AN ACT Relating to medical malpractice insurance for licensed midwives and registered nurses; and creating a new chapter in Title 48 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The commissioner may authorize the formation of a voluntary plan to provide medical malpractice liability insurance coverage to licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing if after a hearing conducted pursuant to chapter 48.04 RCW the commissioner determines that the public interest requires the availability of such insurance and that either of the following applies:

(a) Liability insurance is substantially unavailable through private insurers;

(b) The premiums being charged for liability insurance are so high as to cause or threaten to cause in the immediate future a significant unavailability of needed insurance coverage.

(2) The commissioner may request insurers, agents, and brokers to prepare the plan or assist as needed in the preparation and administration of the plan. A plan formulated under this section shall give consideration to all of the following:

(a) The need for adequate and readily accessible coverage;

(b) Alternative methods of improving the market affected;

(d) The need for reasonable underwriting standards;

(e) The requirement of reasonable loss prevention measures.

(3) The plan shall establish procedures that will encourage use of the voluntary insurance market as a condition of placement of coverage through the plan.

NEW SECTION. Sec. 2. (1) If after a hearing conducted pursuant to section 1 of this act the commissioner determines that a voluntary plan would fail to provide liability insurance coverage, he may authorize the formation of a joint underwriting plan to provide medical malpractice liability insurance for licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing within the office of the commissioner. Every insurer authorized to transact any type of casualty insurance shall participate in the plan as a condition to transact insurance in this state. Policies shall be offered by the plan to licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing if after a hearing conducted pursuant to chapter 48.04 RCW it is determined by the commissioner that either of the following applies:

(a) Liability insurance is substantially unavailable through private insurers;

(b) The premiums being charged for liability insurance are so high as to cause or threaten to cause in the immediate future a significant unavailability of needed insurance coverage.

(2) Thereafter, if the commissioner determines, on application of any interested party and after a public hearing, that liability insurance is available to the licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing through private insurers at an affordable rate, the plan shall cease its underwriting operations.

(3) Nothing contained in this chapter prohibits an insurer from issuing or renewing a policy of liability insurance in this state. However, on a determination by the commissioner, after a public hearing pursuant to chapter 48.04 RCW, that substantial adverse selection has resulted or will likely result, the commissioner may issue an order to insurers that no original policies may thereafter be issued or that renewal policies shall be issued only if the insurer offers the insurance to a representative sample of rating classifications, or both.

NEW SECTION. Sec. 3. The purpose of the plan is to provide, for a period ending on June 30, 1990, a market for medical malpractice liability insurance for licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing.

NEW SECTION. Sec. 4. (1) The plan may do all of the following, which may be exercised directly or by contractual delegation:

(a) Issue or cause to be issued policies of liability insurance to licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing subject to limits as specified in the plan of operation. The policies shall be claims-made policies offered on the basis of one million dollars for each claimant under one policy and three million dollars for all claimants under one policy in any one year;

(b) Underwrite the insurance and adjust and pay losses with respect to the insurance or appoint service companies to perform those functions;

(c) Cede, in whole or in part, to any insurer authorized to reinsure the type of professional liability insurance coverage offered by the plan, the coverage provided by the plan;

(d) Receive, invest, and disburse funds;

(e) Open bank accounts and delegate authority for deposit, withdrawal, and disbursement of funds;

(f) Borrow money for the plan's necessary administrative expenses;

(g) Provide for such fidelity and surety bonds as are deemed necessary to transact the business of the plan;

(h) Review, consider, and act on any matters deemed by it to be necessary and proper for the administration of the plan;

(i) Develop, adopt, and effectuate loss prevention programs;

(j) Sue and be sued, except that no judgment against the plan creates any liability in the individual member companies, and the plan may provide for the indemnification of its member companies, members of the board of directors and officers and employees, and other persons acting on behalf of the plan.

(2) The board shall attempt to secure reinsurance for all potential claims against the plan with the concurrence of the commissioner as to availability and affordability when the underwriting ceases pursuant to section 1 or 2 of this act. The board may use the funds in the plan to purchase the reinsurance. If the board is able to secure the reinsurance, the board shall cease to exist when the reinsurance contract becomes effective, and the commissioner is the successor to the duties, rights, and interests of the board for the purpose of effecting the performance of obligations pursuant to any reinsurance agreement. If the board is unable to secure the reinsurance, the board shall continue operations for the sole purpose of administering all obligations of the plan until there are no potential or unresolved claims against the plan. The board may authorize the assessment of insurers participating in the plan, in the manner prescribed in section 10 of this act, if the assessment is necessary to obtain reinsurance for all potential claims against the plan, notwithstanding the fact that there is no deficit at the time the assessment is made.

(3) The plan shall not be considered an insurer and, unless otherwise specifically provided by statute, shall not be subject to the requirements of insurers governed under this title.

(4) Policies for coverage issued by the plan shall provide that, if coverage is terminated or declared invalid pursuant to a final judicial determination, the commissioner shall use all funds to purchase insurance coverage, to the extent available, for those risks previously insured by the plan and that such funds do not revert, except that if the commissioner is unable to procure similar insurance coverage within sixty days after the date of such judicial determination, he shall report that fact to the governor, and such funds shall revert in the order of priority established in subsection (5) of this section at the expiration of sixty days after the report.

(5) If any funds, after all plan losses are paid or provided for, remain in the plan on cessation of its operations, the remaining funds shall be distributed in the following order of priority:

(a) To the state general fund to the extent of any premium tax or in lieu tax deduction taken by participating insurers as a result of plan assessments;

(b) To policyholders of the plan in proportion to their premium payments.

NEW SECTION. Sec. 5. (1) The plan shall be governed by a board of directors consisting of the commissioner or his designee, who shall serve as chairman, and the following members appointed by the governor:

(a) Two members selected from lists of managerial employees submitted by the plan's participating insurance companies;

(b) One registered nurse certified as an advanced registered nurse practitioner by the board of nursing;

(2) Members of the board are eligible to receive compensation under RCW 43.03.240 and reimbursement of travel expenses pursuant to RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 6. (1) Within ten days after the members of the board are appointed under section 5 of this act, the board shall adopt rules pursuant to chapter 34.04 RCW necessary to implement and govern the plan. The rules shall provide for the following:

(a) The issuance of professional liability insurance pursuant to this chapter;

(b) The establishment of premiums, in accordance with section 9 of this act, premium payments and procedures for termination of the plan, for closing of plan accounts, for disbursement of plan funds, and for the procurement of insurance coverage for potential claims against plan insureds when the plan has ceased issuing policies;

(c) The establishment of percentages for assessments on participating insurers in the event of deficits, except that no such assessments may be made until notice is provided to each participating insurer and if the director finds, after notice and hearing, that funds are insufficient to pay the losses and costs attributable to the underwriting activities of the plan;

(d) A system of procuring and supervising policy issuance or service and for the assignment of those functions to one or more servicing carriers;

(e) The development of advisory loss engineering programs for licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing insured by the plan;

(f) The maintenance of statistical information regarding claim experience against insureds of the plan;

(g) Provisions for authorizing the expenditure of funds of the joint underwriting plan in settlement of cases.

(2) For purposes of authorizing expenditure of funds and settlement of cases, the chairman of the joint underwriting plan board of directors may appoint an executive committee consisting of not less than three members of the joint underwriting plan board of directors to be chaired by the chairman of the joint underwriting plan board of directors. The executive committee, without notice to the remaining members of the joint underwriting plan board of directors, may authorize the expenditure of such funds in settlement on the recommendation of counsel representing the joint underwriting plan. Any such meeting of the executive committee for purposes of authorizing settlement need not be open to public attendance. The executive committee at the next regularly scheduled meeting of the board of directors of the joint underwriting plan shall report in executive session any authorizations for the expenditure of funds in settlement of pending claims or cases.

NEW SECTION. Sec. 7. (1) A policy issued under this chapter may provide that the plan may cancel any of its policies in the event of nonpayment of any premium by mailing or delivering to the insured at the address shown in the policy written notice stating when the cancellation is effective. A cancellation is not effective for at least ten days after notice is given.

(2) The plan may reduce the scope of its insurance coverage for any insured who has his license restricted by his licensing agency or board in accordance with such restriction or may reduce or cancel coverage because of claims against the insured and may terminate coverage if the insured has his license or permit suspended or revoked. Notice of the reduction or termination must be given pursuant to subsection (1) of this section.

NEW SECTION. Sec. 8. All policies written by the plan shall contain a provision that guarantees the insured that the plan shall issue, on the written demand of any insured to whom it has issued a claims-made policy, a rider to the policy that provides full liability coverage for any acts or omissions by the insured that occurred during the same period covered by the plan's claims-made policy, excluding liability for any claim of injury or loss made to the plan during the period. The cost of the occurrence rider shall be determined under section 9 of this act.

NEW SECTION. Sec. 9. (1) The premium rates for an occurrence policy and a claims-made policy for each year the plan issues policies shall be established by the plan.

(2) The board shall employ an actuary to inform the board of actuarially sound rates for the contracts issued by the plan. The board shall then determine an affordable rate by taking into account the annual income of the licensed midwives and registered nurses certified as advanced registered nurse practitioners by the board of nursing seeking coverage. The affordable rate shall become the actual rate charged for that class. The board shall document the anticipated difference between the actuarially sound rate and the actual rate charged for all policies issued by the plan.

(3) The actual rate determined pursuant to subsection (2) of this section shall not be less than the amount needed to cover administrative expenses, loss adjustment expenses, taxes, and an allowance for contingencies and servicing.

NEW SECTION. Sec. 10. (1) The plan shall certify to the commissioner the estimated amount of any deficit at the end of the year of all underwriting activities of the plan. Within sixty days after the certification, the commissioner shall authorize the plan to assess against insurers for the deficit in proportion to their share of net written premiums for casualty insurance in this state for the previous year, except that no assessment may be made after June 30, 1993.

(2) All costs, expenses, and liabilities of the plan shall be charged to the joint underwriting plan fund and are not a general obligation of this state.

(3) In computing premium tax due under chapter 48.14 RCW, each participating insurer, in addition to any other deductions authorized by chapter 48.14 RCW, may deduct from the amount of premium tax attributable to casualty insurance that would otherwise be due an amount equal to twenty percent of the assessments paid by it during the calendar year for which its premium tax is being computed. A casualty insurer paying an in lieu tax under RCW 48.14.080 may deduct from the amount of in lieu tax attributable to casualty insurance not taxed under chapter 48.14 RCW, and that would otherwise be due an amount equal to twenty percent of the assessments paid by it during the calendar year for which its in lieu tax is being computed. An insurer may continue to deduct a maximum of twenty percent of the assessments made until it has received credit for all assessments.

NEW SECTION. Sec. 11. Any applicant to the plan or any person insured pursuant to this chapter, or his representative, or any affected member may appeal to the commissioner within thirty days after any ruling, action, or decision by or on behalf of the plan, with respect to those items defined by the directors of the plan as appealable matters. All orders of the commissioner made under this section are subject to judicial review as provided by chapter 34.04 RCW, except that notwithstanding any other provision of law, proceedings for review act as a stay of the enforcement of any order or decision of the director disapproving or ordering the withdrawal, adjustment, or termination of the effectiveness of any rate filing made by or on behalf of the plan on the ground that the rates or premiums for the plan are unreasonable or excessive. The plan may continue to charge rates pursuant to the filing pending the final order of the court.

NEW SECTION. Sec. 12. Annually on or before June 30th, the plan shall file in the office of the commissioner a statement that contains information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain such matters and information as are prescribed by and shall be in such form as is approved by the commissioner. The commissioner, at any time, may require the plan to furnish additional information with respect to its transactions or condition or any matter connected with its transactions and considered to be material and of assistance in evaluating the scope, operation, and experience of the plan.

NEW SECTION. Sec. 13. The commissioner shall make an examination into the affairs of the plan at least annually. The examination shall be conducted and the report filed in the manner prescribed in chapter 48.03 RCW.

NEW SECTION. Sec. 14. (1) All reasonable and necessary costs incurred by the commissioner under this chapter shall be charged to and immediately reimbursed by the plan.

(2) An initial assessment of up to one hundred dollars may be imposed by the commissioner on every participating insurer of the plan to defray the initial operating expenses of the plan. The initial assessment may be refunded by the plan.

NEW SECTION. Sec. 15. The plan shall not be a member of the Washington Insurance Guarantee Association nor may that association, this state, or any of its political subdivisions be otherwise responsible for losses sustained by the joint underwriting plan.

NEW SECTION. Sec. 16. There is no liability on the part of nor does any cause of action accrue against the plan or its members, the commissioner, or his authorized representatives or any other person or organization for any acts or omissions made in good faith by them during any proceeding or concerning any matters within the scope of this chapter. The plan is a legal entity separate and distinct from its members.

NEW SECTION. Sec. 17. Sections 1 through 16 of this act constitute a new chapter in Title 48 RCW.