SECOND REGULAR SESSION
HOUSE BILL NO. 1940
93RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVES FLOOK (Sponsor), LAGER, PAGE AND ERVIN (Co-sponsors).
Read 1st time March 2, 2006 and copies ordered printed.
STEPHEN S. DAVIS, Chief Clerk
To amend chapter 383, RSMo, by adding thereto eight new sections relating to the establishment
of the Missouri health care stabilization fund.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 383, RSMo, is amended by adding thereto eight new sections, to be
known as sections 383.350, 383.353, 383.356, 383.359, 383.362, 383.365, 383.368, and 383.371,
to read as follows:
383.350. As used in sections 383.350 to 383.371, the following terms mean:
(1) "Director", the director of the department of insurance;
(2) "Fund", the Missouri health care stabilization fund established under sections
383.350 to 383.371;
(3) "Health care provider", includes physicians, dentists, clinical psychologists,
pharmacists, optometrists, podiatrists, registered nurses, physicians' assistants,
chiropractors, physical therapists, nurse anesthetists, anesthetists, emergency medical
technicians, hospitals, nursing homes, and extended care facilities; but shall not include
any nursing service or nursing facility conducted by and for those who rely upon treatment
by spiritual means alone in accordance with the creed or tenets of any well-recognized
church or religious denomination;
(4) "Insurer", any insurance company, association, exchange, or legal entity
authorized to issue policies of medical malpractice insurance in this state;
(5) "Medical malpractice insurance", insurance coverage against the legal liability
of the insured and against loss, damage, or expense incident to a claim arising out of the
death or injury of any person as a result of the negligence or malpractice in rendering
professional service by any health care provider.
383.353. 1. There is hereby created in the state treasury the "Missouri Health Care
Stabilization Fund". Membership fees and premium surcharges collected under section
383.362 shall be deposited in the fund. Notwithstanding the provisions of section 33.080,
RSMo, to the contrary, moneys in the Missouri health care stabilization fund shall not
revert to the general revenue fund. Interest accruing to the fund shall be part of the fund.
Moneys in the fund shall be invested and reinvested in the same manner as provided by
law for the investment of other state funds in interest-bearing investments. All expenses
of collecting, protecting, and administering the fund shall be paid from the fund.
2. The Missouri health care stabilization fund shall be used for the purpose of
paying that portion of a medical malpractice claim, settlement, or judgment which is in
excess of the limits expressed in section 383.368 or the maximum liability limits for which
the health care provider is insured, whichever limit is greater. The fund is liable only for
payment of claims against licensed health care providers in compliance with the provisions
of sections 383.350 to 383.371 and includes reasonable and necessary expenses incurred in
payment of claims and the fund's administrative expense. The fund shall not be liable for
damages for injury or death caused by an intentional crime committed by a health care
provider or an employee of a health care provider, whether or not the criminal conduct is
the basis for a medical malpractice claim. The fund shall have no obligation for the
payment of punitive damages rendered in any judgment. The state shall not be responsible
for any costs, expenses, liabilities, judgments, or other obligations of the fund.
3. The maximum amount recoverable under the Missouri health care stabilization
fund for any single claim under sections 383.350 to 383.371 shall not exceed eight hundred
thousand dollars pursuant to any one judgment or settlement for any party against a
health care provider, subject to an aggregate limitation for all judgments or settlements
arising from all claims made in one year in an amount of two million four hundred
thousand dollars for any health care provider.
383.356. 1. There is hereby created within the department of insurance the "Health
Care Stabilization Board", which shall be composed of the director and nine members
appointed by the governor with the advice and consent of the senate. The board shall be
(1) One member who is licensed to practice medicine and surgery in Missouri who
is a doctor of medicine and who is on a list of nominees submitted to the director by an
organization representing Missouri's medical society;
(2) One member who is a doctor of osteopathy and who is on a list of nominees
submitted to the director by an organization representing Missouri doctors of osteopathy;
(3) One member who is a licensed nurse in Missouri and who is on a list submitted
to the director by an organization representing Missouri nurses;
(4) One member who is a representative of Missouri hospitals and who is on a list
of nominees submitted to the director by an organization representing Missouri hospitals;
(5) Two members who are insurance representatives and who are on a list of
nominees submitted to the director by the insurance industry;
(6) Two members who are attorneys that handle medical malpractice and who are
on a list of nominees submitted to the director by an organization representing Missouri
(7) One member of the general public appointed by the governor who is unaffiliated
with the insurance or health care industries or the medical or legal professions; and
(8) The director.
2. The board is created to manage and operate the Missouri health care
stabilization fund. The appointed members shall serve for a term of six years. Each
member shall serve until a successor is appointed and qualified. The board shall meet at
the call of the director or a majority of the members but in any event it shall meet at least
once a year. A majority of the board members shall constitute a quorum for the
transaction of any business of the board. The affirmative vote by a majority of the quorum
present at a duly called meeting after notice is required to exercise any function of the
3. The board may promulgate any regulations necessary to carry out the provisions
of sections 383.350 to 383.371. Any rule or portion of a rule, as that term is defined in
section 536.010, RSMo, that is created under the authority delegated in this section shall
become effective only if it complies with and is subject to all of the provisions of chapter
536, RSMo, and, if applicable, section 536.028, RSMo. Sections 383.350 to 383.371 and
chapter 536, RSMo, are nonseverable and if any of the powers vested with the general
assembly pursuant to chapter 536, RSMo, to review, to delay the effective date or to
disapprove and annul a rule are subsequently held unconstitutional, then the grant of
rulemaking authority and any rule proposed or adopted after August 28, 2006, shall be
invalid and void.
4. When a vacancy occurs in the membership of the board created by this section,
the governor, with the advice and consent of the senate, shall appoint a successor of like
qualifications from a list of three nominees submitted to the director by the professional
society or association prescribed by this section. Whenever a vacancy occurs in the
membership of the board created by this section for any reason other than the expiration
of a member's term of office, the governor, with the advice and consent of the senate, shall
appoint a successor of like qualifications to fill the unexpired term. In each case of a
vacancy occurring in the membership of the board, the director shall notify the
professional society or association required for the vacant position and request a list of
three nominations from which to make the appointment.
5. The board shall develop a plan of operation for the efficient administration of
the fund consistent with the provisions of sections 383.350 to 383.371. The fund shall
operate pursuant to a plan of operation which shall provide for the economic, fair, and
nondiscriminatory administration and for the prompt and efficient provision of excess
medical malpractice insurance and which may contain other provisions including, but not
limited to, assessment of all members for expenses, deficits, losses, commissions
arrangements, reasonable underwriting standards, acceptance and cession of reinsurance
appointment of servicing carriers, and procedures for determining the amounts of
insurance to be provided by the Missouri health care stabilization fund. The plan of
operation and any amendments to the plan are subject to the approval of the director. If
the board fails to develop a plan of operation within the time frame established by the
director, the director or the director's designee shall develop the plan of operation for the
6. 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 functions required by the board in the exercise of the powers, duties,
and functions imposed or authorized by sections 383.350 to 383.371.
7. The department of insurance shall:
(1) Provide technical and administrative assistance to the board with respect to
administration of the fund upon request of the board; and
(2) Provide such expertise as the board may reasonably request with respect to
evaluation of claims or potential claims.
383.359. All Missouri licensed health care providers shall participate in the fund
and shall remit to the board the appropriate membership fees and premium surcharges as
are required by section 383.362 on or before the provider's membership anniversary date.
383.362. 1. All health care providers shall participate in the Missouri health care
stabilization fund and shall pay annual membership fees. The board, by rule, shall set the
membership fees. The rule shall provide that fees may be paid annually or in semiannual
or quarterly installments.
2. In addition to the membership fees delineated in subsection 1 of this section, the
board shall levy an annual premium surcharge on each participating health care provider
who has obtained a policy meeting the requirements of section 383.315 and upon each self-insurer. The surcharge shall be determined by the board based upon sound actuarial
principles, using data obtained from Missouri experience if available. The amount of the
surcharge shall be adequate for the payment of claims and expenses from the Missouri
health care stabilization fund. The amount of the surcharge shall be reasonable and not
3. The surcharge shall be collected on the same basis as premiums by each insurer
from the health care provider. The surcharge with accrued interest shall be due and
payable within thirty days after the premiums for medical malpractice insurance have been
received by the insurer from the health care provider in Missouri.
4. If the annual premium surcharge is collected but not paid within the time limit
specified in subsection 3 of this section, the certificate of authority of the insurer, risk
manager, or surplus lines agents shall be suspended until the annual premium surcharge
5. Membership in the fund is contingent upon the participating member making
timely payment of all membership fees and all premium surcharges.
6. Self-insureds shall be eligible for membership in the fund upon compliance with
the requirements of the board and shall pay similar membership fees and premium
surcharges as the members. The surcharge for self-insureds shall be in an amount
determined by the board. The amount of the surcharge imposed on the self-insured shall
be in an amount comparable to what a health care provider would be required to pay if the
provider's surcharge was based upon a policy of medical malpractice insurance.
383.365. 1. All books, records, and audits of the fund are open for reasonable
inspection to the general public.
2. On or before December thirty-first of each year the state auditor shall audit the
records of the fund and shall furnish an audited financial report to all fund participants,
the department of insurance, and the general assembly.
383.368. 1. All health care providers shall participate in the Missouri health care
stabilization fund and shall either insure and keep insured the health care provider's
liability by a policy of medical malpractice insurance issued by an insurer authorized to
do business in this state or shall qualify as a self-insurer. Qualification as a self-insurer is
subject to conditions established by the board. The board may establish conditions that
permit a self-insurer to self-insure for claims that are against employees who are health
care providers and that are not covered by the fund.
2. The liability limits for a policy of medical malpractice insurance required by
subsection 1 of this section shall not be less than two hundred thousand dollars per claim,
and shall not be less than six hundred thousand dollars for all claims in any one reporting
3. Each insurance company issuing medical malpractice insurance policies that
meet the requirements of this section shall, at the times prescribed by the director, file with
the director in a form prescribed by the director, a certificate of insurance on behalf of the
health care provider upon original issuance and each renewal.
4. Each self-insured health care provider furnishing coverage that meets the
requirements of this section shall, at the time and in a form prescribed by the board, file
with the board a certificate of self-insurance and a separate certificate of insurance for
each additional health care provider covered by the self-insured plan.
383.371. 1. A person filing a claim may recover from the fund only if the health
care provider or the employee of the health care provider has coverage under the fund, the
fund is named as a party in the action, and the action against the fund is commenced
within the same time limitation within which the action against the health care provider
or employee of the health care provider must be commenced.
2. If, after reviewing the facts upon which the claim or action is based, it appears
reasonably probable that damages paid will exceed the limits provided in section 383.318,
the fund may appear and actively defend itself when named as a party in an action against
a health care provider, or an employee of a health care provider, that has coverage under
the fund. In such action, the fund may retain counsel and pay out of the fund attorney fees
and expenses including court costs incurred in defending the fund. The attorney or law
firm retained to defend the fund shall not be retained or employed by the board to perform
legal services for the board of other than those directly connected with the fund. Any
judgment affecting the fund may be appealed as provided by law.
3. It shall be the responsibility of the insurer or self-insurer providing insurance
or self-insurance for a health care provider who is also covered by the fund to provide an
adequate defense of the fund on any claim filed that may potentially affect the fund with
respect to such insurance contract or self-insurance contract. The insurer or self-insurer
shall act in good faith and in a fiduciary relationship with respect to any claim affecting
the fund. No settlement exceeding an amount which could require payment by the fund
may be agreed to unless approved by the board.
4. A person who has recovered a final judgment or a settlement approved by the
board against a health care provider, or an employee of a health care provider that has
coverage under the fund, may file a claim with the board to recover that portion of such
judgment or settlement which is in excess of the limits provided in section 383.368 or the
maximum liability limit for which the health care provider is insured, whichever limit is
greater. In no event, however, shall the amount recoverable from the fund exceed the
amounts established under subsection 3 of section 383.353. Payments shall be made from
money collected and paid into the fund and from interest earned thereon.
5. Claims filed against the fund shall be paid in the order received within ninety
days after filing unless appealed by the fund. If the amounts in the fund are not sufficient
to pay all of the claims, claims received after the funds are exhausted shall be immediately
payable the following year in the order in which they were received.
6. The board may bring an action against an insurer, self-insurer, or health care
provider for failure to act in good faith or breach of fiduciary responsibility.