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.