Relating to Certain Long Term Care Facilities
S.B. No. 1839
S.B. No. 1839
AN ACT
relating to certain long term care facilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. SHORT TITLE; PURPOSE
SECTION 1.01. SHORT TITLE. This Act may be cited as the Long Term Care Facility Improvement Act.
SECTION 1.02. LEGISLATIVE INTENT; PURPOSE. (a) The legislature specifically acknowledges an existing crisis confronting long term care facilities in Texas and the critical importance of the services provided to Texans by these facilities, and in particular to the growing population of older Texans.
(b) In response to this crisis, this Act is intended to ensure that long term care facilities continue to be available to provide care to Texans, that this care be of the highest quality, and that the residents of these facilities be financially protected by available and affordable professional liability insurance.
(c) This Act includes extraordinary measures that are necessary to address an emergency in long term care in this state. These measures are intended as temporary solutions that will facilitate the efficient recovery of both for profit and not for profit private long term care facilities so that, in the future, these facilities will be financially sound and capable of providing high quality care.
(d) With respect to the legal concepts incorporated in the measures contained in this Act, the legislature does not intend for these concepts to be applied outside the realm of long term care. Because the application of the measures contained in this Act in relation to these legal concepts is temporary and because of the extraordinary complexity and uniqueness of the crisis facing nursing homes, these measures should not be construed as the legislature's interpretation of the current law applicable to these legal concepts. In enacting the extraordinary measures contained in this Act, the legislature specifically rejects any suggestion that these measures represent solutions that are appropriate for any area involving liability insurance, insurance practices, or medical care other than long term care facilities.
ARTICLE 2. NOTICE OF EXEMPLARY DAMAGES IN CERTAIN ACTIONS
SECTION 2.01. Subchapter B, Chapter 242, Health and Safety Code, is amended by adding Section 242.051 to read as follows:
Sec. 242.051. NOTIFICATION OF AWARD OF EXEMPLARY DAMAGES. (a) If exemplary damages are awarded under Chapter 41, Civil Practice and Remedies Code, against an institution or an officer, employee, or agent of an institution, the court shall notify the department.
(b) If the department receives notice under Subsection (a), the department shall maintain the information contained in the notice in the records of the department relating to the history of the institution.
SECTION 2.02. This article applies only to an award of exemplary damages in a cause of action that accrues on or after September 1, 2001.
ARTICLE 3. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL ACTION
SECTION 3.01. Subsections (i) and (k), Section 32.021, Human Resources Code, are amended to read as follows:
(i) A record of the department, including a record of [Except as provided by Subsections (j) and (k),] a department survey, complaint investigation, incident investigation, or survey report, that relates to [documents that] an institution, including an intermediate care facility for the mentally retarded, may be introduced into evidence in a civil action, enforcement action, or related proceeding if the record is admissible under the Texas Rules of Evidence [has violated a standard for participation in the state Medicaid program, or the assessment of a monetary penalty by the department or the payment of a monetary penalty by the institution, is not admissible as evidence in a civil action to prove that the institution has committed a violation].
(k) A department surveyor or investigator may testify in a civil action as to observations, factual findings, conclusions, or violations of requirements for licensure or for certification for participation in the state Medicaid program that were made in the discharge of official duties for the department, if the testimony is admissible under [in accordance with] the Texas Rules of [Civil] Evidence.
SECTION 3.02. Subchapter B, Chapter 242, Health and Safety Code, is amended by adding Section 242.050 to read as follows:
Sec. 242.050. ADMISSIBILITY OF CERTAIN DOCUMENTS OR TESTIMONY. Sections 32.021(i) and (k), Human Resources Code, govern the admissibility in a civil action against an institution of:
(1) a record of the department described by Section 32.021(i), Human Resources Code; or
(2) the testimony of a department surveyor or investigator described by Section 32.021(k), Human Resources Code.
SECTION 3.03. Subchapter B, Chapter 252, Health and Safety Code, is amended by adding Section 252.045 to read as follows:
Sec. 252.045. ADMISSIBILITY OF CERTAIN DOCUMENTS OR TESTIMONY. Sections 32.021(i) and (k), Human Resources Code, govern the admissibility in a civil action against a facility of:
(1) a record of the department described by Section 32.021(i), Human Resources Code; or
(2) the testimony of a department surveyor or investigator described by Section 32.021(k), Human Resources Code.
SECTION 3.04. Subsection (j), Section 32.021, Human Resources Code, is repealed.
SECTION 3.05. This article applies only to a civil action, enforcement action, or related proceeding that is commenced on or after the effective date of this Act. A civil action, enforcement action, or related proceeding that is commenced before the effective date of this Act is governed by the law applicable to the action or proceeding immediately before the effective date of this Act, and that law is continued in effect for that purpose.
ARTICLE 4. DATA REPORTING FOR CERTAIN LIABILITY INSURANCE COVERAGE
SECTION 4.01. Chapter 38, Insurance Code, is amended by adding Subchapter F to read as follows:
SUBCHAPTER F. DATA REPORTING BY CERTAIN LIABILITY INSURERS
Sec. 38.251. INSURER DATA REPORTING. (a) Each insurer that writes professional liability insurance policies for nursing institutions licensed under Chapter 242, Health and Safety Code, including an insurer whose rates are not regulated, shall, as a condition of writing those policies in this state, comply with a request for information from the commissioner under this section.
(b) The commissioner may require information in rate filings, special data calls, or informational hearings or by any other means consistent with this code applicable to the affected insurer that the commissioner believes will allow the commissioner to:
(1) determine whether insurers writing insurance coverage described by Subsection (a) are passing to insured nursing institutions on a prospective basis the savings that accrue as a result of the reduction in risk to insurers writing that coverage that will result from legislation enacted by the 77th Legislature, Regular Session, including legislation that:
(A) amended Article 5.15 1 to limit the exposure of an insurer to exemplary damages for certain claims against a nursing institution; and
(B) amended Sections 32.021(i) and (k), Human Resources Code, added Section 242.050, Health and Safety Code, and repealed Section 32.021(j), Human Resources Code, to clarify the admissibility of certain documents in a civil action against a nursing institution; or
(2) prepare the report required of the commissioner under Section 38.252 or any other report the commissioner is required to submit to the legislature in connection with the legislation described by Subdivision (1).
(c) Information provided under this section is privileged and confidential to the same extent as the information is privileged and confidential under this code or any other law governing an insurer described by Subsection (a). The information remains privileged and confidential unless and until introduced into evidence at an administrative hearing or in a court of competent jurisdiction.
Sec. 38.252. RECOMMENDATIONS TO LEGISLATURE. The commissioner shall assemble information and take other appropriate measures to assess and evaluate changes in the marketplace resulting from the implementation of the legislation described by Section 38.251 and shall report the commissioner's findings and recommendations to the legislature.
ARTICLE 5. AVAILABILITY OF AND COVERAGE UNDER CERTAIN
PROFESSIONAL LIABILITY INSURANCE
SECTION 5.01. Subdivision (2), Section 2, Article 5.15 1, Insurance Code, is amended to read as follows:
(2) "Health care provider" means any person, partnership, professional association, corporation, facility, or institution licensed or chartered by the State of Texas to provide health care as a registered nurse, hospital, dentist, podiatrist, chiropractor, optometrist, pharmacist, veterinarian, not for profit kidney dialysis center, blood bank that is a nonprofit corporation chartered to operate a blood bank and which is accredited by the American Association of Blood Banks, for profit nursing home or not for profit nursing home, or an officer, employee, or agent of any of them acting in the course and scope of his employment.
SECTION 5.02. Section 8, Article 5.15 1, Insurance Code, is amended to read as follows:
Sec. 8. EXEMPLARY [PUNITIVE] DAMAGES UNDER MEDICAL PROFESSIONAL LIABILITY INSURANCE. No policy of medical professional liability insurance issued to or renewed for a health care provider or physician in this state may include coverage for exemplary [punitive] damages that may be assessed against the health care provider or physician; provided, however, that the commissioner may approve an endorsement form that provides for coverage for exemplary [punitive] damages to be used on a policy of medical professional liability insurance issued to a hospital, as the term "hospital" is defined in this article, or to a for profit or not for profit nursing home.
SECTION 5.03. Subchapter B, Chapter 5, Insurance Code, is amended by adding Article 5.15 4 to read as follows:
Art. 5.15 4. BEST PRACTICES FOR NURSING HOMES. (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 determining rates for professional liability insurance applicable to a for profit or not for profit nursing home, an insurance company or the Texas Medical Liability Insurance Underwriting Association may consider whether the nursing home adopts and implements the best practices adopted by the commissioner under Subsection (a) of this article.
(c) In developing or amending best practices for for profit and not for profit nursing homes, the commissioner shall consult with the Health and Human Services Commission and a task force appointed by the commissioner. The task force must be composed of representatives of:
(1) insurance companies that write professional liability insurance for nursing homes;
(2) the Texas Medical Liability Insurance Underwriting Association;
(3) nursing homes; and
(4) consumers.
(d) The best practices for risk management and loss control adopted under this article do not establish standards of care for nursing homes applicable in a civil action against a nursing home.
SECTION 5.04. Subdivision (6), Section 2, Article 21.49 3, Insurance Code, is amended to read as follows:
(6) "Health care provider" means:
(A) any person, partnership, professional association, corporation, facility, or institution duly licensed or chartered by the State of Texas to provide health care as defined in Section 1.03(a)(2) [1.03(2)], Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas Civil Statutes), as:
(i) a registered nurse, hospital, dentist, podiatrist, pharmacist, chiropractor, or optometrist;
(ii) a for profit[,] or not for profit nursing home;
(iii) [, or] a radiation therapy center that is independent of any other medical treatment facility and which is licensed by the Texas Department of Health in that agency's capacity as the Texas [State] Radiation Control Agency pursuant to the provisions of Chapter 401, Health and Safety Code, and which is in compliance with the regulations promulgated under that chapter;
(iv) [by the Texas State Radiation Control Agency,] a blood bank that is a nonprofit corporation chartered to operate a blood bank and which is accredited by the American Association of Blood Banks;
(v) [,] a nonprofit corporation which is organized for the delivery of health care to the public and which is certified under Chapter 162, Occupations Code; [Article 4509a, Revised Civil Statutes of Texas, 1925,] or
(vi) a [migrant] health center as defined by 42 U.S.C. Section 254b [P.L. 94 63], as amended; [(42 U.S.C. Section 254b), or a community health center as defined by P.L. 94 63, as amended (42 U.S.C. Section 254c), that is receiving federal funds under an application approved under either Title IV, P.L. 94 63, as amended (42 U.S.C. Section 254b), or Title V, P.L. 94 63, as amended (42 U.S.C. Section 254c),] or
(B) an officer, employee, or agent of any of them acting in the course and scope of that person's [his] employment.
SECTION 5.05. Section 3A, Article 21.49 3, Insurance Code, is amended by adding Subsection (c) to read as follows:
(c) A for profit or not for profit nursing home not otherwise eligible under this section for coverage from the association is eligible for coverage if the nursing home demonstrates, in accordance with the requirements of the association, that the nursing home made a verifiable effort to obtain coverage from authorized insurers and eligible surplus lines insurers and was unable to obtain substantially equivalent coverage and rates.
SECTION 5.06. Subsection (b), Section 4, Article 21.49 3, Insurance Code, is amended by amending Subdivisions (1) and (3) and adding Subdivision (6) to read as follows:
(1) Subject to Subdivision (6) of this subsection, the [The] rates, rating plans, rating rules, rating classification, territories, and policy forms applicable to the insurance written by the association and statistics relating thereto shall be subject to Subchapter B of Chapter 5 of the Insurance Code, as amended, giving due consideration to the past and prospective loss and expense experience for medical professional liability insurance within and without this state of all of the member companies of the association, trends in the frequency and severity of losses, the investment income of the association, and such other information as the commissioner [board] may require; provided, that if any article of the above subchapter is in conflict with any provision of this Act, this Act shall prevail. For purposes of this article, rates, rating plans, rating rules, rating classifications, territories, and policy forms for for profit nursing homes are subject to the requirements of Article 5.15 1 of this code to the same extent as not for profit nursing homes.
(3) Any deficit sustained by the association with respect to physicians and health care providers, other than for profit and not for profit nursing homes, or by for profit and not for profit nursing homes in any one year shall be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or more of the following procedures in this sequence:
First, a contribution from the policyholder's stabilization reserve fund for physicians and health care providers, other than for profit and not for profit nursing homes, established under Section 4A of this article or from the stabilization reserve fund for for profit and not for profit nursing homes, established under Section 4B of this article, as appropriate, until the respective fund [same] is exhausted;
Second, an assessment upon the policyholders pursuant to Section 5(a) of this article;
Third, an assessment upon the members pursuant to Section 5(b) of this article. To the extent a member has paid one or more assessments and has not received reimbursement from the association in accordance with Subdivision (5) of this subsection, a credit against premium taxes under Article 4.10 of this code [7064, Revised Civil Statutes of Texas, 1925], as amended, shall be allowed. The tax credit shall be allowed at a rate of 20 percent per year for five successive years following the year in which said deficit was sustained and at the option of the insurer may be taken over an additional number of years.
(6) The rates applicable to professional liability insurance provided by the association that cover nursing homes that are not for profit must reflect a discount of 30 percent from the rates for the same coverage provided to others in the same category of insureds. The commissioner shall ensure compliance with this subdivision.
SECTION 5.07. Section 4A, Article 21.49 3, Insurance Code, is amended to read as follows:
Sec. 4A. POLICYHOLDER'S STABILIZATION RESERVE FUND FOR PHYSICIANS AND HEALTH CARE PROVIDERS OTHER THAN FOR PROFIT AND NOT FOR PROFIT NURSING HOMES. (a) There is hereby created a policyholder's stabilization reserve fund for physicians and health care providers, other than for profit and not for profit nursing homes, which shall be administered as provided herein and in the plan of operation of the association. The stabilization reserve fund created by this section is separate and distinct from the stabilization reserve fund for for profit and not for profit nursing homes created by Section 4B of this article.
(b) Each policyholder shall pay annually into the stabilization reserve fund a charge, the amount of which shall be established annually by advisory directors chosen by health care providers, other than for profit and not for profit nursing homes, and physicians eligible for insurance in the association in accordance with the plan of operation. The charge shall be in proportion to each premium payment due for liability insurance through the association. Such charge shall be separately stated in the policy, but shall not constitute a part of premiums or be subject to premium taxation, servicing fees, acquisition costs, or any other such charges.
(c) The [policyholder's] stabilization reserve fund shall be collected and administered by the association and shall be treated as a liability of the association along with and in the same manner as premium and loss reserves. The fund shall be valued annually by the board of directors as of the close of the last preceding year.
(d) Collections of the stabilization reserve fund charge shall continue until such time as the net balance of the stabilization reserve fund is not less than the projected sum of premiums for physicians and health care providers, other than for profit and not for profit nursing homes, to be written in the year following valuation date.
(e) The stabilization reserve fund shall be credited with all stabilization reserve fund charges collected from physicians and health care providers, other than for profit and not for profit nursing homes, [policyholders] and shall be charged with any deficit sustained by physicians and health care providers, other than for profit and not for profit nursing homes, from the prior year's operation of the association.
SECTION 5.08. Article 21.49 3, Insurance Code, is amended by adding Sections 4B and 4C to read as follows:
Sec. 4B. STABILIZATION RESERVE FUND FOR FOR PROFIT AND NOT FOR PROFIT NURSING HOMES. (a) There is hereby created a stabilization reserve fund for for profit and not for profit nursing homes that shall be administered as provided in this section and in the plan of operation of the association. The stabilization reserve fund created by this section is separate and distinct from the policyholder's stabilization reserve fund for physicians and health care providers, other than for profit and not for profit nursing homes, created by Section 4A of this article.