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COMMITTEE REPORT
May 3, 2000
S. 1282
S. Printed 5/3/00--H.
Read the first time April 11, 2000.
To whom was referred a Bill (S. 1282), to amend Sections 38-79-130, as amended, and 38-79-480, Code of Laws of South Carolina, 1976, relating respectively to the powers of the South Carolina Medical Malpractice Liability Joint Underwriting Association, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, Section 38-79-480(3) page 3, line 22 by deleting /one six/ and inserting /one two/ so when amended, Section 38-79-480(3) reads:
/(3) A person who has recovered a final judgment or a settlement approved by the board against a provider covered by the fund may file a claim with the board to recover that portion of the judgment or settlement which is in excess of one two hundred thousand dollars or three six hundred thousand dollars in the aggregate for one year. In the event If the fund incurs liability exceeding one two hundred thousand dollars to any person under a single occurrence, the fund may not pay more than one two hundred thousand dollars per year until the claim has been paid in full. However, in its discretion the board may pay an amount in excess of one two hundred thousand dollars so as to avoid the payment of interest./
Amend the bill, further, Section 38-79-260 page 4, line 14 by deleting /South Carolina Hospital Association/ and inserting /South Carolina Health Alliance/ so when amended Section 38-79-260 reads:
/"Section 38-79-260. The association is governed by a board of twenty-one thirteen directors, nine all of whom are must be appointed by the Governor, one of whom represents consumers, two of whom represent licensed insurance agents or brokers, three of whom are members of the South Carolina Medical Association, two of whom are members of the South Carolina Hospital Association, and one of whom is a member of the South Carolina Dental Association. Twelve members are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. The Governor shall appoint five health care providers after consultation with the South Carolina Medical Association, the South Carolina Dental Association, and the South Carolina Health Alliance; four insurance representatives after consultation with the insurance industry; one consumer representative who is unaffiliated with the insurance or health care industries or the medical or legal professions; and two licensed insurance agents or brokers. The professional associations listed and the insurance industry may nominate qualified individuals to the Governor for his consideration. The Governor may also receive nominations for appointments to the board from any other individual, group, or association. Notices of vacancies on the board must be published in newspapers of general statewide circulation. The director or his designee shall serve as an ex officio member of the board. The board shall develop a plan of operation which is subject to the approval of the director or his designee as provided in this article. The plan of operation shall provide for staggered terms of the members of the board. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of such a group may serve as a director at any one time. The board shall elect a chairman and other necessary officers for two-year terms. The insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the chairman of the board. No member of the board is eligible for reappointment for a period of four years following the completion of his term. A vacancy must be filled for the unexpired portion of the term only. The Governor may receive recommendations from any individual, group, or association for any vacancy on the board. The board must meet at the call of the chairman or a majority of the members of the board but in any event it must meet at least once a year."/
Amend the bill, further, Section 38-79-430 page 5, line 19 after the /./ by inserting /The fund may not grant retroactive coverage to members./ so when amended Section 38-79-430 reads:
/"The board shall develop a plan of operation for the efficient administration of the fund consistent with the provisions of this article. The fund must operate pursuant to a plan of operation which shall provide for the economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of excess medical malpractice insurance and which may contain other provisions including, but not limited to, assessment of all members for expenses, deficits, losses, commissions arrangements, reasonable underwriting standards, acceptance and cession of reinsurance appointment of servicing carriers, and procedures for determining the amounts of insurance to be provided by the association. The fund may not grant retroactive coverage to members. The plan of operation and any amendments to the plan are subject to the approval of the director or his designee. If the board fails to develop a plan of operation within the time frame established by the Governor or his designee, the director or his designee shall develop the plan of operation for the fund."/
Renumber sections to conform.
Amend totals and title to conform.
HARRY F. CATO, for Committee.
EXPLANATION OF IMPACT:
The JUA's funding is not appropriated or authorized in the State Appropriations Act; therefore, changes to the operation of the JUA would have no impact on the General Fund of the State. The funding for the administration of the Patients' Compensation Fund is authorized as other funds in the Appropriations Act; however, the money in the fund for the payment of claims is not considered part of the State's general, federal, or other funds. The provision of the bill specifying that the State is not responsible for the obligations of the Fund is consistent with the current status of the fund's relationship to the State, and will not have a fiscal impact on the State other than to avoid any future liability.
Approved By:
Don Addy
Office of State Budget
TO AMEND SECTIONS 38-79-130, AS AMENDED, AND 38-79-480, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING RESPECTIVELY TO THE POWERS OF THE SOUTH CAROLINA MEDICAL MALPRACTICE LIABILITY JOINT UNDERWRITING ASSOCIATION AND LIMITS ON RECOVERY FOR CLAIMS MADE AGAINST A PERSON OR ENTITY INSURED BY THE ASSOCIATION SO AS TO INCREASE THE LIMITS FROM ONE HUNDRED THOUSAND DOLLARS TO TWO HUNDRED THOUSAND DOLLARS FOR EACH CLAIMANT AND FROM THREE HUNDRED THOUSAND DOLLARS TO SIX HUNDRED THOUSAND DOLLARS FOR ALL CLAIMANTS UNDER ONE POLICY IN ANY ONE YEAR; TO AMEND SECTION 38-79-250, AS AMENDED, RELATING TO OBLIGATIONS OF MEMBERS TERMINATED FROM THE ASSOCIATION, SO AS TO PROVIDE THAT THE STATE IS NOT RESPONSIBLE FOR ANY COSTS, EXPENSES, LIABILITIES, JUDGMENTS, OR OTHER OBLIGATIONS OF THE ASSOCIATION; TO AMEND SECTION 38-79-260, AS AMENDED, RELATING TO THE GOVERNING BOARD OF THE ASSOCIATION, SO AS TO REDUCE THE NUMBER OF MEMBERS ON THIS BOARD FROM TWENTY-ONE TO THIRTEEN AND TO REQUIRE THE BOARD TO DEVELOP A PLAN OF OPERATION SUBJECT TO APPROVAL BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE; TO AMEND SECTION 38-79-430, AS AMENDED, RELATING TO CREATION OF THE BOARD OF GOVERNORS TO MANAGE AND OPERATE THE SOUTH CAROLINA PATIENT'S COMPENSATION FUND, SO AS TO REQUIRE THE BOARD TO DEVELOP A PLAN OF OPERATION SUBJECT TO THE APPROVAL OF THE DIRECTOR OF THE DEPARTMENT OF INSURANCE; AND TO AMEND SECTION 38-79-450, RELATING TO FEES FOR MEMBERSHIP IN THE SOUTH CAROLINA PATIENT'S COMPENSATION FUND, SO AS TO REQUIRE MEMBERS TO PAY ANY DEFICIT OF THE FUND AND TO PROVIDE THAT THE STATE IS NOT RESPONSIBLE FOR ANY COSTS, EXPENSES, LIABILITIES, JUDGMENTS, OR OTHER OBLIGATIONS OF THE FUND.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-79-130 of the 1976 Code, as amended by Act 181 of 1993, is further amended to read:
"Section 38-79-130. The association, pursuant to the provisions of this article and the approved plan of operation in respect to medical malpractice insurance, has the power on behalf of its members to:
(1) To issue, or cause to be issued, policies of insurance to applicants including incidental coverages, such as including, but not limited to, premises or operations liability coverage on the premises where services are rendered, all subject to limits of liability as specified in the plan of operation but not to exceed one two hundred thousand dollars for each claimant under one policy and three six hundred thousand dollars for all claimants under one policy in any one year.;
(2) To underwrite medical malpractice insurance and to adjust and pay losses with respect thereto or to appoint service companies to perform those functions.;
(3) To cede and assume reinsurance."
SECTION 2. Section 38-79-480 of the 1976 Code is amended to read:
"Section 38-79-480. (1) In an action for damages arising out of the rendering of medical services against a licensed health care provider covered under the fund, the provider shall within five days of receipt of summons and complaint, excluding the first day and holidays, give notice to the board of the action. If after reviewing the facts upon which the action is based it appears that the claim will exceed one two hundred thousand dollars, the board in its discretion may appear and actively defend the fund. In so defending, the board may retain counsel and pay out of the fund attorney's fees and expenses including court costs incurred in defending the fund. Any judgment affecting the fund may be appealed.
(2) It is the responsibility of the insurer providing insurance for a licensed health care provider who is also covered by the fund or for the self-insured provider covered by the fund to provide an adequate defense on any claim filed that potentially affects the fund with respect to such these insurance contracts or a self-insured's liability. The insurers or self-insured providers must act in a fiduciary relationship with respect to any claim affecting the fund. No settlement exceeding one two hundred thousand dollars per incident, or three six hundred thousand dollars in the aggregate for one year, may be agreed to unless approved by the board.
(3) A person who has recovered a final judgment or a settlement approved by the board against a provider covered by the fund may file a claim with the board to recover that portion of the judgment or settlement which is in excess of one two hundred thousand dollars or three six hundred thousand dollars in the aggregate for one year. In the event If the fund incurs liability exceeding one two hundred thousand dollars to any person under a single occurrence, the fund may not pay more than one six hundred thousand dollars per year until the claim has been paid in full. However, in its discretion the board may pay an amount in excess of one two hundred thousand dollars so as to avoid the payment of interest.
(4) Claims filed against the fund must be paid in the order received within ninety days after filing unless the judgment is appealed. If the fund does not have enough money to pay all of the claims, claims received after the funds are exhausted are immediately payable the following year in the order in which they were received."
SECTION 3. Section 38-79-250 of the 1976 Code, as last amended by Act 181 of 1993, is further amended by adding at the end:
"(4) The State is not responsible for any costs, expenses, liabilities, judgments, or other obligations of the association."
SECTION 4. Section 38-79-260 of the 1976 Code, as last amended by Act 19 of 1997, is further amended to read:
"Section 38-79-260. The association is governed by a board of twenty-one thirteen directors, nine all of whom are must be appointed by the Governor, one of whom represents consumers, two of whom represent licensed insurance agents or brokers, three of whom are members of the South Carolina Medical Association, two of whom are members of the South Carolina Hospital Association, and one of whom is a member of the South Carolina Dental Association. Twelve members are elected by cumulative voting by members of the association, whose votes in the election must be weighed in accordance with each member's net direct premiums written during the preceding calendar year. The Governor shall appoint five health care providers after consultation with the South Carolina Medical Association, the South Carolina Dental Association, and the South Carolina Hospital Association; four insurance representatives after consultation with the insurance industry; one consumer representative who is unaffiliated with the insurance or health care industries or the medical or legal professions; and two licensed insurance agents or brokers. The professional associations listed and the insurance industry may nominate qualified individuals to the Governor for his consideration. The Governor may also receive nominations for appointments to the board from any other individual, group, or association. Notices of vacancies on the board must be published in newspapers of general statewide circulation. The director or his designee shall serve as an ex officio member of the board. The board shall develop a plan of operation which is subject to the approval of the director or his designee as provided in this article. The plan of operation shall provide for staggered terms of the members of the board. The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of such a group may serve as a director at any one time. The board shall elect a chairman and other necessary officers for two-year terms. The insurer representatives of the board of directors must be elected at a meeting of the members or their authorized representatives, which must be held at a time and place designated by the chairman of the board. No member of the board is eligible for reappointment for a period of four years following the completion of his term. A vacancy must be filled for the unexpired portion of the term only. The Governor may receive recommendations from any individual, group, or association for any vacancy on the board. The board must meet at the call of the chairman or a majority of the members of the board but in any event it must meet at least once a year."
SECTION 5. Section 38-79-430 of the 1976 Code, as last amended by Act 19 of 1997, is further amended by adding at the end:
"The board shall develop a plan of operation for the efficient administration of the fund consistent with the provisions of this article. The fund must operate pursuant to a plan of operation which shall provide for the economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of excess medical malpractice insurance and which may contain other provisions including, but not limited to, assessment of all members for expenses, deficits, losses, commissions arrangements, reasonable underwriting standards, acceptance and cession of reinsurance appointment of servicing carriers, and procedures for determining the amounts of insurance to be provided by the association. The plan of operation and any amendments to the plan are subject to the approval of the director or his designee. If the board fails to develop a plan of operation within the time frame established by the Governor or his designee, the director or his designee shall develop the plan of operation for the fund."
SECTION 6. Section 38-79-450 of the 1976 Code is amended by adding at the end:
"Any deficit must be paid by the members of the fund. The State is not responsible for any costs, expenses, liabilities, judgements, or other obligations of the fund."
SECTION 7. This act takes effect one hundred eighty days after approval by the Governor.
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