00 HOUSE BILL NO. 493 01 "An Act relating to health care providers and establishing the Medical Insurance 02 Corporation; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. PURPOSE. The purpose of this Act and companion legislation relating to 05 medical malpractice actions is to 06 (1) provide financial security to health care providers by limiting their liability 07 exposure for medical negligence to the amount of liability insurance required; 08 (2) eliminate the need for the practice of defensive medicine; 09 (3) provide affordable insurance to all health care providers; 10 (4) control or reduce medical negligence insurance costs; 11 (5) resolve the hospital insurance problems created by Jackson v. Powers, 743 12 P.2d 1376 (Alaska 1987); 13 (6) establish an expeditious and cost-effective procedure for the resolution of 14 noncatastrophic claims; 01 (7) provide a source for financial recovery for those injured as a result of 02 medical negligence; and 03 (8) reduce litigation costs. 04 * Sec. 2. AS 08.02 is amended by adding a new section to read: 05  Sec. 08.02.025. REQUIRED COVERAGE BY MEDICAL INSURANCE 06 CORPORATION. A person licensed as a health care provider shall enroll as a 07 covered person in the liability insurance program established under AS 21.58. 08 Notwithstanding another provision of law, the license of a health care provider is not 09 valid unless the health care provider complies with this section. In this section "health 10 care provider" has the meaning given in AS 21.58.400. 11 * Sec. 3. AS 21 is amended by adding a new chapter to read: 12 CHAPTER 58. STATE MEDICAL INSURANCE CORPORATION. 13  Sec. 21.58.010. CREATION AND PURPOSE. (a) The Medical Insurance 14 Corporation is established as a public corporation of the state in the Department of 15 Commerce and Economic Development but has a legal existence independent of and 16 separate from the state. 17  (b) The purpose of the corporation is to establish and maintain a program for 18 providing liability insurance coverage for licensed health care providers in the state on 19 a basis calculated to contain or reduce both the costs of the program and the costs of 20 obtaining medical liability insurance in the state. 21  (c) An obligation issued by the corporation does not constitute a debt, liability, 22 or obligation of the state. 23  Sec. 21.58.020. BOARD OF DIRECTORS. The corporation is governed by 24 a board of five directors who are residents of the state and shall include 25  (1) two physicians licensed under AS 08.64; one physician must be 26 engaged in group medical practice in a clinic of six or more physicians; 27  (2) an administrator or senior executive officer employed by a hospital 28 licensed under AS 18.20; 29  (3) a professional person employed by an insurer licensed under this 30 title; 31  (4) a person who is not a health care provider, does not have a financial 01 interest in health care, and is not employed in the insurance industry. 02  Sec. 21.58.030. APPOINTMENT AND REMOVAL OF DIRECTORS. The 03 directors of the corporation are appointed by the governor and serve at the pleasure of 04 the governor. A director may be removed only for good cause. 05  Sec. 21.58.040. TERM OF SERVICE. The term of a director is three years. 06 Terms of directors shall be staggered. A director may not be appointed to more than 07 two successive terms. A director appointed to fill a vacancy serves for the unexpired 08 term of the director. A term shall be measured from January 1 of the year in which 09 the term of the vacant position begins, regardless of when the vacancy is filled. 10  Sec. 21.58.050. COMPENSATION AND EXPENSES. A director is entitled 11 to travel and per diem expenses authorized by law for boards and commissions under 12 AS 39.20.180. 13  Sec. 21.58.060. OFFICERS. At the first meeting of each year, the board of 14 the corporation shall elect a chair and a vice-chair from among its members. The 15 corporation shall prescribe their duties by regulation. 16  Sec. 21.58.070. MEETINGS AND QUORUM. The board of the corporation 17 shall meet at least once every three months. Three members of the board constitute 18 a quorum for the transaction of business and the exercise of the powers and duties of 19 the corporation. 20  Sec. 21.58.080. ADMINISTRATIVE PROCEDURE. (a) Actions of the 21 corporation under this chapter are subject to AS 44.62 (Administrative Procedure Act) 22 except as provided in (b) of this section. 23  (b) The corporation shall issue a decision within 30 days after the submission 24 to the corporation of the proposed decision of a hearing officer under AS 44.62.500. 25 The decision of the corporation, except a decision to refer the case to a hearing officer 26 under AS 44.62.500(c), is a final administrative order under AS 44.62.560. 27  Sec. 21.58.090. EMPLOYMENT OF PERSONNEL. The corporation shall 28 employ and determine the salary of an executive director who is responsible for the 29 day-to-day operations of the corporation and who serves at the pleasure of the board. 30 With the approval of the board, the executive director may select and employ 31 additional staff. The executive director and other employees are in the exempt service 01 under AS 39.25. 02  Sec. 21.58.100. GENERAL POWERS. The corporation may 03  (1) act as an insurer; when acting as an insurer, the corporation shall 04 comply with the provisions applicable to an insurer under this title; 05  (2) make contracts and execute all instruments necessary or convenient 06 for carrying out its business; 07  (3) acquire, own, hold, dispose of, and encumber personal property and 08 lease real property in the exercise of its powers; 09  (4) enter into agreements or transactions with a federal, state, or 10 municipal agent, or other public institution, or with a private individual, partnership, 11 firm, corporation, association, or other entity necessary to perform the duties of the 12 corporation; 13  (5) perform all other acts necessary and proper to carry out the duties 14 of the corporation; 15  (6) establish risk pools to provide reasonably priced insurance coverage 16 when the corporation determines that liability insurance would otherwise not be 17 available to the health care provider; in making a determination under this paragraph, 18 the corporation shall consider the locale, income, and medical services provided by 19 each health care provider. 20  Sec. 21.58.110. DUTIES. The corporation shall 21  (1) adopt regulations to implement this chapter; 22  (2) provide medical liability insurance coverage as required under 23 AS 21.58.130; 24  (3) establish for each fiscal year a standard premium to be paid by or 25 on behalf of each enrollee, taking into consideration the corporation's cost of providing 26 or procuring insurance, the funds available from the state medical liability insurance 27 fund, the specialty, location, and claims experience of the enrollee, and other relevant 28 factors as determined by the corporation that are consistent with AS 21.58.100(6); 29  (4) define acceptable reasons for the denial of claims under the uniform 30 liability policy. 31  Sec. 21.58.120. MEDICAL LIABILITY INSURANCE FUND. The state 01 medical liability insurance fund is established as a separate account in the general 02 fund. The fund shall be administered by the corporation and used to provide medical 03 liability insurance required under this chapter. The fund consists of appropriations by 04 the legislature. 05  Sec. 21.58.130. UNIFORM MEDICAL LIABILITY INSURANCE POLICY. 06 (a) The corporation shall issue, in the form approved by the director, to all health care 07 providers who pay the premiums for it, a uniform medical liability insurance policy 08 indemnifying the health care provider and employees who are health care providers 09 against loss by reason of liability for professional services rendered in the state on an 10 occurrence basis; the policy must include provisions that 11  (1) offer a maximum limit of liability of $5,000,000; 12  (2) require the corporation to provide a defense against and indemnify 13 a claim for compensatory or punitive damages in a proceeding subject to AS 09.55.530 14 - 09.55.560; 15  (3) at the option of the health care provider and for an additional 16 premium, agree to provide a defense and indemnity for claims against the health care 17 provider or an employee that arise out of professional services performed by the health 18 care provider or employee for any period before the contract is issued, except that 19 coverage will not be provided for a claim already filed or that the health care provider 20 or employee had or reasonably should have had notice of at the time the retroactive 21 insurance was purchased; and 22  (4) adopt one of the following approaches regarding the risk incurred 23 by a policy issued by the corporation under this section: 24  (A) act as a self-insurer; or 25  (B) negotiate for and procure reinsurance from private casualty 26 insurers or reinsurers for all liability incurred by a policy issued by the 27 corporation; 28  (b) The corporation shall adopt regulations specifying the medical services 29 covered by a uniform liability policy. 30  Sec. 21.58.140. DEDUCTIBLES AND COPAYMENTS. Subject to 31 AS 21.58.130, the corporation shall establish the deductible and copayment amounts 01 applicable under a uniform medical liability insurance policy. 02  Sec. 21.58.150. SOLICITATION OF ELIGIBLE HEALTH CARE 03 PROVIDERS. (a) The corporation shall disseminate appropriate information to health 04 care providers in the state regarding the existence of the state medical liability 05 insurance policy and the means of enrollment. 06  (b) The corporation shall devise and implement a means of maintaining public 07 awareness of the provisions of this chapter regarding the state medical liability 08 insurance policy and shall administer this chapter in a manner that facilitates public 09 participation in the state medical liability insurance program. 10  Sec. 21.58.400. DEFINITIONS. In this chapter, 11  (1) "corporation" means the Medical Insurance Corporation established 12 in AS 21.58.010; 13  (2) "enrollee" means a person whose application for coverage under the 14 state medical liability insurance policy has been accepted by the corporation, who has 15 completed applicable enrollment procedures, and who is covered by the insurance 16 policy; 17  (3) "health care provider" has the meaning given in AS 09.55.560; 18  (4) "liability insurance" means insurance against legal liability for the 19 death, injury, or disability of a person. 20 * Sec. 4. AS 36.30.015(e) is amended to read: 21  (e) The board of directors of the Alaska Railroad Corporation, [AND] the 22 board of directors of the Alaska Aerospace Development Corporation, and the board 23 of directors of the Medical Insurance Corporation shall adopt procedures to govern 24 the procurement of supplies, services, professional services, and construction. The 25 procedures must be substantially equivalent to the procedures prescribed in this chapter 26 and in regulations adopted under this chapter. 27 * Sec. 5. AS 39.25.110(11) is amended to read: 28  (11) the officers and employees of the following boards, commissions, 29 and authorities: 30  (A) Alaska Gas Pipeline Financing Authority; 31  (B) Alaska Permanent Fund Corporation; 01  (C) Alaska Industrial Development and Export Authority; 02  (D) Alaska Commercial Fisheries Entry Commission; 03  (E) Alaska Commission on Postsecondary Education; 04  (F) Alaska Aerospace Development Corporation; 05  (G) Medical Insurance Corporation; 06 * Sec. 6. AS 44.62.330(a) is amended by adding a new paragraph to read: 07  (59) Medical Insurance Corporation. 08 * Sec. 7. TRANSITION. (a) The Medical Insurance Corporation established in sec. 3 of 09 this Act shall begin the implementation of AS 21.58 by January 1, 1995, and shall fully 10 implement AS 21.58 before July 1, 1996. 11 (b) The initially appointed members of the board of the Medical Insurance Corporation 12 that are serving staggered terms shall serve terms set by the governor under AS 39.05.055(3). 13 * Sec. 8. (a) This Act takes effect only if an Act providing that in a civil action against 14 a health care provider insured by the Medical Insurance Corporation, damages may not be 15 recovered in an amount that exceeds the amount of the liability insurance of the health care 16 provider, requiring mandatory arbitration in medical malpractice actions when the claimed 17 damages are less than $200,000, and eliminating the expert advisory panel in a medical 18 malpractice action is passed by the Eighteenth Alaska State Legislature and becomes law. 19 (b) If the condition described in (a) of this section is fulfilled, 20 (1) secs. 3 - 7 of this Act take effect July 1, 1994; and 21 (2) AS 08.02.025, enacted in sec. 2 of this Act, takes effect 30 days after the 22 Medical Insurance Corporation first offers medical liability insurance; the Medical Insurance 23 Corporation shall notify the revisor of statutes of the date that the corporation first offers 24 medical liability insurance.