Louisiana § RS 40:1231.7 - Risk management; authority

§ RS 40:1231.7. Risk management; authority

            A. The purpose of this Section is to make malpractice liability insurance available to qualified risks as defined in this Part.

            B. There is created the Residual Malpractice Insurance Authority. The authority is empowered to engage in making malpractice liability insurance available in this state. Governance and administration of the authority shall be vested with the board.

            C.(1) The board shall choose a risk manager for the authority according to the public bid laws of the state.

            (2) Unless otherwise agreed between the risk manager and the board, the separate, personal or independent assets of the risk manager shall not be liable for or subject to use or expenditure for the purpose of providing insurance by the authority.

            (3) All contracts between the authority and the risk manager, and any amendment thereto, and any adjustments made by the board in the compensation or duties of the risk manager permitted by such contracts shall require the approval of the division of administration.

            D. In the administration and provision for malpractice liability insurance by the authority, the risk manager shall:

            (1) Be subject to all laws and regulations of this state which apply to insurance. Except as provided by this Part the Residual Malpractice Insurance Authority shall not be subject to the taxes provided by the Louisiana Insurance Code.

            (2) Prepare and file appropriate forms with the Department of Insurance.

            (3) Prepare and file premium rates with the Department of Insurance.

            (4) Perform the underwriting functions; and subject to the approval of the board, shall formulate underwriting standards for insuring health care providers who by reason of training, experience, claims history and other generally accepted underwriting standards are reasonable insurance risks.

            (5) Dispose of all claims and litigations arising out of insurance policies.

            (6) Maintain complete books and records.

            (7) File an annual financial statement regarding its operations under this Section with the Department of Insurance on forms prescribed by the commissioner.

            (8) Obtain private reinsurance for the authority, if necessary.

            (9) Prepare and file for approval of the commissioner, a schedule of agent's compensation.

            (10) Prepare and file a plan of operations with the commissioner for approval.

            E. Unless otherwise agreed between the risk manager and the board, the risk manager shall receive as compensation for its services only a percentage of all premiums received by it under the terms of this Section, as determined by the board and approved by the division of administration.

            F. If a health care provider desires malpractice liability insurance under this Part, he shall forward his application to the risk manager. The risk manager shall not consider any application unless a health care provider furnishes in his application evidence of his having either been refused coverage by at least two private insurers writing medical malpractice insurance in the state, or having been refused coverage by the only private insurer writing medical malpractice insurance in the state, or that no private insurer is writing such insurance in the state. Upon written application therefor, the risk manager shall provide a malpractice liability insurance binder to a health care provider who has applied for medical malpractice insurance to any private insurer writing medical malpractice insurance in the state. Such binder shall remain in effect for no more than sixty days from the date of the application by the health care provider to such private insurer. Upon proof by the health care provider submitted to the risk manager that he has not been accepted by any private insurer during the sixty day period, the risk manager shall assume that the health care provider has been rejected for private insurance coverage. In that case, the risk manager shall, if the health care provider meets the underwriting standards called for in Paragraph (4) of Subsection D of this Section, issue a policy of insurance to the health care provider. If within the sixty day period the applicant is accepted by a private insurer, the binder shall expire at the time of such acceptance.

            G. If the risk manager declines to accept the risk, notice of declination, together with reasons, shall be sent to the applicant and the board. The applicant shall have ten days from the date of notice to file an appeal for review by the board. On appeal, the board shall review the decision of the risk manager to determine whether the approved underwriting standards have been fairly applied by the risk manager and shall enter an appropriate order.

            H. The surplus of premiums over losses and expenses received by the authority shall be placed in a segregated fund and shall be invested and reinvested by the board in accordance with the Louisiana Insurance Code and investment income generated shall remain in the fund. These funds shall not be considered public or state funds.

            I. The authority may issue malpractice liability insurance policies only to health care providers who are residents of Louisiana and to corporations, foreign or domestic, with regard to health care facilities operated within Louisiana. Insofar as practicable, only the claims experience of Louisiana health care providers shall be considered in the determination of rates for such policies. The rates for such policies shall otherwise be determined and approved according to the same procedures and principles as rates for malpractice liability policies issued by private insurers in Louisiana. The rates for such policies shall be at least equal to the highest rate established for any particular category of malpractice liability insurance of a like policy issued by private insurers in the state.

            J. The state of Louisiana assumes no liability for medical malpractice insurance policies written by the authority. Every policy issued by the authority shall contain a statement that the authority's liability or the liability of the policy is limited to the authority's reserves.

            Added by Acts 1975, No. 817, §1. Amended by Acts 1976, No. 183, §6; 1977, No. 261, §3; Acts 1990, No. 967, §2, eff. Oct. 1, 1990; Acts 2013, No. 80, §1; Redesignated from R.S. 40:1299.46 by HCR 84 of 2015 R.S.