An Act concerning health care; medical care facility licensure, inspection procedures and risk management program; charitable health care provider; amending K.S.A. 65-429 and 65-433 and K.S.A. 1995 Supp. 40-3403 and 75-6102 and repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1995 Supp. 40-3403 is hereby amended to read as follows: 40-3403. (a) For the purpose of paying damages for personal injury or death arising out of the rendering of or the failure to render professional services by a health care provider, self-insurer or inactive health care provider subsequent to the time that such health care provider or self-insurer has qualified for coverage under the provisions of this act, there is hereby established the health care stabilization fund. The fund shall be held in trust in a segregated fund in the state treasury. The board of governors shall administer the fund or contract for the administration of the fund with an insurance company authorized to do business in this state.

(b) (1) On the effective date of this act, the board of governors in existence on the day preceding such effective date is hereby abolished. On the effective date of this act, there is hereby created a board of gov- ernors which shall be composed of such members and shall have such powers, duties and functions as are prescribed by this act. The board of governors shall:

(A) Administer the fund and exercise and perform other powers, du- ties and functions required of the board under the health care provider insurance availability act;

(B) provide advice, information and testimony to the appropriate li- censing or disciplinary authority regarding the qualifications of a health care provider;

(C) prepare and publish, on or before October 1 of each year, a sum- mary of the fund's activity during the preceding fiscal year, including but not limited to the amount collected from surcharges, the highest and lowest surcharges assessed, the amount paid from the fund, the number of judgments paid from the fund, the number of settlements paid from the fund and the amount in the fund at the end of the fiscal year; and

(D) have the authority to grant exemptions from the provisions of subsection (m) of this section when a health care provider temporarily leaves the state for the purpose of obtaining additional education or train- ing or to participate in religious, humanitarian or government service programs. Whenever a health care provider has previously left the state for one of the reasons specified in this paragraph and returns to the state and recommences practice, the board of governors may refund any amount paid by the health care provider pursuant to subsection (m) of this section if no claims have been filed against such health care provider during the provider's temporary absence from the state.

(2) The board shall consist of 10 persons appointed by the commis- sioner of insurance, as provided by this subsection (b) and as follows:

(A) Three members who are licensed to practice medicine and sur- gery in Kansas who are doctors of medicine and who are on a list of nominees submitted to the commissioner by the Kansas medical society;

(B) three members who are representatives of Kansas hospitals and who are on a list of nominees submitted to the commissioner by the Kansas hospital association;

(C) two members who are licensed to practice medicine and surgery in Kansas who are doctors of osteopathic medicine and who are on a list of nominees submitted to the commissioner by the Kansas association of osteopathic medicine;

(D) one member who is licensed to practice chiropractic in Kansas and who is on a list of nominees submitted to the commissioner by the Kansas chiropractic association;

(E) one member who is a licensed professional nurse authorized to practice as a registered nurse anesthetist who is on a list of nominees submitted to the commissioner by the Kansas association of nurse anes- thetists.

(3) On and after the effective date of this act, whenever a vacancy occurs in the membership of the board of governors created by this act, the commissioner shall appoint a successor of like qualifications from a list of three nominees submitted to the commissioner by the professional society or association prescribed by this section for the category of health care provider required for the vacant position on the board of governors. Except as otherwise provided by this section, all appointments made shall be for a term of office of four years, but no member shall be appointed for more than two successive four-year terms. Each member shall serve until a successor is appointed and qualified. Whenever a vacancy occurs in the membership of the board of governors created by this act for any reason other than the expiration of a member's term of office, the com- missioner shall appoint a successor of like qualifications to fill the unex- pired term. In each case of a vacancy occurring in the membership of the board of governors, the commissioner shall notify the professional society or association which represents the category of health care provider re- quired for the vacant position and request a list of three nominations of health care providers from which to make the appointment.

(4) (A) The persons serving as members of the board of governors on the day preceding the effective date of this act, except the commis- sioner of insurance and the persons appointed from the public at large or to represent the unspecified category of health care providers under the provisions of this section as it existed on the day preceding the effec- tive date of this act, shall be the initial members of the board of governors created by this act and shall hold such office in accordance with and subject to the provisions of this section. The commissioner shall designate the terms of office of such initial members of the board of governors created by this act as follows:

(i) One member who is licensed to practice medicine and surgery in Kansas who is a doctor of medicine shall be designated for a term expiring on July 1, 1995;

(ii) one member who is licensed to practice medicine and surgery in Kansas who is a doctor of medicine shall be designated for a term expiring on July 1, 1996;

(iii) one member who is licensed to practice medicine and surgery in Kansas who is a doctor of medicine shall be designated for a term expiring on July 1, 1997;

(iv) one member who is a representative of a Kansas hospital shall be designated for a term expiring on July 1, 1995;

(v) one member who is a representative of a Kansas hospital shall be designated for a term expiring on July 1, 1996;

(vi) one member who is a representative of a Kansas hospital shall be designated for a term expiring on July 1, 1997;

(vii) one member who is licensed to practice medicine and surgery in Kansas who is a doctor of osteopathic medicine shall be designated for a term expiring on July 1, 1995;

(viii) one member who is licensed to practice medicine and surgery in Kansas who is a doctor of osteopathic medicine shall be designated for a term expiring on July 1, 1996;

(ix) the member who is licensed to practice chiropractic in Kansas shall be designated for a term expiring on July 1, 1995; and

(x) the member who is a licensed professional nurse authorized to practice as a registered nurse anesthetist in Kansas shall be designated for a term expiring on July 1, 1996.

(B) If there was a vacancy in the membership of the board of gov- ernors abolished by this act on the day preceding the effective date of this act, the commissioner shall appoint a person of like qualifications in accordance with this subsection (b) and shall designate the term of such member in accordance with this subsection (b) as though such member had been a member on the day preceding the effective date of this act. In any such case, the commissioner shall notify the professional society or association representing the category of health care provider required for the vacant position and request a list of nominations of health care providers from which to make the appointment.

(5) The board of governors shall organize at its first meeting in Jan- uary of 1995, and at its first meeting subsequent to July 1, 1995, and July 1 of each year thereafter and shall elect a chairperson and vice-chairper- son from among its membership. Meetings shall be called by the chair- person or by a written notice signed by three members of the board.

(6) The board of governors, in addition to other duties imposed by this act, shall study and evaluate the operation of the fund and make such recommendations to the legislature as may be appropriate to ensure the viability of the fund.

(7) On and after January 1, 1995, and prior to July 1, 1995, the board of governors shall be attached to the insurance department in accordance with this section and all staff, other than the executive director, budgeting, personnel, purchasing and related management functions of the board shall be provided by the commissioner of insurance. The commissioner shall include the budget estimates of the board of governors, as approved by the board, with the budget estimates for the insurance department which are submitted to the division of the budget under K.S.A. 75-3717 and amendments thereto. All vouchers for expenditures of the board shall be approved by the chairperson of the board or a person designated by the chairperson and, upon such approval, shall be paid from the fund. On and after January 1, 1995, the board shall appoint an executive director who shall be in the unclassified service of the Kansas civil service act. On and after July 1, 1995, the board may appoint such additional employees, and provide all office space, services, equipment, materials and supplies, and all budgeting, personnel, purchasing and related management func- tions required by the board in the exercise of the powers, duties and functions imposed or authorized by the health care provider insurance availability act or may enter into a contract with the commissioner of insurance for the provision, by the commissioner, of all or any part thereof.

(8) The commissioner shall:

(A) Provide technical and administrative assistance to the board of governors with respect to administration of the fund upon request of the board;

(B) provide such expertise as the board may reasonably request with respect to evaluation of claims or potential claims; and

(C) On and after January 1, 1995, and prior to July 1, 1995, provide such staff, other than the executive director, office space, services, equip- ment, materials and supplies and all budgeting, personnel, purchasing and related management functions as may be required by the board in the exercise of its powers, duties and functions imposed or authorized by the health care provider insurance availability act; and on and after July 1, 1995, provide all or any part thereof required by any contract entered into between the board and the commissioner therefor.

(9) On the effective date of this act, all of the powers, duties, func- tions, records and property of the board of governors that is abolished by this section, which are prescribed for the board of governors by this act are hereby transferred to and conferred and imposed upon the board of governors that is created by this section, except as is otherwise specifically provided by this act. On the dates prescribed for the transfer of the pow- ers, duties and functions by this act, all of the powers, duties, functions, records and property of the commissioner of insurance or the insurance department, which relate to or are required for the performance of pow- ers, duties or functions which are prescribed for the board of governors by this act, including the power to expend funds now or hereafter made available in accordance with appropriation acts, are hereby transferred to and conferred and imposed upon the board of governors that is created by this section, except as is otherwise specifically provided by this act.

(10) The board of governors created by this act shall be the successor in every way to the powers, duties and functions of the board of governors and the commissioner of insurance in which such powers, duties and functions were vested prior to the dates prescribed for the transfer of such powers, duties and functions to the board in accordance with this act, except as otherwise specifically provided by this act. Every act per- formed under the authority of the board of governors created by this act shall be deemed to have the same force and effect as if performed by the board of governors and the commissioner of insurance in which such powers, duties and functions were vested prior to the transfer of such powers, duties and functions.

(11) Subject to the provisions of this act, whenever the board of gov- ernors that is abolished by this act or the commissioner of insurance, or words of like effect, is referred to or designated by a statute, contract, or other document, and such reference or designation relates to a power, duty or function which is transferred to and conferred and imposed upon the board of governors that is created by this act, such reference or des- ignation shall be deemed to apply to the board of governors created by this act.

(12) All rules and regulations and all orders or directives of the board of governors that is abolished by this act and all rules and regulations of the commissioner of insurance, which are in existence on the date pre- scribed for the transfer of powers, duties and functions to such board under this act and which relate to powers, duties and functions that were vested in such board of governors or the commissioner of insurance prior to such date, shall continue to be effective and shall be deemed to be the rules and regulations and orders or directives of the board of governors created by this act, until revised, amended or revoked or nullified pur- suant to law. The board of governors created by this act shall be deemed to be a continuation of the board of governors abolished by this act.

(13) On July 1, 1995, all employees who were engaged prior to such date in the performance of duties and functions under the health care provider insurance availability act, and who, in the opinion of the board, are necessary to perform the duties and functions required under such act by the board shall become employees of the board, and shall retain all retirement benefits and rights of civil service which such employee had prior to July 1, 1995, and their services shall be deemed to have been continuous.

(c) Subject to subsections (d), (e), (f), (i), (k), (m), (n), (o) and (p), the fund shall be liable to pay: (1) Any amount due from a judgment or settlement which is in excess of the basic coverage liability of all liable resident health care providers or resident self-insurers for any personal injury or death arising out of the rendering of or the failure to render professional services within or without this state;

(2) subject to the provisions of subsection (m), any amount due from a judgment or settlement which is in excess of the basic coverage liability of all liable nonresident health care providers or nonresident self-insurers for any such injury or death arising out of the rendering or the failure to render professional services within this state but in no event shall the fund be obligated for claims against nonresident health care providers or nonresident self-insurers who have not complied with this act or for claims against nonresident health care providers or nonresident self-in- surers that arose outside of this state;

(3) subject to the provisions of subsection (m), any amount due from a judgment or settlement against a resident inactive health care provider, an optometrist or pharmacist who purchased coverage pursuant to sub- section (n) or a physical therapist who purchased coverage pursuant to subsection (o), for any such injury or death arising out of the rendering of or failure to render professional services;

(4) subject to the provisions of subsection (m), any amount due from a judgment or settlement against a nonresident inactive health care pro- vider, an optometrist or pharmacist who purchased coverage pursuant to subsection (n) or a physical therapist who purchased coverage pursuant to subsection (o), for any injury or death arising out of the rendering or failure to render professional services within this state, but in no event shall the fund be obligated for claims against: (A) Nonresident inactive health care providers who have not complied with this act; or (B) non- resident inactive health care providers for claims that arose outside of this state, unless such health care provider was a resident health care provider or resident self-insurer at the time such act occurred;

(5) subject to subsection (b) of K.S.A. 40-3411, and amendments thereto, reasonable and necessary expenses for attorney fees incurred in defending the fund against claims;

(6) any amounts expended for reinsurance obtained to protect the best interests of the fund purchased by the board of governors, which purchase shall be subject to the provisions of K.S.A. 75-3738 through 75- 3744, and amendments thereto, but shall not be subject to the provisions of K.S.A. 75-4101 and amendments thereto;

(7) reasonable and necessary actuarial expenses incurred in admin- istering the act, including expenses for any actuarial studies contracted for by the legislative coordinating council, which expenditures shall not be subject to the provisions of K.S.A. 75-3738 through 75-3744, and amendments thereto;

(8) periodically to the plan or plans, any amount due pursuant to subsection (a)(3) of K.S.A. 40-3413 and amendments thereto;

(9) reasonable and necessary expenses incurred by the board of gov- ernors in the administration of the fund or in the performance of other powers, duties or functions of the board under the health care provider insurance availability act;

(10) return of any unearned surcharge;

(11) subject to subsection (b) of K.S.A. 40-3411, and amendments thereto, reasonable and necessary expenses for attorney fees and other costs incurred in defending a person engaged or who was engaged in residency training or the private practice corporations or foundations and their full-time physician faculty employed by the university of Kansas medical center from claims for personal injury or death arising out of the rendering of or the failure to render professional services by such health care provider;

(12) notwithstanding the provisions of subsection (m), any amount due from a judgment or settlement for an injury or death arising out of the rendering of or failure to render professional services by a person engaged or who was engaged in residency training or the private practice corporations or foundations and their full-time physician faculty em- ployed by the university of Kansas medical center;

(13) subject to the provisions of K.S.A. 65-429 and amendments thereto, reasonable and necessary expenses for the development and pro- motion of risk management education programs and for the medical care facility licensure and risk management survey functions carried out under K.S.A. 65-429 and amendments thereto;

(14) notwithstanding the provisions of subsection (m), any amount, but not less than the required basic coverage limits, owed pursuant to a judgment or settlement for any injury or death arising out of the rendering of or failure to render professional services by a person, other than a person described in clause (12) of this subsection (c), who was engaged in a postgraduate program of residency training approved by the state board of healing arts but who, at the time the claim was made, was no longer engaged in such residency program;

(15) subject to subsection (b) of K.S.A. 40-3411, and amendments thereto, reasonable and necessary expenses for attorney fees and other costs incurred in defending a person described in clause (14) of this sub- section (c);

(16) expenses incurred by the commissioner in the performance of duties and functions imposed upon the commissioner by the health care provider insurance availability act, and expenses incurred by the com- missioner in the performance of duties and functions under contracts entered into between the board and the commissioner as authorized by this section; and

(17) periodically to the state general fund reimbursements of amounts paid to members of the health care stabilization fund oversight committee for compensation, travel expenses and subsistence expenses pursuant to subsection (e) of K.S.A. 40-3403b, and amendments thereto.

(d) All amounts for which the fund is liable pursuant to subsection (c) shall be paid promptly and in full except that, if the amount for which the fund is liable is $300,000 or more, it shall be paid, by installment payments of $300,000 or 10% of the amount of the judgment including interest thereon, whichever is greater, per fiscal year, the first installment to be paid within 60 days after the fund becomes liable and each subse- quent installment to be paid annually on the same date of the year the first installment was paid, until the claim has been paid in full. Any at- torney fees payable from such installment shall be similarly prorated.

(e) In no event shall the fund be liable to pay in excess of $3,000,000 pursuant to any one judgment or settlement against any one health care provider relating to any injury or death arising out of the rendering of or the failure to render professional services on and after July 1, 1984, and before July 1, 1989, subject to an aggregate limitation for all judgments or settlements arising from all claims made in any one fiscal year in the amount of $6,000,000 for each health care provider.

(f) The fund shall not be liable to pay in excess of the amounts spec- ified in the option selected by the health care provider pursuant to sub- section (l) for judgments or settlements relating to injury or death arising out of the rendering of or failure to render professional services by such health care provider on or after July 1, 1989.

(g) A health care provider shall be deemed to have qualified for cov- erage under the fund:

(1) On and after July 1, 1976, if basic coverage is then in effect;

(2) subsequent to July 1, 1976, at such time as basic coverage be- comes effective; or

(3) upon qualifying as a self-insurer pursuant to K.S.A. 40-3414 and amendments thereto.

(h) A health care provider who is qualified for coverage under the fund shall have no vicarious liability or responsibility for any injury or death arising out of the rendering of or the failure to render professional services inside or outside this state by any other health care provider who is also qualified for coverage under the fund. The provisions of this sub- section shall apply to all claims filed on or after July 1, 1986.

(i) Notwithstanding the provisions of K.S.A. 40-3402 and amend- ments thereto, if the board of governors determines due to the number of claims filed against a health care provider or the outcome of those claims that an individual health care provider presents a material risk of significant future liability to the fund, the board of governors is authorized by a vote of a majority of the members thereof, after notice and an op- portunity for hearing in accordance with the provisions of the Kansas administrative procedure act, to terminate the liability of the fund for all claims against the health care provider for damages for death or personal injury arising out of the rendering of or the failure to render professional services after the date of termination. The date of termination shall be 30 days after the date of the determination by the board of governors. The board of governors, upon termination of the liability of the fund under this subsection, shall notify the licensing or other disciplinary board having jurisdiction over the health care provider involved of the name of the health care provider and the reasons for the termination.

(j) (1) Upon the payment of moneys from the health care stabiliza- tion fund pursuant to subsection (c)(11), the board of governors shall certify to the director of accounts and reports the amount of such pay- ment, and the director of accounts and reports shall transfer an amount equal to the amount certified, reduced by any amount transferred pur- suant to paragraph (3) of this subsection (j), from the state general fund to the health care stabilization fund.

(2) Upon the payment of moneys from the health care stabilization fund pursuant to subsection (c)(12), the board of governors shall certify to the director of accounts and reports the amount of such payment which is equal to the basic coverage liability of self-insurers, and the director of accounts and reports shall transfer an amount equal to the amount cer- tified, reduced by any amount transferred pursuant to paragraph (3) of this subsection (j), from the state general fund to the health care stabili- zation fund.

(3) The university of Kansas medical center private practice foun- dation reserve fund is hereby established in the state treasury. If the balance in such reserve fund is less than $500,000 on July 1 of any year, the private practice corporations or foundations referred to in subsection (c) of K.S.A. 40-3402, and amendments thereto, shall remit the amount necessary to increase such balance to $500,000 to the state treasurer for credit to such reserve fund as soon after such July 1 date as is practicable. Upon receipt of each such remittance, the state treasurer shall credit the same to such reserve fund. When compliance with the foregoing provi- sions of this paragraph have been achieved on or after July 1 of any year in which the same are applicable, the state treasurer shall certify to the board of governors that such reserve fund has been funded for the year in the manner required by law. Moneys in such reserve fund may be invested or reinvested in accordance with the provisions of K.S.A. 40- 3406, and amendments thereto, and any income or interest earned by such investments shall be credited to such reserve fund. Upon payment of moneys from the health care stabilization fund pursuant to subsection (c)(11) or (c)(12) with respect to any private practice corporation or foun- dation or any of its full-time physician faculty employed by the university of Kansas, the director of accounts and reports shall transfer an amount equal to the amount paid from the university of Kansas medical center private practice foundation reserve fund to the health care stabilization fund or, if the balance in such reserve fund is less than the amount so paid, an amount equal to the balance in such reserve fund.

(4) Upon payment of moneys from the health care stabilization fund pursuant to subsection (c)(14) or (c)(15), the board of governors shall certify to the director of accounts and reports the amount of such pay- ment, and the director of accounts and reports shall transfer an amount equal to the amount certified from the state general fund to the health care stabilization fund.

(k) Notwithstanding any other provision of the health care provider insurance availability act, no psychiatric hospital licensed under K.S.A. 75-3307b and amendments thereto shall be assessed a premium sur- charge or be entitled to coverage under the fund if such hospital has not paid any premium surcharge pursuant to K.S.A. 40-3404 and amend- ments thereto prior to January 1, 1988.

(l) On or after July 1, 1989, every health care provider shall make an election to be covered by one of the following options provided in this subsection (l) which shall limit the liability of the fund with respect to judgments or settlements relating to injury or death arising out of the rendering of or failure to render professional services on or after July 1, 1989. Such election shall be made at the time the health care provider renews the basic coverage in effect on July 1, 1989, or, if basic coverage is not in effect, such election shall be made at the time such coverage is acquired pursuant to K.S.A. 40-3402, and amendments thereto. Notice of the election shall be provided by the insurer providing the basic cov- erage in the manner and form prescribed by the board of governors and shall continue to be effective from year to year unless modified by a subsequent election made prior to the anniversary date of the policy. The health care provider may at any subsequent election reduce the dollar amount of the coverage for the next and subsequent fiscal years, but may not increase the same, unless specifically authorized by the board of gov- ernors. Such election shall be made for persons engaged in residency training and persons engaged in other postgraduate training programs approved by the state board of healing arts at medical care facilities or mental health centers in this state by the agency or institution paying the surcharge levied under K.S.A. 40-3404, and amendments thereto, for such persons. Such options shall be as follows:

(1) OPTION 1. The fund shall not be liable to pay in excess of $100,000 pursuant to any one judgment or settlement for any party against such health care provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $300,000 for such provider.

(2) OPTION 2. The fund shall not be liable to pay in excess of $300,000 pursuant to any one judgment or settlement for any party against such health care provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $900,000 for such provider.

(3) OPTION 3. The fund shall not be liable to pay in excess of $800,000 pursuant to any one judgment or settlement for any party against such health care provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $2,400,000 for such health care provider.

(m) The fund shall not be liable for any amounts due from a judgment or settlement against resident or nonresident inactive health care provid- ers who first qualify as an inactive health care provider on or after July 1, 1989, unless such health care provider has been in compliance with K.S.A. 40-3402, and amendments thereto, for a period of not less than five years. If a health care provider has not been in compliance for five years, such health care provider may make application and payment for the coverage for the period while they are nonresident health care providers, nonres- ident self-insurers or resident or nonresident inactive health care provid- ers to the fund. Such payment shall be made within 30 days after the health care provider ceases being an active health care provider and shall be made in an amount determined by the board of governors to be suf- ficient to fund anticipated claims based upon reasonably prudent actuarial principles. The provisions of this subsection shall not be applicable to any health care provider which becomes inactive through death or retirement, or through disability or circumstances beyond such health care provider's control, if such health care provider notifies the board of governors and receives approval for an exemption from the provisions of this subsection. Any period spent in a postgraduate program of residency training ap- proved by the state board of healing arts shall not be included in com- putation of time spent in compliance with the provisions of K.S.A. 40- 3402, and amendments thereto.

(n) Notwithstanding the provisions of subsection (m) or any other provision in article 34 of chapter 40 of the Kansas Statutes Annotated to the contrary, the fund shall not be liable for any claim made on or after July 1, 1991, against a licensed optometrist or pharmacist relating to any injury or death arising out of the rendering of or failure to render pro- fessional services by such optometrist or pharmacist prior to July 1, 1991, unless such optometrist or pharmacist qualified as an inactive health care provider prior to July 1, 1991, and obtained coverage pursuant to sub- section (m). Optometrists and pharmacists not qualified as inactive health care providers prior to July 1, 1991, may purchase coverage from the fund for periods of prior compliance by making application prior to August 1, 1991, and payment within 30 days from notice of the calculated amount as determined by the board of governors to be sufficient to fund antici- pated claims based on reasonably prudent actuarial principles.

(o) Notwithstanding the provisions of subsection (m) or any other provision in article 34 of chapter 40 of the Kansas Statutes Annotated to the contrary, the fund shall not be liable for any claim made on or after July 1, 1995, against a physical therapist registered by the state board of healing arts relating to any injury or death arising out of the rendering of or failure to render professional services by such physical therapist prior to July 1, 1995, unless such physical therapist qualified as an inactive health care provider prior to July 1, 1995, and obtained coverage pursuant to subsection (m). Physical therapists not qualified as inactive health care providers prior to July 1, 1995, may purchase coverage from the fund for periods of prior compliance by making application prior to August 1, 1995, and payment within 30 days from notice of the calculated amount as determined by the board of governors to be sufficient to fund anticipated claims based on reasonably prudent actuarial principles.

(p) Notwithstanding anything in article 34 of chapter 40 of the Kansas Statutes Annotated to the contrary, the fund shall in no event be liable for any claims against any health care provider based upon or relating to the health care provider's sexual acts or activity, but in such cases the fund may pay reasonable and necessary expenses for attorney fees in- curred in defending the fund against such claim. The fund may recover all or a portion of such expenses for attorney fees if an adverse judgment is returned against the health care provider for damages resulting from the health care provider's sexual acts or activity.

Sec. 2. K.S.A. 65-429 is hereby amended to read as follows: 65-429. Upon receipt of an application for license, the licensing agency shall issue with the approval of the state fire marshal a license provided the applicant and the physical facilities of the medical care facility meet the require- ments established under this act. A license, unless suspended or revoked, shall be renewable annually without charge upon the filing by the li- censee, and approval by the licensing agency, of an annual report upon such uniform dates and containing such information in such form as the licensing agency prescribes by regulation rules and regulations. A medical care facility which has been licensed by the licensing agency and which has received certification for participation in federal reimbursement pro- grams and which has been accredited by the joint commission on accred- itation of hospitals health care organizations or the American osteopathic association may be granted a license renewal based on such certification and accreditation. The cost of administration of the medical care facilities licensure and risk management program provisions of this act pursuant to K.S.A. 65-433 and 65-4921 et seq., and amendments thereto, shall be funded by an annual assessment from the health care stabilization fund, which assessment shall not exceed $200,000 in any one fiscal year. The licensing agency shall make an annual report to the health care stabili- zation fund regarding the use of these funds. Each license shall be issued only for the premises and persons or governmental units named in the application and shall not be transferable or assignable except with the written approval of the licensing agency. A separate license is not required for two separate establishments which are located in the same or contig- uous counties, which provide the services required by K.S.A. 65-431 and amendments thereto and which are organized under a single owner or governing board with a single designated administrator and medical staff. Licenses shall be posted in a conspicuous place on the licensed premises.

Sec. 3. K.S.A. 65-433 is hereby amended to read as follows: 65-433. The licensing agency shall make or cause to be made such inspections and investigations as it deems deemed necessary. The authorized agents and representatives of the licensing agency shall conduct inspections of each medical care facility not accredited by the joint commission on ac- creditation of health care organizations or the American osteopathic as- sociation at such intervals as the secretary determines necessary to protect the public health and safety and to carry out the risk management pro- visions of K.S.A. 65-4921 et seq., and amendments thereto. The licensing agency may prescribe by rules and regulations that any licensee or appli- cant desiring to make specified types of alteration or additions to its fa- cilities or to construct new facilities shall before commencing such alter- ation, addition or new construction, submit plans and specifications therefor to the licensing agency for preliminary inspection and approval or recommendations with respect to compliance with the rules and reg- ulations and standards herein authorized. Necessary conferences and con- sultations may be provided.

Sec. 4. K.S.A. 1995 Supp. 75-6102 is hereby amended to read as follows: 75-6102. As used in K.S.A. 75-6101 through 75-6118, and amend- ments thereto, unless the context clearly requires otherwise:

(a) ``State'' means the state of Kansas and any department or branch of state government, or any agency, authority, institution or other instru- mentality thereof.

(b) ``Municipality'' means any county, township, city, school district or other political or taxing subdivision of the state, or any agency, au- thority, institution or other instrumentality thereof.

(c) ``Governmental entity'' means state or municipality.

(d) ``Employee'' means any officer, employee, servant or member of a board, commission, committee, division, department, branch or council of a governmental entity, including elected or appointed officials and persons acting on behalf or in service of a governmental entity in any official capacity, whether with or without compensation and a charitable health care provider. Employee includes any steward or racing judge ap- pointed pursuant to K.S.A. 74-8818, and amendments thereto, regardless of whether the services of such steward or racing judge are rendered pursuant to contract as an independent contractor, but does not otherwise include any independent contractor under contract with a governmental entity except (1) employees of the United States marshal's service en- gaged in the transportation of inmates on behalf of the secretary of cor- rections and (2) a person who is an employee of a nonprofit independent contractor, other than a municipality, under contract to provide educa- tional or vocational training to inmates in the custody of the secretary of corrections and who is engaged in providing such service in an institution under the control of the secretary of corrections provided that such em- ployee does not otherwise have coverage for such acts and omissions within the scope of their employment through a liability insurance con- tract of such independent contractor. ``Employee'' also includes an em- ployee of an indigent health care clinic. ``Employee'' also includes former employees for acts and omissions within the scope of their employment during their former employment with the governmental entity.

(e) ``Community service work'' means public or community service performed by a person (1) as a result of a contract of diversion entered into by such person as authorized by law, (2) pursuant to the assignment of such person by a court to a community corrections program, (3) as a result of suspension of sentence or as a condition of probation pursuant to court order, (4) in lieu of a fine imposed by court order or (5) as a condition of placement ordered by a court pursuant to K.S.A. 38-1663, and amendments thereto.

(f) ``Charitable health care provider'' means a person licensed by the state board of healing arts as an exempt licensee or a federally active licensee, a person issued a limited permit by the state board of healing arts, a physician's assistant registered by the state board of healing arts or a health care provider as the term ``health care provider'' is defined under K.S.A. 65-4921, and amendments thereto, who has entered into an agreement with:

(1) The secretary of health and environment under K.S.A. 1995 Supp. 75-6120, and amendments thereto, who, pursuant to such agreement, gratuitously renders professional services to a person who has provided information which would reasonably lead the health care provider to make the good faith assumption that such person meets the definition of medically indigent person as defined by this section or to a person re- ceiving medical assistance from the programs operated by the department of social and rehabilitation services, and who is considered an employee of the state of Kansas under K.S.A. 1995 Supp. 75-6120, and amendments thereto; or

(2) the secretary of health and environment and who, pursuant to such agreement, gratuitously renders professional services in conducting children's immunization programs administered by the secretary; or

(3) a local health department or indigent health care clinic, which renders professional services to medically indigent persons or persons receiving medical assistance from the programs operated by the depart- ment of social and rehabilitation services gratuitously or for a fee paid by the local health department or indigent health care clinic to such provider and who is considered an employee of the state of Kansas under K.S.A. 1995 Supp. 75-6120 and amendments thereto. Professional services ren- dered by a provider under this paragraph (3) shall be considered gratui- tous notwithstanding fees based on income eligibility guidelines charged by a local health department or indigent health care clinic and notwith- standing any fee paid by the local health department or indigent health care clinic to a provider in accordance with this paragraph (3).

(g) ``Medically indigent person'' means a person who lacks resources to pay for medically necessary health care services and who meets the eligibility criteria for qualification as a medically indigent person estab- lished by the secretary of health and environment under K.S.A. 1995 Supp. 75-6120, and amendments thereto.

(h) ``Indigent health care clinic'' means an outpatient medical care clinic operated on a not-for-profit basis which has a contractual agreement in effect with the secretary of health and environment to provide health care services to medically indigent persons.

(i) ``Local health department'' shall have the meaning ascribed to such term under K.S.A. 65-241 and amendments thereto.

Sec. 5. K.S.A. 65-429 and 65-433 and K.S.A. 1995 Supp. 40-3403 and 75-6102 are hereby repealed.

Sec. 6. This act shall take effect and be in force from and after its publication in the statute book.

Approved March 29, 1996.