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12  AN ACT concerning the health care provider insurance availability act;
13    amending K.S.A. 40-3408 and K.S.A. 1996 Supp. 40-3402, 40-3403
14    and 40-3404 and repealing the existing sections.
15
16  Be it enacted by the Legislature of the State of Kansas:
17    Section 1.  K.S.A. 1996 Supp. 40-3402 is hereby amended to read as
18  follows: 40-3402. (a) A policy of professional liability insurance approved
19  by the commissioner and issued by an insurer duly authorized to transact
20  business in this state in which the limit of the insurer's liability is not less
21  than $200,000 per occurrence claim, subject to not less than a $600,000
22  annual aggregate for all claims made during the policy period, shall be
23  maintained in effect by each resident health care provider as a condition
24  to rendering professional service as a health care provider in this state,
25  unless such health care provider is a self-insurer. This provision shall not
26  apply to optometrists and pharmacists on or after July 1, 1991 nor to
27  physical therapists on and after July 1, 1995 nor to health maintenance
28  organizations on or after July 1, 1997. Such policy shall provide as a
29  minimum coverage for claims made during the term of the policy which
30  were incurred during the term of such policy or during the prior term of
31  a similar policy. Any insurer offering such policy of professional liability
32  insurance to any health care provider may offer to such health care pro-
33  vider a policy as prescribed in this section with deductible options. Such
34  deductible shall be within such policy limits.
35    (1)  Each insurer providing basic coverage shall within 30 days after
36  the premium for the basic coverage is received by the insurer or within
37  30 days from the effective date of this act, whichever is later, notify the
38  board of governors that such coverage is or will be in effect. Such noti-
39  fication shall be on a form approved by the board of governors and shall
40  include information identifying the professional liability policy issued or
41  to be issued, the name and address of all health care providers covered
42  by the policy, the amount of the annual premium, the inception and
43  expiration dates of the coverage and such other information as the com-
SB 229--Am. by HCW
                                     

 1  missioner board of governors shall require. A copy of the notice required
 2  by this subsection shall be furnished the named insured.
 3    (2)  In the event of termination of basic coverage by cancellation, non-
 4  renewal, expiration or otherwise by either the insurer or named insured,
 5  notice of such termination shall be furnished by the insurer to the board
 6  of governors, the state agency which licenses, registers or certifies the
 7  named insured and the named insured. Such notice shall be provided no
 8  less than 30 days prior to the effective date of any termination initiated
 9  by the insurer or within 10 days after the date coverage is terminated at
10  the request of the named insured and shall include the name and address
11  of the health care provider or providers for whom basic coverage is ter-
12  minated and the date basic coverage will cease to be in effect. No basic
13  coverage shall be terminated by cancellation or failure to renew by the
14  insurer unless such insurer provides a notice of termination as required
15  by this subsection.
16    (3)  Any professional liability insurance policy issued, delivered or in
17  effect in this state on and after July 1, 1976, shall contain or be endorsed
18  to provide basic coverage as required by subsection (a) of this section.
19  Notwithstanding any omitted or inconsistent language, any contract of
20  professional liability insurance shall be construed to obligate the insurer
21  to meet all the mandatory requirements and obligations of this act. The
22  liability of an insurer for claims made prior to July 1, 1984, shall not
23  exceed those limits of insurance provided by such policy prior to July 1,
24  1984.
25    (b)  Unless a nonresident health care provider is a self-insurer, such
26  health care provider shall not render professional service as a health care
27  provider in this state unless such health care provider maintains coverage
28  in effect as prescribed by subsection (a), except such coverage may be
29  provided by a nonadmitted insurer who has filed the form required by
30  subsection (b)(1). This provision shall not apply to optometrists and phar-
31  macists on or after July 1, 1991 nor to physical therapists on and after
32  July 1, 1995.
33    (1)  Every insurance company authorized to transact business in this
34  state, that is authorized to issue professional liability insurance in any
35  jurisdiction, shall file with the commissioner, as a condition of its contin-
36  ued transaction of business within this state, a form prescribed by the
37  commissioner declaring that its professional liability insurance policies,
38  wherever issued, shall be deemed to provide at least the insurance re-
39  quired by this subsection when the insured is rendering professional serv-
40  ices as a nonresident health care provider in this state. Any nonadmitted
41  insurer may file such a form.
42    (2)  Every nonresident health care provider who is required to main-
43  tain basic coverage pursuant to this subsection shall pay the surcharge
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 1  levied by the board of governors pursuant to subsection (a) of K.S.A. 40-
 2  3404 and amendments thereto directly to the board of governors and
 3  shall furnish to the board of governors the information required in sub-
 4  section (a)(1).
 5    (c)  Every health care provider that is a self-insurer, the university of
 6  Kansas medical center for persons engaged in residency training, as de-
 7  scribed in subsection (r)(1) of K.S.A. 40-3401 and amendments thereto,
 8  the employers of persons engaged in residency training, as described in
 9  subsection (r)(2) of K.S.A. 40-3401 and amendments thereto, the private
10  practice corporations or foundations and their full-time physician faculty
11  employed by the university of Kansas medical center or a medical care
12  facility or mental health center for self-insurers under subsection (e) of
13  K.S.A. 40-3414 and amendments thereto shall pay the surcharge levied
14  by the board of governors pursuant to subsection (a) of K.S.A. 40-3404
15  and amendments thereto directly to the board of governors and shall
16  furnish to the board of governors the information required in subsection
17    (a)(1) and (a)(2).
18    (d)  In lieu of a claims made policy otherwise required under this
19  section, a person engaged in residency training who is providing services
20  as a health care provider but while providing such services is not covered
21  by the self-insurance provisions of subsection (d) of K.S.A. 40-3414 and
22  amendments thereto may obtain basic coverage under an occurrence
23  form policy if such policy provides professional liability insurance cover-
24  age and limits which are substantially the same as the professional liability
25  insurance coverage and limits required by subsection (a) of K.S.A. 40-
26  3402 and amendments thereto. Where such occurrence form policy is in
27  effect, the provisions of the health care provider insurance availability act
28  referring to claims made policies shall be construed to mean occurrence
29  form policies.
30    (e)  The provisions of this section shall expire on July 1, 1994, if the
31  health care stabilization fund oversight committee recommends provi-
32  sions that are enacted on or before July 1, 1994, which: (1) Provide for
33  the equitable apportionment of risk among insurers of applicants for pro-
34  fessional liability insurance, who are unable to procure such insurance
35  through ordinary methods after June 30, 1994; (2) provide for the ap-
36  portionment, on a pro rata basis, of any balance remaining in the fund
37  after all liabilities have been paid, to each health care provider who paid
38  the applicable surcharge levied pursuant to K.S.A. 40-3404, and amend-
39  ments thereto, during the period July 1, 1991, to June 30, 1994; and (3)
40  provide a plan for addressing the professional liability insurance needs of
41  faculty, residents and private practice foundations and corporations at the
42  university of Kansas school of medicine after June 30, 1994.
43    Sec. 2.  K.S.A. 1996 Supp. 40-3403 is hereby amended to read as
SB 229--Am. by HCW
                                     

 1  follows: 40-3403. (a) For the purpose of paying damages for personal
 2  injury or death arising out of the rendering of or the failure to render
 3  professional services by a health care provider, self-insurer or inactive
 4  health care provider subsequent to the time that such health care provider
 5  or self-insurer has qualified for coverage under the provisions of this act,
 6  there is hereby established the health care stabilization fund. The fund
 7  shall be held in trust in the state treasury and accounted for separately
 8  from other state funds. The board of governors shall administer the fund
 9  or contract for the administration of the fund with an insurance company
10  authorized to do business in this state.
11    (b) (1)  On the effective date of this act, the board of governors in
12  existence on the day preceding such effective date is hereby abolished.
13  On the effective date of this act, There is hereby created a board of
14  governors which shall be composed of such members and shall have such
15  powers, duties and functions as are prescribed by this act. The board of
16  governors shall:
17    (A)  Administer the fund and exercise and perform other powers, du-
18  ties and functions required of the board under the health care provider
19  insurance availability act;
20    (B)  provide advice, information and testimony to the appropriate li-
21  censing or disciplinary authority regarding the qualifications of a health
22  care provider;
23    (C)  prepare and publish, on or before October 1 of each year, a sum-
24  mary of the fund's activity during the preceding fiscal year, including but
25  not limited to the amount collected from surcharges, the highest and
26  lowest surcharges assessed, the amount paid from the fund, the number
27  of judgments paid from the fund, the number of settlements paid from
28  the fund and the amount in the fund at the end of the fiscal year; and
29    (D)  have the authority to grant exemptions from the provisions of
30  subsection (m) of this section when a health care provider temporarily
31  leaves the state for the purpose of obtaining additional education or train-
32  ing or to participate in religious, humanitarian or government service
33  programs. Whenever a health care provider has previously left the state
34  for one of the reasons specified in this paragraph and returns to the state
35  and recommences practice, the board of governors may refund any
36  amount paid by the health care provider pursuant to subsection (m) of
37  this section if no claims have been filed against such health care provider
38  during the provider's temporary absence from the state.
39    (2)  The board shall consist of 10 persons appointed by the commis-
40  sioner of insurance, as provided by this subsection (b) and as follows:
41    (A)  Three members who are licensed to practice medicine and sur-
42  gery in Kansas who are doctors of medicine and who are on a list of
43  nominees submitted to the commissioner by the Kansas medical society;
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 1    (B)  three members who are representatives of Kansas hospitals and
 2  who are on a list of nominees submitted to the commissioner by the
 3  Kansas hospital association;
 4    (C)  two members who are licensed to practice medicine and surgery
 5  in Kansas who are doctors of osteopathic medicine and who are on a list
 6  of nominees submitted to the commissioner by the Kansas association of
 7  osteopathic medicine;
 8    (D)  one member who is licensed to practice chiropractic in Kansas
 9  and who is on a list of nominees submitted to the commissioner by the
10  Kansas chiropractic association;
11    (E)  one member who is a licensed professional nurse authorized to
12  practice as a registered nurse anesthetist who is on a list of nominees
13  submitted to the commissioner by the Kansas association of nurse anes-
14  thetists.
15    (3)  On and after the effective date of this act, whenever When a
16  vacancy occurs in the membership of the board of governors created by
17  this act, the commissioner shall appoint a successor of like qualifications
18  from a list of three nominees submitted to the commissioner by the pro-
19  fessional society or association prescribed by this section for the category
20  of health care provider required for the vacant position on the board of
21  governors. Except as otherwise provided by this section, All appointments
22  made shall be for a term of office of four years, but no member shall be
23  appointed for more than two successive four-year terms. Each member
24  shall serve until a successor is appointed and qualified. Whenever a va-
25  cancy occurs in the membership of the board of governors created by this
26  act for any reason other than the expiration of a member's term of office,
27  the commissioner shall appoint a successor of like qualifications to fill the
28  unexpired term. In each case of a vacancy occurring in the membership
29  of the board of governors, the commissioner shall notify the professional
30  society or association which represents the category of health care pro-
31  vider required for the vacant position and request a list of three nomi-
32  nations of health care providers from which to make the appointment.
33    (4) (A)  The persons serving as members of the board of governors
34  on the day preceding the effective date of this act, except the commis-
35  sioner of insurance and the persons appointed from the public at large
36  or to represent the unspecified category of health care providers under
37  the provisions of this section as it existed on the day preceding the effec-
38  tive date of this act, shall be the initial members of the board of governors
39  created by this act and shall hold such office in accordance with and
40  subject to the provisions of this section. The commissioner shall designate
41  the terms of office of such initial members of the board of governors
42  created by this act as follows:
43    (i)  One member who is licensed to practice medicine and surgery in
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 1  Kansas who is a doctor of medicine shall be designated for a term expiring
 2  on July 1, 1995;
 3    (ii)  one member who is licensed to practice medicine and surgery in
 4  Kansas who is a doctor of medicine shall be designated for a term expiring
 5  on July 1, 1996;
 6    (iii)  one member who is licensed to practice medicine and surgery in
 7  Kansas who is a doctor of medicine shall be designated for a term expiring
 8  on July 1, 1997;
 9    (iv)  one member who is a representative of a Kansas hospital shall be
10  designated for a term expiring on July 1, 1995;
11    (v)  one member who is a representative of a Kansas hospital shall be
12  designated for a term expiring on July 1, 1996;
13    (vi)  one member who is a representative of a Kansas hospital shall be
14  designated for a term expiring on July 1, 1997;
15    (vii)  one member who is licensed to practice medicine and surgery
16  in Kansas who is a doctor of osteopathic medicine shall be designated for
17  a term expiring on July 1, 1995;
18    (viii)  one member who is licensed to practice medicine and surgery
19  in Kansas who is a doctor of osteopathic medicine shall be designated for
20  a term expiring on July 1, 1996;
21    (ix)  the member who is licensed to practice chiropractic in Kansas
22  shall be designated for a term expiring on July 1, 1995; and
23    (x)  the member who is a licensed professional nurse authorized to
24  practice as a registered nurse anesthetist in Kansas shall be designated
25  for a term expiring on July 1, 1996.
26    (B)  If there was a vacancy in the membership of the board of gov-
27  ernors abolished by this act on the day preceding the effective date of
28  this act, the commissioner shall appoint a person of like qualifications in
29  accordance with this subsection (b) and shall designate the term of such
30  member in accordance with this subsection (b) as though such member
31  had been a member on the day preceding the effective date of this act.
32  In any such case, the commissioner shall notify the professional society
33  or association representing the category of health care provider required
34  for the vacant position and request a list of nominations of health care
35  providers from which to make the appointment.
36    (5) (4)  The board of governors shall organize at its first meeting in
37  January of 1995, and at its first meeting subsequent to July 1, 1995, and
38  on July 1 of each year thereafter and shall elect a chairperson and vice-
39  chairperson from among its membership. Meetings shall be called by the
40  chairperson or by a written notice signed by three members of the board.
41    (6) (5)  The board of governors, in addition to other duties imposed
42  by this act, shall study and evaluate the operation of the fund and make
43  such recommendations to the legislature as may be appropriate to ensure
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 1  the viability of the fund.
 2    (7)  On and after January 1, 1995, and prior to July 1, 1995, the board
 3  of governors shall be attached to the insurance department in accordance
 4  with this section and all staff, other than the executive director, budgeting,
 5  personnel, purchasing and related management functions of the board
 6  shall be provided by the commissioner of insurance. The commissioner
 7  shall include the budget estimates of the board of governors, as approved
 8  by the board, with the budget estimates for the insurance department
 9  which are submitted to the division of the budget under K.S.A. 75-3717
10  and amendments thereto. All vouchers for expenditures of the board shall
11  be approved by the chairperson of the board or a person designated by
12  the chairperson and, upon such approval, shall be paid from the fund.
13  On and after January 1, 1995, the board shall appoint an executive director
14  who shall be in the unclassified service of the Kansas civil service act. On
15  and after July 1, 1995, (6) [(6) (A) The board shall appoint an exec-
16  utive director who shall be in the unclassified service under the
17  Kansas civil service act.  The salaries and other compensation of
18  the executive director of the board of governors of the health care
19  stabilization fund and all other persons who are appointed by the
20  board of governors of the health care stabilization fund and who
21  are in the unclassified service under the Kansas civil service act
22  shall be subject to approval by the governor. On and after the
23  effective date of this act, any salary or other compensation of the
24  executive director or any other employee of the board of governors
25  of the health care stabilization fund in the unclassified service un-
26  der the Kansas civil service act, that is fixed, increased or otherwise
27  changed by the board of governors, shall not be paid until ap-
28  proved by the governor.
29    (b)]  The board may appoint such additional employees, and provide
30  all office space, services, equipment, materials and supplies, and all budg-
31  eting, personnel, purchasing and related management functions required
32  by the board in the exercise of the powers, duties and functions imposed
33  or authorized by the health care provider insurance availability act or may
34  enter into a contract with the commissioner of insurance for the provision,
35  by the commissioner, of all or any part thereof.
36    (8) (7)  The commissioner shall:
37    (A)  Provide technical and administrative assistance to the board of
38  governors with respect to administration of the fund upon request of the
39  board;
40    (B)  provide such expertise as the board may reasonably request with
41  respect to evaluation of claims or potential claims; and.
42    (C)  On and after January 1, 1995, and prior to July 1, 1995, provide
43  such staff, other than the executive director, office space, services, equip-
SB 229--Am. by HCW
                                     

 1  ment, materials and supplies and all budgeting, personnel, purchasing
 2  and related management functions as may be required by the board in
 3  the exercise of its powers, duties and functions imposed or authorized by
 4  the health care provider insurance availability act; and on and after July
 5  1, 1995, provide all or any part thereof required by any contract entered
 6  into between the board and the commissioner therefor.
 7    (9)  On the effective date of this act, all of the powers, duties, func-
 8  tions, records and property of the board of governors that is abolished by
 9  this section, which are prescribed for the board of governors by this act
10  are hereby transferred to and conferred and imposed upon the board of
11  governors that is created by this section, except as is otherwise specifically
12  provided by this act. On the dates prescribed for the transfer of the pow-
13  ers, duties and functions by this act, all of the powers, duties, functions,
14  records and property of the commissioner of insurance or the insurance
15  department, which relate to or are required for the performance of pow-
16  ers, duties or functions which are prescribed for the board of governors
17  by this act, including the power to expend funds now or hereafter made
18  available in accordance with appropriation acts, are hereby transferred to
19  and conferred and imposed upon the board of governors that is created
20  by this section, except as is otherwise specifically provided by this act.
21    (10)  The board of governors created by this act shall be the successor
22  in every way to the powers, duties and functions of the board of governors
23  and the commissioner of insurance in which such powers, duties and
24  functions were vested prior to the dates prescribed for the transfer of
25  such powers, duties and functions to the board in accordance with this
26  act, except as otherwise specifically provided by this act. Every act per-
27  formed under the authority of the board of governors created by this act
28  shall be deemed to have the same force and effect as if performed by the
29  board of governors and the commissioner of insurance in which such
30  powers, duties and functions were vested prior to the transfer of such
31  powers, duties and functions.
32    (11)  Subject to the provisions of this act, whenever the board of gov-
33  ernors that is abolished by this act or the commissioner of insurance, or
34  words of like effect, is referred to or designated by a statute, contract, or
35  other document, and such reference or designation relates to a power,
36  duty or function which is transferred to and conferred and imposed upon
37  the board of governors that is created by this act, such reference or des-
38  ignation shall be deemed to apply to the board of governors created by
39  this act.
40    (12)  All rules and regulations and all orders or directives of the board
41  of governors that is abolished by this act and all rules and regulations of
42  the commissioner of insurance, which are in existence on the date pre-
43  scribed for the transfer of powers, duties and functions to such board
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 1  under this act and which relate to powers, duties and functions that were
 2  vested in such board of governors or the commissioner of insurance prior
 3  to such date, shall continue to be effective and shall be deemed to be the
 4  rules and regulations and orders or directives of the board of governors
 5  created by this act, until revised, amended or revoked or nullified pur-
 6  suant to law. The board of governors created by this act shall be deemed
 7  to be a continuation of the board of governors abolished by this act.
 8    (13)  On July 1, 1995, all employees who were engaged prior to such
 9  date in the performance of duties and functions under the health care
10  provider insurance availability act, and who, in the opinion of the board,
11  are necessary to perform the duties and functions required under such
12  act by the board shall become employees of the board, and shall retain
13  all retirement benefits and rights of civil service which such employee
14  had prior to July 1, 1995, and their services shall be deemed to have been
15  continuous.
16    (c)  Subject to subsections (d), (e), (f), (i), (k), (m), (n), (o) and (p),
17    (p) and (q), the fund shall be liable to pay: (1) Any amount due from a
18  judgment or settlement which is in excess of the basic coverage liability
19  of all liable resident health care providers or resident self-insurers for any
20  personal injury or death arising out of the rendering of or the failure to
21  render professional services within or without this state;
22    (2)  subject to the provisions of subsection (m), any amount due from
23  a judgment or settlement which is in excess of the basic coverage liability
24  of all liable nonresident health care providers or nonresident self-insurers
25  for any such injury or death arising out of the rendering or the failure to
26  render professional services within this state but in no event shall the
27  fund be obligated for claims against nonresident health care providers or
28  nonresident self-insurers who have not complied with this act or for
29  claims against nonresident health care providers or nonresident self-in-
30  surers that arose outside of this state;
31    (3)  subject to the provisions of subsection (m), any amount due from
32  a judgment or settlement against a resident inactive health care provider,
33  an optometrist or pharmacist who purchased coverage pursuant to sub-
34  section (n) or a physical therapist who purchased coverage pursuant to
35  subsection (o), for any such injury or death arising out of the rendering
36  of or failure to render professional services;
37    (4)  subject to the provisions of subsection (m), any amount due from
38  a judgment or settlement against a nonresident inactive health care pro-
39  vider, an optometrist or pharmacist who purchased coverage pursuant to
40  subsection (n) or a physical therapist who purchased coverage pursuant
41  to subsection (o), for any injury or death arising out of the rendering or
42  failure to render professional services within this state, but in no event
43  shall the fund be obligated for claims against: (A) Nonresident inactive
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 1  health care providers who have not complied with this act; or (B) non-
 2  resident inactive health care providers for claims that arose outside of this
 3  state, unless such health care provider was a resident health care provider
 4  or resident self-insurer at the time such act occurred;
 5    (5)  subject to subsection (b) of K.S.A. 40-3411, and amendments
 6  thereto, reasonable and necessary expenses for attorney fees incurred in
 7  defending the fund against claims;
 8    (6)  any amounts expended for reinsurance obtained to protect the
 9  best interests of the fund purchased by the board of governors, which
10  purchase shall be subject to the provisions of K.S.A. 75-3738 through 75-
11  3744, and amendments thereto, but shall not be subject to the provisions
12  of K.S.A. 75-4101 and amendments thereto;
13    (7)  reasonable and necessary actuarial expenses incurred in admin-
14  istering the act, including expenses for any actuarial studies contracted
15  for by the legislative coordinating council, which expenditures shall not
16  be subject to the provisions of K.S.A. 75-3738 through 75-3744, and
17  amendments thereto;
18    (8)  periodically to the plan or plans, any amount due pursuant to
19  subsection (a)(3) of K.S.A. 40-3413 and amendments thereto;
20    (9)  reasonable and necessary expenses incurred by the board of gov-
21  ernors in the administration of the fund or in the performance of other
22  powers, duties or functions of the board under the health care provider
23  insurance availability act;
24    (10)  return of any unearned surcharge;
25    (11)  subject to subsection (b) of K.S.A. 40-3411, and amendments
26  thereto, reasonable and necessary expenses for attorney fees and other
27  costs incurred in defending a person engaged or who was engaged in
28  residency training or the private practice corporations or foundations and
29  their full-time physician faculty employed by the university of Kansas
30  medical center from claims for personal injury or death arising out of the
31  rendering of or the failure to render professional services by such health
32  care provider;
33    (12)  notwithstanding the provisions of subsection (m), any amount
34  due from a judgment or settlement for an injury or death arising out of
35  the rendering of or failure to render professional services by a person
36  engaged or who was engaged in residency training or the private practice
37  corporations or foundations and their full-time physician faculty em-
38  ployed by the university of Kansas medical center;
39    (13)  subject to the provisions of K.S.A. 65-429 and amendments
40  thereto, reasonable and necessary expenses for the development and pro-
41  motion of risk management education programs and for the medical care
42  facility licensure and risk management survey functions carried out under
43  K.S.A. 65-429 and amendments thereto;
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 1    (14)  notwithstanding the provisions of subsection (m), any amount,
 2  but not less than the required basic coverage limits, owed pursuant to a
 3  judgment or settlement for any injury or death arising out of the rendering
 4  of or failure to render professional services by a person, other than a
 5  person described in clause (12) of this subsection (c), who was engaged
 6  in a postgraduate program of residency training approved by the state
 7  board of healing arts but who, at the time the claim was made, was no
 8  longer engaged in such residency program;
 9    (15)  subject to subsection (b) of K.S.A. 40-3411, and amendments
10  thereto, reasonable and necessary expenses for attorney fees and other
11  costs incurred in defending a person described in clause (14) of this sub-
12  section (c);
13    (16)  expenses incurred by the commissioner in the performance of
14  duties and functions imposed upon the commissioner by the health care
15  provider insurance availability act, and expenses incurred by the com-
16  missioner in the performance of duties and functions under contracts
17  entered into between the board and the commissioner as authorized by
18  this section; and
19    (17)  periodically to the state general fund reimbursements of
20  amounts paid to members of the health care stabilization fund oversight
21  committee for compensation, travel expenses and subsistence expenses
22  pursuant to subsection (e) of K.S.A. 40-3403b, and amendments thereto.
23    (d)  All amounts for which the fund is liable pursuant to subsection
24    (c) shall be paid promptly and in full except that, if the amount for which
25  the fund is liable is $300,000 or more, it shall be paid, by installment
26  payments of $300,000 or 10% of the amount of the judgment including
27  interest thereon, whichever is greater, per fiscal year, the first installment
28  to be paid within 60 days after the fund becomes liable and each subse-
29  quent installment to be paid annually on the same date of the year the
30  first installment was paid, until the claim has been paid in full. Any at-
31  torney fees payable from such installment shall be similarly prorated.
32    (e)  In no event shall the fund be liable to pay in excess of $3,000,000
33  pursuant to any one judgment or settlement against any one health care
34  provider relating to any injury or death arising out of the rendering of or
35  the failure to render professional services on and after July 1, 1984, and
36  before July 1, 1989, subject to an aggregate limitation for all judgments
37  or settlements arising from all claims made in any one fiscal year in the
38  amount of $6,000,000 for each health care provider.
39    (f)  The fund shall not be liable to pay in excess of the amounts spec-
40  ified in the option selected by the health care provider pursuant to sub-
41  section (l) for judgments or settlements relating to injury or death arising
42  out of the rendering of or failure to render professional services by such
43  health care provider on or after July 1, 1989.
SB 229--Am. by HCW
                                     

 1    (g)  A health care provider shall be deemed to have qualified for cov-
 2  erage under the fund:
 3    (1)  On and after July 1, 1976, if basic coverage is then in effect;
 4    (2)  subsequent to July 1, 1976, at such time as basic coverage be-
 5  comes effective; or
 6    (3)  upon qualifying as a self-insurer pursuant to K.S.A. 40-3414 and
 7  amendments thereto.
 8    (h)  A health care provider who is qualified for coverage under the
 9  fund shall have no vicarious liability or responsibility for any injury or
10  death arising out of the rendering of or the failure to render professional
11  services inside or outside this state by any other health care provider who
12  is also qualified for coverage under the fund. The provisions of this sub-
13  section shall apply to all claims filed on or after July 1, 1986.
14    (i)  Notwithstanding the provisions of K.S.A. 40-3402 and amend-
15  ments thereto, if the board of governors determines due to the number
16  of claims filed against a health care provider or the outcome of those
17  claims that an individual health care provider presents a material risk of
18  significant future liability to the fund, the board of governors is authorized
19  by a vote of a majority of the members thereof, after notice and an op-
20  portunity for hearing in accordance with the provisions of the Kansas
21  administrative procedure act, to terminate the liability of the fund for all
22  claims against the health care provider for damages for death or personal
23  injury arising out of the rendering of or the failure to render professional
24  services after the date of termination. The date of termination shall be
25  30 days after the date of the determination by the board of governors.
26  The board of governors, upon termination of the liability of the fund
27  under this subsection, shall notify the licensing or other disciplinary board
28  having jurisdiction over the health care provider involved of the name of
29  the health care provider and the reasons for the termination.
30    (j) (1)  Upon the payment of moneys from the health care stabiliza-
31  tion fund pursuant to subsection (c)(11), the board of governors shall
32  certify to the director of accounts and reports the amount of such pay-
33  ment, and the director of accounts and reports shall transfer an amount
34  equal to the amount certified, reduced by any amount transferred pur-
35  suant to paragraph (3) of this subsection (j), from the state general fund
36  to the health care stabilization fund.
37    (2)  Upon the payment of moneys from the health care stabilization
38  fund pursuant to subsection (c)(12), the board of governors shall certify
39  to the director of accounts and reports the amount of such payment which
40  is equal to the basic coverage liability of self-insurers, and the director of
41  accounts and reports shall transfer an amount equal to the amount cer-
42  tified, reduced by any amount transferred pursuant to paragraph (3) of
43  this subsection (j), from the state general fund to the health care stabili-
SB 229--Am. by HCW
                                     

 1  zation fund.
 2    (3)  The university of Kansas medical center private practice foun-
 3  dation reserve fund is hereby established in the state treasury. If the
 4  balance in such reserve fund is less than $500,000 on July 1 of any year,
 5  the private practice corporations or foundations referred to in subsection
 6    (c) of K.S.A. 40-3402, and amendments thereto, shall remit the amount
 7  necessary to increase such balance to $500,000 to the state treasurer for
 8  credit to such reserve fund as soon after such July 1 date as is practicable.
 9  Upon receipt of each such remittance, the state treasurer shall credit the
10  same to such reserve fund. When compliance with the foregoing provi-
11  sions of this paragraph have been achieved on or after July 1 of any year
12  in which the same are applicable, the state treasurer shall certify to the
13  board of governors that such reserve fund has been funded for the year
14  in the manner required by law. Moneys in such reserve fund may be
15  invested or reinvested in accordance with the provisions of K.S.A. 40-
16  3406, and amendments thereto, and any income or interest earned by
17  such investments shall be credited to such reserve fund. Upon payment
18  of moneys from the health care stabilization fund pursuant to subsection
19    (c)(11) or (c)(12) with respect to any private practice corporation or foun-
20  dation or any of its full-time physician faculty employed by the university
21  of Kansas, the director of accounts and reports shall transfer an amount
22  equal to the amount paid from the university of Kansas medical center
23  private practice foundation reserve fund to the health care stabilization
24  fund or, if the balance in such reserve fund is less than the amount so
25  paid, an amount equal to the balance in such reserve fund.
26    (4)  Upon payment of moneys from the health care stabilization fund
27  pursuant to subsection (c)(14) or (c)(15), the board of governors shall
28  certify to the director of accounts and reports the amount of such pay-
29  ment, and the director of accounts and reports shall transfer an amount
30  equal to the amount certified from the state general fund to the health
31  care stabilization fund.
32    (k)  Notwithstanding any other provision of the health care provider
33  insurance availability act, no psychiatric hospital licensed under K.S.A.
34  75-3307b and amendments thereto shall be assessed a premium sur-
35  charge or be entitled to coverage under the fund if such hospital has not
36  paid any premium surcharge pursuant to K.S.A. 40-3404 and amend-
37  ments thereto prior to January 1, 1988.
38    (l)  On or after July 1, 1989, every health care provider shall make an
39  election to be covered by one of the following options provided in this
40  subsection (l) which shall limit the liability of the fund with respect to
41  judgments or settlements relating to injury or death arising out of the
42  rendering of or failure to render professional services on or after July 1,
43  1989. Such election shall be made at the time the health care provider
SB 229--Am. by HCW
                                     

 1  renews the basic coverage in effect on July 1, 1989, or, if basic coverage
 2  is not in effect, such election shall be made at the time such coverage is
 3  acquired pursuant to K.S.A. 40-3402, and amendments thereto. Notice
 4  of the election shall be provided by the insurer providing the basic cov-
 5  erage in the manner and form prescribed by the board of governors and
 6  shall continue to be effective from year to year unless modified by a
 7  subsequent election made prior to the anniversary date of the policy. The
 8  health care provider may at any subsequent election reduce the dollar
 9  amount of the coverage for the next and subsequent fiscal years, but may
10  not increase the same, unless specifically authorized by the board of gov-
11  ernors. Any election of fund coverage limits, whenever made, shall be with
12  respect to judgments or settlements relating to injury or death arising out
13  of the rendering of or failure to render professional services on or after
14  the effective date of such election of fund coverage limits. Such election
15  shall be made for persons engaged in residency training and persons en-
16  gaged in other postgraduate training programs approved by the state
17  board of healing arts at medical care facilities or mental health centers in
18  this state by the agency or institution paying the surcharge levied under
19  K.S.A. 40-3404, and amendments thereto, for such persons. Such options
20  shall be as follows:
21    (1)  OPTION 1. The fund shall not be liable to pay in excess of
22  $100,000 pursuant to any one judgment or settlement for any party
23  against such health care provider, subject to an aggregate limitation for
24  all judgments or settlements arising from all claims made in the fiscal year
25  in an amount of $300,000 for such provider.
26    (2)  OPTION 2. The fund shall not be liable to pay in excess of
27  $300,000 pursuant to any one judgment or settlement for any party
28  against such health care provider, subject to an aggregate limitation for
29  all judgments or settlements arising from all claims made in the fiscal year
30  in an amount of $900,000 for such provider.
31    (3)  OPTION 3. The fund shall not be liable to pay in excess of
32  $800,000 pursuant to any one judgment or settlement for any party
33  against such health care provider, subject to an aggregate limitation for
34  all judgments or settlements arising from all claims made in the fiscal year
35  in an amount of $2,400,000 for such health care provider.
36    (m)  The fund shall not be liable for any amounts due from a judgment
37  or settlement against resident or nonresident inactive health care provid-
38  ers who first qualify as an inactive health care provider on or after July 1,
39  1989, unless such health care provider has been in compliance with K.S.A.
40  40-3402, and amendments thereto, for a period of not less than five years.
41  If a health care provider has not been in compliance for five years, such
42  health care provider may make application and payment for the coverage
43  for the period while they are nonresident health care providers, nonres-
SB 229--Am. by HCW
                                     

 1  ident self-insurers or resident or nonresident inactive health care provid-
 2  ers to the fund. Such payment shall be made within 30 days after the
 3  health care provider ceases being an active health care provider and shall
 4  be made in an amount determined by the board of governors to be suf-
 5  ficient to fund anticipated claims based upon reasonably prudent actuarial
 6  principles. The provisions of this subsection shall not be applicable to any
 7  health care provider which becomes inactive through death or retirement,
 8  or through disability or circumstances beyond such health care provider's
 9  control, if such health care provider notifies the board of governors and
10  receives approval for an exemption from the provisions of this subsection.
11  Any period spent in a postgraduate program of residency training ap-
12  proved by the state board of healing arts shall not be included in com-
13  putation of time spent in compliance with the provisions of K.S.A. 40-
14  3402, and amendments thereto.
15    (n)  Notwithstanding the provisions of subsection (m) or any other
16  provision in article 34 of chapter 40 of the Kansas Statutes Annotated to
17  the contrary, the fund shall not be liable for any claim made on or after
18  July 1, 1991, against a licensed optometrist or pharmacist relating to any
19  injury or death arising out of the rendering of or failure to render pro-
20  fessional services by such optometrist or pharmacist prior to July 1, 1991,
21  unless such optometrist or pharmacist qualified as an inactive health care
22  provider prior to July 1, 1991, and obtained coverage pursuant to sub-
23  section (m). Optometrists and pharmacists not qualified as inactive health
24  care providers prior to July 1, 1991, may purchase coverage from the fund
25  for periods of prior compliance by making application prior to August 1,
26  1991, and payment within 30 days from notice of the calculated amount
27  as determined by the board of governors to be sufficient to fund antici-
28  pated claims based on reasonably prudent actuarial principles.
29    (o)  Notwithstanding the provisions of subsection (m) or any other
30  provision in article 34 of chapter 40 of the Kansas Statutes Annotated to
31  the contrary, the fund shall not be liable for any claim made on or after
32  July 1, 1995, against a physical therapist registered by the state board of
33  healing arts relating to any injury or death arising out of the rendering of
34  or failure to render professional services by such physical therapist prior
35  to July 1, 1995, unless such physical therapist qualified as an inactive
36  health care provider prior to July 1, 1995, and obtained coverage pursuant
37  to subsection (m). Physical therapists not qualified as inactive health care
38  providers prior to July 1, 1995, may purchase coverage from the fund for
39  periods of prior compliance by making application prior to August 1, 1995,
40  and payment within 30 days from notice of the calculated amount as
41  determined by the board of governors to be sufficient to fund anticipated
42  claims based on reasonably prudent actuarial principles.
43    (p)  Notwithstanding the provisions of subsection (m) or any other
SB 229--Am. by HCW
                                     

 1  provision in article 34 of chapter 40 of the Kansas Statutes Annotated to
 2  the contrary, the fund shall not be liable for any claim made on or after
 3  July 1, 1997, against a health maintenance organization relating to any
 4  injury or death arising out of the rendering of or failure to render pro-
 5  fessional services by such health maintenance organization prior to July
 6  1, 1997, unless such health maintenance organization qualified as an in-
 7  active health care provider prior to July 1, 1997, and obtained coverage
 8  pursuant to subsection (m). Health maintenance organizations not qual-
 9  ified as inactive health care providers prior to July 1, 1997, may purchase
10  coverage from the fund for periods of prior compliance by making appli-
11  cation prior to August 1, 1997, and payment within 30 days from notice
12  of the calculated amount as determined by the board of governors to be
13  sufficient to fund anticipated claims based on reasonably prudent actu-
14  arial principles.
15    (p) (q)  Notwithstanding anything in article 34 of chapter 40 of the
16  Kansas Statutes Annotated to the contrary, the fund shall in no event be
17  liable for any claims against any health care provider based upon or re-
18  lating to the health care provider's sexual acts or activity, but in such cases
19  the fund may pay reasonable and necessary expenses for attorney fees
20  incurred in defending the fund against such claim. The fund may recover
21  all or a portion of such expenses for attorney fees if an adverse judgment
22  is returned against the health care provider for damages resulting from
23  the health care provider's sexual acts or activity.
24    Sec. 3.  K.S.A. 1996 Supp. 40-3404 is hereby amended to read as
25  follows: 40-3404. (a) Except for any health care provider whose partici-
26  pation in the fund has been terminated pursuant to subsection (i) of
27  K.S.A. 40-3403 and amendments thereto, the board of governors shall
28  levy an annual premium surcharge on each health care provider who has
29  obtained basic coverage and upon each self-insurer for each fiscal year.
30  This provision shall not apply to optometrists and pharmacists on or after
31  July 1, 1991 nor to physical therapists on or after July 1, 1995, nor to
32  health maintenance organizations on and after July 1, 1997. Such pre-
33  mium surcharge shall be an amount equal to a percentage of the annual
34  premium paid by the health care provider for the basic coverage required
35  to be maintained as a condition to coverage by the fund by subsection (a)
36  of K.S.A. 40-3402 and amendments thereto. The annual premium sur-
37  charge upon each self-insurer, except for persons engaged in residency
38  training, shall be an amount equal to a percentage of the amount such
39  self-insurer would pay for basic coverage as calculated in accordance with
40  rating procedures approved by the commissioner pursuant to K.S.A. 40-
41  3413 and amendments thereto based upon a rating classification system
42  established by the board of governors which is reasonable, adequate and
43  not unfairly discriminating. The annual premium surcharge upon the
SB 229--Am. by HCW
                                     

 1  university of Kansas medical center for persons engaged in residency
 2  training, as described in subsection (r)(1) of K.S.A. 40-3401, and amend-
 3  ments thereto, shall be an amount equal to a percentage of based on an
 4  assumed aggregate premium of $600,000. The annual premium surcharge
 5  upon the employers of persons engaged in residency training, as de-
 6  scribed in subsection (r)(2) of K.S.A. 40-3401, and amendments thereto,
 7  shall be an amount equal to a percentage of based on an assumed aggre-
 8  gate premium of $400,000. The surcharge on such $400,000 amount shall
 9  be apportioned among the employers of persons engaged in residency
10  training, as described in subsection (r)(2) of K.S.A. 40-3401, and amend-
11  ments thereto, based on the number of residents employed as of July 1
12  of each year.
13    (b)  In the case of a resident health care provider who is not a self-
14  insurer, the premium surcharge shall be collected in addition to the an-
15  nual premium for the basic coverage by the insurer and shall not be
16  subject to the provisions of K.S.A. 40-252, 40-1113 and 40-2801 et seq.,
17  and amendments thereto. The amount of the premium surcharge shall
18  be shown separately on the policy or an endorsement thereto and shall
19  be specifically identified as such. Such premium surcharge shall be due
20  and payable by the insurer to the board of governors within 30 days after
21  the annual premium for the basic coverage is received by the insurer, but
22  in the event basic coverage is in effect at the time this act becomes ef-
23  fective, such surcharge shall be based upon the unearned premium until
24  policy expiration and annually thereafter. Within 15 days immediately
25  following the effective date of this act, the board of governors shall send
26  to each insurer information necessary for their compliance with this sub-
27  section. The certificate of authority of any insurer who fails to comply
28  with the provisions of this subsection shall be suspended pursuant to
29  K.S.A. 40-222 and amendments thereto until such insurer shall pay the
30  annual premium surcharge due and payable to the board of governors.
31  In the case of a nonresident health care provider or a self-insurer, the
32  premium surcharge shall be collected in the manner prescribed in K.S.A.
33  40-3402 and amendments thereto.
34    (c)  The premium surcharge made for any annual period beginning
35  on or after July 1, 1991, shall be in an amount deemed sufficient by the
36  board of governors, together with the premium surcharges for any sub-
37  sequent annual periods made prior to July 1, 1994, to fund the total of
38  any existing deficiencies in the fund on July 1, 1991, and all anticipated
39  claims to be made before July 1, 1994, for which the fund will be liable
40  based upon reasonably prudent actuarial principles. In setting the amount
41  of such surcharge, the board of governors:  (1) may require any health
42  care provider who has paid a surcharge for less than 24 months to pay a
43  higher surcharge than other health care providers; and (2) shall require
SB 229--Am. by HCW
                                     

 1  that any health care provider who is insured by a policy of professional
 2  liability insurance with deductibles pay a surcharge based on an amount
 3  equal to a percentage on the annual amount of premium that would have
 4  been paid by the health care provider for basic coverage required to be
 5  maintained by the fund as provided by K.S.A. 40-3402 and amendments
 6  thereto without any deductibles.
 7    Sec. 4.  K.S.A. 40-3408 is hereby amended to read as follows: 40-
 8  3408. (a) The insurer of a health care provider covered by the fund or
 9  self-insurer shall be liable only for the first $200,000 of a claim for per-
10  sonal injury or death arising out of the rendering of or the failure to render
11  professional services by such health care provider, subject to an annual
12  aggregate of $600,000 for all such claims against the health care provider.
13  However, if any liability insurance in excess of such amounts is applicable
14  to any claim or would be applicable in the absence of this act, any pay-
15  ments from the fund shall be excess over such amounts paid, payable or
16  that would have been payable in the absence of this act. The liability of
17  an insurer for claims made prior to July 1, 1984, shall not exceed those
18  limits of insurance provided by such policy prior to July 1, 1984.
19    (b)  If any inactive health care provider has liability insurance in effect
20  which is applicable to any claim or would be applicable in the absence of
21  this act, any payments from the fund shall be excess over such amounts
22  paid, payable or that would have been payable in the absence of this act.
23    (c)  Notwithstanding anything in article 34 of chapter 40 of the Kansas
24  Statutes Annotated to the contrary, an insurer that provides coverage to
25  a health care provider may exclude from coverage any liability incurred
26  by such provider:
27    (a) (1)  From the rendering of or the failure to render professional
28  services by any other health care provider who is required by K.S.A. 40-
29  3402 and amendments thereto to maintain professional liability insurance
30  in effect as a condition to rendering professional services as a health care
31  provider in this state; or
32    (b) (2)  based upon or relating to the health care provider's sexual acts
33  or activity, but in such cases the insurer may provide reasonable and
34  necessary expenses for attorney fees incurred in defending against such
35  claim. The insurer may recover all or a portion of such expenses for at-
36  torney fees if an adverse judgment is returned against the health care
37  provider for damages resulting from the health care provider's sexual acts
38  or activity.
39    Sec. 5.  K.S.A. 40-3408 and K.S.A. 1996 Supp. 40-3402, 40-3403 and
40  40-3404 are hereby repealed.
41    Sec. 6.  This act shall take effect and be in force from and after its
42  publication in the statute book.