WEST virginia legislature

2018 regular session

ENROLLED

Committee Substitute

for

House Bill  4400

By Delegates Westfall, Hartman, Criss, White, Lane, Walters, Upson, Frich, Capito and Shott

[Passed March 7, 2018; in effect ninety days from passage.]

AN ACT to repeal §33-20F-6 of the Code of West Virginia, 1931, as amended, and to amend and reenact §33-20F-3, §33-20F-5, and §33-20F-9 of said code, all relating to the West Virginia Physicians Mutual Insurance Company; removing language that is no longer relevant to the operation of the company as a private mutual insurance company; and adding language to accommodate policies written to physicians outside the State of West Virginia.

Be it enacted by the Legislature of West Virginia:

ARTICLE 20F. PHYSICIANS' MUTUAL INSURANCE COMPANY.

§33-20F-3. Definitions.

For purposes of this article, the term:

(a) “Board of medicine” means the West Virginia Board of Medicine as provided in §30-3-5 of this code.

(b) “Board of osteopathy” means the West Virginia Board of osteopathy as provided in §30-14-3 of this code.

(c) “Commissioner” means the Insurance Commissioner of West Virginia as provided in §33-2-1 of this code.

(d) “Company” means the physicians' mutual insurance company created pursuant to the terms of this article.

(e) “Medical liability insurance” means, for the purposes of this article: All policies previously issued by the Board of Risk and Insurance Management pursuant to §29-12B-1 et seq. of this code which are transferred by the Board of Risk and Insurance Management to the company, pursuant to §33-20F-9(b) of this code and all policies of insurance subsequently issued by the company to physicians, physician corporations, physician-operated clinics, and such other individual health care providers as the commissioner may, upon written application of the company, approve.

(f) “Physician” means an individual who is licensed by the Board of Medicine or the Board of Osteopathy to practice medicine or podiatry in West Virginia, or who is licensed by a licensing board or body in another state to practice medicine or podiatry. 

(g) “Transfer date” means the date on which the assets, obligations, and liabilities resulting from the Board of Risk and Insurance Management's issuance of medical liability policies to physicians, physician corporations, and physician-operated clinics pursuant to §29-12B-1 et seq. of this code are transferred to the company.

§33-20F-5. Governance and organization.

(a) The Board of Risk and Insurance Management shall implement the initial formation and organization of the company as provided by this article.

(b) The company shall be governed by a board of directors consisting of 11 directors, as follows:

(1) Six directors who are physicians licensed to practice medicine in this state by the Board of Medicine or the Board of Osteopathy, including at least one general practitioner and one specialist: Provided, That only physicians who have purchased medical professional liability coverage from the Board of Risk and Insurance Management are eligible to serve as physician representatives on the company's first board of directors;

(2) Three directors who have substantial experience as an officer or employee of a company in the insurance industry;

(3) Two directors with general knowledge and experience in business management who are officers and employees of the company and are responsible for the daily management of the company;

 (c) In addition to the eleven directors required by subsection (b) of this section, the bylaws of the company may provide for the election of at least two additional directors.

(d) The directors and officers of the company are to be chosen in accordance with the articles of incorporation and bylaws of the company. The initial board of directors selected in accordance with the provisions of subdivision (3), subsection (a) of this section shall serve for the following terms: (1) Three for four-year terms; (2) three for three-year terms; (3) three for two-year terms; and (4) two for one-year terms. Thereafter, the Directors shall serve staggered terms of four years. If an additional director is added to the board as provided in subsection (c) of this section, his or her initial term shall be for four years.

(e) The incorporators are to prepare and file articles of incorporation and bylaws in accordance with the provisions of this article and the provisions of this chapter and chapter thirty-one of this code.

§33-20F-6. Management and administration of the company.

[Repealed]

§33-20F-9. Kinds of coverage authorized; transfer of policies from the state Board of Risk and Insurance Management; risk management practices authorized.

(a) Upon approval by the commissioner for a license to transact insurance in this state, the company may issue nonassessable policies of malpractice insurance, as defined in §33-1-10 (e)(9) of this code, insuring a physician. Additionally, the company may issue other types of casualty or liability insurance as may be approved by the commissioner.

(b) On the transfer date:

(1) The company shall accept from the Board of Risk and Insurance Management the transfer of any and all medical liability insurance obligations and risks of existing or in-force contracts of insurance covering physicians, physician corporations, and physician-operated clinics issued by the board pursuant to §29-12B-1 et seq. of this code: Provided, That the company may decline or refuse to renew any and all such contracts of insurance transferred to the company from the Board of Risk and Insurance Management upon the expiration of the respective terms of each contract of insurance so transferred and nothing in this section is intended to or shall be construed to otherwise obligate the company to accept, underwrite or renew any contract of insurance whatsoever. The transfer shall not include medical liability insurance obligations and risks of existing or in-force contracts of insurance covering hospitals and nonphysician providers;

(2) The company shall assume all responsibility for and defend, indemnify, and hold harmless the Board of Risk and Insurance Management and the state with respect to any and all liabilities and duties arising from the assets and responsibilities transferred to the company pursuant to §29-12B-1 et seq. of this code;

(3) The Board of Risk and Insurance Management shall disburse and pay to the company any funds attributable to premiums paid for the insurance obligations transferred to the company pursuant to subdivision (1) of this subsection, with earnings thereon, less paid losses and expenses, and deposited in the Medical Liability Fund created by §29-12B-1 et seq. of this code as reflected on the ledgers of the Board of Risk and Insurance Management;

(4) The Board of Risk and Insurance Management shall disburse and pay to the company any funds in the Board of Risk and Insurance Management Physicians' Mutual Insurance Company account created by §33-20F-7 of this code. All funds in this account shall be transferred pursuant to terms of a surplus note or other loan arrangement satisfactory to the Board of Risk and Insurance Management and the Insurance Commissioner.

(c) The Board of Risk and Insurance Management shall cause an independent actuarial study to be performed to determine the amount of all paid losses, expenses and assets associated with the policies the board has in force pursuant to §29-12B-1 et seq. of this code. The actuarial study shall determine the paid losses, expenses and assets associated with the policies to be transferred to the company pursuant to subsection (b) of this section and the paid losses, expenses and assets associated with those policies retained by the board. The determination shall not include liabilities created by issuance of new tail insurance policies for nonphysician providers authorized by §29-12B-6 (n) of this code.

(d) The Board of Risk and Insurance Management may enter into such agreements, including loan agreements, with the company that are necessary to accomplish the transfers addressed in this section.

(e) The company shall make policies of insurance available to physicians in this state, regardless of practice type or specialty. Policies issued by the company to each class of physicians are to be essentially uniform in terms and conditions of coverage.

(f) Notwithstanding the provisions of subsection (b), (c) or (e) of this section, the company may:

(1) Establish reasonable classifications of physicians, insured activities, and exposures based on a good faith determination of relative exposures and hazards among classifications;

(2) Vary the limits, coverages, exclusions, conditions, and loss-sharing provisions among classifications;

(3) Establish, for an individual physician within a classification, reasonable variations in the terms of coverage, including rates, deductibles, and loss-sharing provisions, based on underwriting criteria established by the company, from time to time, which underwriting criteria may take into account factors considered by other medical malpractice insurance companies, from time to time, in underwriting similar risks and which factors may include, but are not limited to, the insured's prior loss experience; current professional training and capability; disciplinary action taken against the physician by the Board of Medicine, Board of Osteopathy or a licensing board or body of another state in which the physician has been licensed; felonies or other criminal offenses committed by the physician; evidence of alcohol or chemical dependency or abuse; evidence of sexual misconduct; and any other factors relevant to the liability risk profile of the physician.

(4) Refuse to provide insurance coverage for individual physicians who do not meet underwriting criteria established by the company, from time to time, which underwriting criteria may take into account factors considered by other medical malpractice insurance companies, from time to time, in underwriting or declining to underwrite similar risks and which factors may include, but are not limited to, prior loss experience, current professional training and capability, disciplinary action taken against the physician by the Board of Medicine, Board of Osteopathy or a licensing board or body of another state in which the physician has been licensed; felonies or other criminal offenses committed by the physician; evidence of alcohol or chemical dependency or abuse; evidence of sexual misconduct; and any other factors relevant to the liability risk profile of the physician and which do or may indicate that the physician represents an unacceptable risk of loss if coverage is provided.

(g) The company shall establish reasonable risk management and continuing education requirements which policyholders must meet in order to be and remain eligible for coverage.