an amountof $300,000 for such provider.
(2) OPTION 2. The fund shall not be liable to pay in excess of$300,000pursuant to any one judgment or settlement for any party against suchhealth care provider, subject to an aggregate limitation for all judgmentsor settlements arising from all claims made in the fiscal year in an amountof $900,000 for such provider.
(3) OPTION 3. The fund shall not be liable to pay in excess of$800,000pursuant to any one judgment or settlement for any party against suchhealth care provider, subject to an aggregate limitation for all judgmentsor settlements arising from all claims made in the fiscal year in an amountof $2,400,000 for such health care provider.
(m) The fund shall not be liable for any amounts due from a judgment orsettlement against resident or nonresident inactive health care providerswho first qualify as an inactive health care provider on or after July 1,1989, unless such health care provider has been in compliance with K.S.A.40-3402, and amendments thereto, for a period of not less than five years.If a health care provider has not been in compliance for five years, suchhealth care provider may make application and payment for the coverage forthe period while they are nonresident health care providers, nonresidentself-insurers or resident or nonresident inactive health care providers tothe fund. Such payment shall be made within 30 days after the health careprovider ceases being an active health care provider and shall be made inan amount determined by the board of governors to besufficient to fundanticipated claims based upon reasonably prudent actuarial principles. Theprovisions of this subsection shall not be applicable to any health careprovider which becomes inactive through death or retirement, or throughdisability or circumstances beyond such health care provider's control, ifsuch health care provider notifies the board of governors and receivesapproval for an exemption from the provisions of this subsection. Anyperiod spent in a postgraduate program of residency training approved bythe state board of healing arts shall not be included in computation oftime spent in compliance with the provisions of K.S.A. 40-3402, and amendmentsthereto.
(n) Notwithstanding the provisions of subsection (m) or any other provisionin article 34 of chapter 40 of the Kansas Statutes Annotated to the contrary,the fund shall not be liable for any claim made on or after July 1, 1991,against a licensed optometrist or pharmacist relating to any injury or deatharising out of the rendering of or failure to render professional services bysuch optometrist or pharmacist prior to July 1, 1991, unless such optometristor pharmacist qualified as an inactive health care provider prior to July 1,1991.
(o) Notwithstanding the provisions of subsection (m) or any otherprovision in article 34 of chapter 40 of the Kansas Statutes Annotated to thecontrary, the fund shall not be liable for any claim made on or after July 1,1995, against a physical therapist registered by the state board of healingarts relating to any injury or death arising out of the rendering of or failureto render professional services by such physical therapist prior to July 1,1995, unless such physical therapist qualified as an inactive health careprovider prior to July 1, 1995.
(p) Notwithstanding the provisions of subsection (m) or any otherprovision in article 34 of chapter 40 of the Kansas Statutes Annotated to thecontrary, the fund shall not be liable for any claim made on or after July 1,1997, against a health maintenance organization relating to any injury or deatharising out of the rendering of or failure to render professional services bysuch health maintenance organization prior to July 1, 1997, unless such healthmaintenance organization qualified as an inactive health care provider prior toJuly 1, 1997, and obtained coverage pursuant to subsection (m). Healthmaintenance organizations not qualified as inactive health care providers priorto July 1, 1997, may purchase coverage from the fund for periods of priorcompliance by making application prior to August 1, 1997, and payment within 30days from notice of the calculated amount as determined by the board ofgovernors to be sufficient to fund anticipated claims based on reasonablyprudent actuarial principles.
(q) Notwithstanding anything in article 34 of chapter 40 of theKansas Statutes Annotated to the contrary, the fund shall in no event be liablefor any claims against any health care provider based upon or relating tothe health care provider's sexual acts or activity, but in such cases thefund may pay reasonable and necessary expenses for attorney fees incurredin defending the fund against such claim. The fund may recover all or aportion of such expenses for attorney feesif an adverse judgment is returned against the health care provider fordamages resulting from the health care provider's sexual acts or activity.
History: L. 1976, ch. 231, § 3;L. 1980, ch. 143, § 1;L. 1983, ch. 160, § 1;L. 1984, ch. 238, § 3;L. 1984, ch. 178, § 1;L. 1986, ch. 229, § 27;L. 1986, ch. 179, § 2;L. 1986, ch. 184, § 3;L. 1986, ch. 181, § 5;L. 1986, ch. 181, § 6;L. 1987, ch. 176, § 2;L. 1987, ch. 177, § 2;L. 1987, ch. 178, § 3;L. 1988, ch. 155, § 8;L. 1988, ch. 356, § 123;L. 1989, ch. 143, § 3;L. 1990, ch. 174, § 2;L. 1990, ch. 175, § 3;L. 1991, ch. 139, § 3;L. 1992, ch. 23, § 1;L. 1994, ch. 155, § 2;L. 1994, ch. 328, § 1;L. 1995, ch. 145, § 2;L. 1996, ch. 254, § 7;L. 1996, ch. 254, § 8;L. 1997, ch. 134, § 2;L. 1998, ch. 58, § 1;L. 2001, ch. 204, § 2; May 31.