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Senate Bill 2186

Senate Bill sb2186

CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2004                                  SB 2186

    By Senator Geller





    31-1056-04

  1                      A bill to be entitled

  2         An act relating to medical malpractice

  3         insurance; creating the Florida Medical

  4         Malpractice Insurance Fund; providing the

  5         purpose of the fund; providing for governance

  6         by a board of governors; requiring the board to

  7         submit a plan of operation for approval by the

  8         Office of Insurance Regulation; providing

  9         investment requirements; authorizing the board

10         to employ staff and other professionals;

11         providing immunity from liability for members

12         of the board, its agents, and employees of the

13         state; providing for the fund to issue medical

14         malpractice policies to any physician

15         regardless of specialty; providing requirements

16         for premium rates; providing for the tax-exempt

17         status of the fund; requiring the Financial

18         Services Commission to seek an opinion from the

19         Internal Revenue Service; providing for initial

20         capitalization; authorizing the Financial

21         Services Commission to adopt rules; providing

22         for termination of the fund; requiring

23         practitioners licensed under ch. 458 or ch.

24         459, F.S., to obtain and maintain professional

25         liability coverage of a specified amount as a

26         condition of licensure; providing certain

27         exceptions; providing an effective date.

28  

29  Be It Enacted by the Legislature of the State of Florida:

30  

31  

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    Florida Senate - 2004                                  SB 2186
    31-1056-04




 1         Section 1.  Florida Medical Malpractice Insurance

 2  Fund.--

 3         (1)  FINDINGS AND PURPOSES.--The Legislature finds and

 4  declares that there is a compelling state interest in

 5  maintaining the availability and affordability of health care

 6  services to the people of Florida. This state interest is

 7  seriously threatened by the increased cost and decreased

 8  availability of medical malpractice insurance to physicians.

 9  To the extent that the private sector is unable to maintain a

10  viable and orderly market for medical malpractice insurance,

11  state actions to maintain the availability and affordability

12  of medical malpractice insurance are a valid and necessary

13  exercise of the police power.

14         (2)  DEFINITIONS.--As used in this section, the term:

15         (a)  "Fund" means the Florida Medical Malpractice

16  Insurance Fund, as created pursuant to this section.

17         (b)  "Physician" means a physician licensed under

18  chapter 458 or chapter 459, Florida Statutes.

19         (3)  FLORIDA MEDICAL MALPRACTICE INSURANCE FUND

20  CREATED.--There is created the Florida Medical Malpractice

21  Insurance Fund, which shall be subject to the requirements of

22  this section. The fund shall begin offering coverage when

23  initial capitalization is provided for the fund pursuant to

24  subsection (7).

25         (a)  The fund shall be administered by a board of

26  governors consisting of seven members who are appointed as

27  follows:

28         1.  Three members by the Governor;

29         2.  Three members by the Chief Financial Officer; and

30         3.  One member by the other six board members.

31  

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    Florida Senate - 2004                                  SB 2186
    31-1056-04




 1  Board members shall serve at the pleasure of the appointing

 2  authority. Two board members must be physicians licensed in

 3  this state and the Governor and the Chief Financial Officer

 4  shall each appoint one of these physicians.

 5         (b)  The board shall submit a plan of operation, which

 6  must be approved by the Office of Insurance Regulation of the

 7  Financial Services Commission. The plan of operation and other

 8  actions of the board shall not be considered rules subject to

 9  the requirements of chapter 120, Florida Statutes.

10         (c)  Except as otherwise provided by this section, the

11  fund shall be subject to the requirements of state law which

12  apply to authorized insurers.

13         (d)  Moneys in the fund may not be expended, loaned, or

14  appropriated except to pay obligations of the fund arising out

15  of medical malpractice insurance policies issued to physicians

16  and the costs of administering the fund, including the

17  purchase of reinsurance as the board deems prudent. The board

18  shall enter into an agreement with the State Board of

19  Administration, which shall invest one-third of the moneys in

20  the fund pursuant to sections 215.44-215.52, Florida Statutes.

21  The board shall enter into an agreement with the Division of

22  Treasury of the Department of Financial Services, which shall

23  invest two-thirds of the moneys in the fund pursuant to the

24  requirements for the investment of state funds in chapter 17,

25  Florida Statutes. Earnings from all investments shall be

26  retained in the fund, except as otherwise provided in this

27  section.

28         (e)  The fund may employ or contract with such staff

29  and professionals as the board deems necessary for the

30  administration of the fund.

31  

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    Florida Senate - 2004                                  SB 2186
    31-1056-04




 1         (f)  There shall be no liability on the part of any

 2  member of the board, its agents, or any employee of the state

 3  for any action taken by them in the performance of their

 4  powers and duties under this section. Such immunity does not

 5  apply to any willful tort or to breach of any contract or

 6  agreement.

 7         (g)  The fund is not a member insurer of the Florida

 8  Insurance Guaranty Association established pursuant to part II

 9  of chapter 631, Florida Statutes. The fund is not subject to

10  sections 624.407, 624.408, 624.4095, and 624.411, Florida

11  Statutes.

12         (4)  MEDICAL MALPRACTICE INSURANCE POLICIES.--The board

13  must offer medical malpractice insurance to any physician,

14  regardless of his or her specialty, but may adopt underwriting

15  requirements, as specified in its plan of operation. The fund

16  shall offer limits of coverage of $250,000 per claim/$500,000

17  annual aggregate; $500,000 per claim/$1 million annual

18  aggregate; and $1 million per claim/$2 million annual

19  aggregate. The fund shall also allow policyholders to select

20  from policies with deductibles of $100,000, $200,000, and

21  $250,000; excess coverage limits of $250,000 per claim and

22  $750,000 annual aggregate; $1 million per claim and $3 million

23  annual aggregate; or $2 million and $4 million annual

24  aggregate. The fund shall offer such other limits as specified

25  in its plan of operation.

26         (5)  PREMIUM RATES.--The premium rates for coverage

27  offered by the fund must be actuarially sound and shall be

28  subject to the same requirements that apply to authorized

29  insurers issuing medical malpractice insurance, except that:

30         (a)  The rates shall not include any factor for

31  profits; and

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    Florida Senate - 2004                                  SB 2186
    31-1056-04




 1         (b)  The anticipated future investment income of the

 2  fund, as projected in its rate filing, must be approximately

 3  equal to the actual investment income that the fund has

 4  earned, on average, for the prior 7 years. For those years of

 5  the prior 7 years during which the fund was not in operation,

 6  the anticipated future investment income must be approximately

 7  equal to the actual average investment income earned by the

 8  State Board of Administration for the moneys available for

 9  investment under sections 215.44-215.53, Florida Statutes, and

10  the average annual investment income earned by the Division of

11  Treasury of the Department of Financial Services for the

12  investment of state funds under chapter 17, Florida Statutes,

13  in the same proportion as specified in paragraph (3)(d).

14         (6)  TAX EXEMPTION.--The fund shall be a political

15  subdivision of the state and is exempt from the corporate

16  income tax under chapter 220, Florida Statutes, and the

17  premiums shall not be subject to the premium tax imposed by

18  section 624.509, Florida Statutes. It is also the intent of

19  the Legislature that the fund be exempt from federal income

20  taxation. The Financial Services Commission and the fund shall

21  seek an opinion from the Internal Revenue Service as to the

22  tax-exempt status of the fund and shall make such

23  recommendations to the Legislature as the board deems

24  necessary to obtain tax-exempt status.

25         (7)  INITIAL CAPITALIZATION.--By July 1, 2005, the

26  Legislature shall provide by law for adequate initial

27  capitalization of the Florida Medical Malpractice Insurance

28  Fund.

29         (8)  RULES.--The Financial Services Commission may

30  adopt rules to implement and administer the provisions of this

31  section.

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    Florida Senate - 2004                                  SB 2186
    31-1056-04




 1         (9)  REVERSION OF FUND ASSETS UPON TERMINATION.--The

 2  fund and the duties of the board under this section shall

 3  stand repealed on a date 10 years after the date the Florida

 4  Medical Malpractice Insurance Fund begins offering coverage

 5  pursuant to this section, unless reviewed and saved from

 6  repeal through reenactment by the Legislature. Upon

 7  termination of the fund, all assets of the fund shall revert

 8  to the General Revenue Fund.

 9         Section 2.  (1)  Notwithstanding any law to the

10  contrary, if the Florida Medical Malpractice Insurance Fund

11  begins offering coverage as provided in this act, all

12  physicians licensed under chapter 458 or chapter 459, Florida

13  Statutes, as a condition of licensure shall be required to

14  maintain financial responsibility by obtaining and maintaining

15  professional liability coverage in an amount not less than

16  $250,000 per claim, with a minimum annual aggregate of not

17  less than $500,000, from an authorized insurer as defined

18  under section 624.09, Florida Statutes, from a surplus lines

19  insurer as defined under section 626.914(2), Florida Statutes,

20  from a risk retention group as defined under section 627.942,

21  Florida Statutes, from the Joint Underwriting Association

22  established under section 627.351(4), Florida Statutes,

23  through a plan of self-insurance as provided in section

24  627.357 or section 624.462, Florida Statutes, or from the

25  Florida Medical Malpractice Insurance Fund.

26         (2)  Physicians and osteopathic physicians who are

27  exempt from the financial responsibility requirements under

28  section 458.320(5)(a), (b), (c), (d), (e), and (f) and section

29  459.0085(5)(a), (b), (c), (d), (e), and (f), Florida Statutes,

30  shall not be subject to the requirements of this section.

31  

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    Florida Senate - 2004                                  SB 2186
    31-1056-04




 1         Section 3.  This act shall take effect upon becoming a

 2  law.

 3  

 4            *****************************************

 5                          SENATE SUMMARY

 6    Creates the Florida Medical Malpractice Insurance Fund.
      Provides for oversight by a board of governors and the
 7    Office of Insurance Regulation of the Financial Services
      Commission. Provides for the fund to issue medical
 8    malpractice policies to any physician regardless of
      specialty. Provides for initial capitalization of the
 9    fund. Authorizes the Financial Services Commission to
      adopt rules. Provides for the fund to terminate in 10
10    years. Requires physicians to obtain professional
      liability coverage in an amount of at least $250,000 per
11    claim, with an annual aggregate of at least $500,000, as
      a condition of licensure. (See bill for details.)
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