CCS/SCS/HCS/HB 1305 - This act makes several changes to the laws regarding medical malpractice insurance.

INCREASED OVERSIGHT OVER MEDICAL MALPRACTICE INSURANCE - The act includes medical malpractice insurance policies issued by insurers and 383 malpractice associations within the definition of "commercial casualty insurance" to require notice when canceling or nonrenewing such policies (section 379.882) and to require rate filing (section 379.888)(section 383.010). Under current law, medical malpractice insurance is not included.

This act subjects certain malpractice associations (383s) to Sections 379.882 - 379.893 regarding commercial casualty insurance, Section 379.321.6 dealing with rate filing and notice requirements of commercial casualty insurance, and Sections 374.202 - 374.207 on the examination powers of the Director of the Department of Insurance.

This act prohibits insurance companies and other entities providing malpractice insurance to health care providers in Missouri from: (1) increasing premium charges more than $1,000 without 60 days' prior notice to the insured; (2) refusing to renew policies without 60 days' prior notice, unless the refusal to renew is based upon nonpayment of insurance premiums or license termination or suspension; and (3) ceasing to issue insurance policies without 180 days' prior notice to the Department.

DEPARTMENT OF INSURANCE OVERSIGHT OF SETTING MEDICAL MALPRACTICE INSURANCE RATES - This act requires the Department of Insurance to establish 12 to 20 risk-reporting categories for medical malpractice insurance premiums and regulations for their reporting by May 30, 2005. The act requires insurance companies providing malpractice insurance to provide the department of insurance, by June 1, 2005, and annually thereafter, reports on premium rates charged by category. The Department of Insurance, by December 31, 2006, and annually thereafter, shall establish and publish a market rate reflecting the median of the actual rates charged for each risk-reporting category for the preceding year. This act provides that, after January 1, 2007, insurance premium rates charged by insurance companies and other entities providing malpractice insurance to health care providers in Missouri which are no greater than 20% higher or lower than the published market rate will be presumed reasonable, and rates greater than 20% higher or lower will be presumed unreasonable. The act establishes a procedure by which medical malpractice insurers can make premium rate changes otherwise presumed unreasonable under Section 383.405 (greater than 20%), including: prior notice to the Director (60 days prior to the effective date of the proposed rate change); a hearing (within 30 days after receipt of the insurer's notice); and an appeals process for the insurer if the Director determines the rate change to be unjustified. The act establishes penalties (not to exceed $500 per violation or $5,000 if determined to be a wilful violation) for violations of the act and authorizes license suspension upon the written order of the Director after notice to the insurer and a hearing.

STOCK INSURANCE COMPANIES - This act allows MEMIC (Missouri Employers Mutual Insurance Company) to form a medical malpractice insurance stock insurance company under certain conditions. The general incorporation provisions of Chapter 379, RSMo, and insurance laws of this state shall be applicable unless the provisions of the act provide otherwise. No company authorized to issue medical malpractice insurance prior to August 28, 2004, shall incorporate under the provisions of this act. Under this act, the director of the Department of Insurance may waive the capital and surplus requirements solely for medical malpractice for any company formed under the provisions of this act for a period of 5 years after its incorporation. The act also provides that any company formed under this act shall not be a member of the Missouri Property and Casualty Insurance Guarantee Association, unless the company meets the applicable capital and surplus requirements and maintains such capital and surplus requirements for a period of not less than three consecutive years. Physician mutual insurance companies formed under Chapter 383, RSMo, may be merged into any company formed under this act.

The effective date of the substitute is contingent upon the passage and approval of House Bill 1304 (tort reform bill).
STEPHEN WITTE