Section 17.25. Wisconsin health care liability insurance plan.

 

(1)   Findings.

(a) Legislation has been enacted authorizing the commissioner to promulgate a plan to provide health care liability insurance and liability coverage normally incidental to health care liability insurance for risks in this state which are equitably entitled to but otherwise unable to obtain such coverage, or to call upon the insurance industry to prepare plans for the commissioner's approval.

(b) Health care liability insurance, liability coverage normally incidental to health care liability insurance or both are not readily available in the voluntary market for the persons specified in sub. (5) (a) .

(c) A plan for providing health care liability insurance and liability coverage normally incidental to health care liability insurance should be enacted pursuant to ch. 619 , Stats.

(2)   Purpose. This section implements ss. 619.01 and 619.04 , Stats., by establishing procedures and requirements for a mandatory risk sharing plan to provide health care liability insurance coverage and liability coverage normally incidental to health care liability insurance on a self-supporting basis for the persons specified in sub. (5) (a) and for their employees acting within the scope of their employment and providing health care services. This section is also intended to encourage improvement in reasonable loss prevention measures and to encourage the maximum use of the voluntary market.

(3)   Coverage; exclusions.

(a) Each policy of health care liability insurance coverage issued by the plan shall provide occurrence coverage for all of the following:

1. Providing or failing to provide health care services to a patient.

2. Peer review, accreditation and similar professional activities in conjunction with and incidental to the provision of health care services, when conducted in good faith by the insured or an employee of the insured.

3. Utilization review, quality assurance and similar professional activities in conjunction with and incidental to the provision of health care services, when conducted in good faith by the insured or an employee of the insured.

(b) Each policy issued by the plan shall also provide for supplemental payments in addition to the limits of liability under par. (d) , including attorney fees, litigation expenses, costs and interest.

(c) The health care liability insurance coverage issued by the plan shall exclude coverage for all of the following:

1. Criminal acts.

2. Intentional sexual acts and other intentional torts.

3. Restraint of trade, anti-trust violations and racketeering.

4. Defamation.

5. Employment, religious, racial, sexual, age and other unlawful discrimination.

6. Pollution resulting in injury to a 3rd party.

7. Acts that occurred before the effective date of the policy of which the insured was aware or should have been aware.

8. Incidents occurring while and insured's license to practice is suspended, revoked, surrendered or otherwise terminated.

9. Criminal and civil fines, forfeitures and other penalties.

10. Punitive and exemplary damages.

11. Liability of the insured covered by other insurance, such as worker's compensation, automobile, fire or general liability.

12. Liability arising out of the ownership, operation or supervision by the insured of a hospital, nursing home or other health care facility or business enterprise.

13. Liability of others assumed by the insured under a contract or agreement.

(d) The maximum limits of liability for coverage under par. (a) are the following:

1. For all occurrences before July 1, 1987, $200,000 for each occurrence and $600,000 per year for all occurrences in any one policy year.

2. For occurrences on or after July 1, 1987, and before July 1, 1988, $300,000 for each occurrence and $900,000 for all occurrences in any one policy year.

3. Except as provided in subds. 4. and 5. , for occurrences on or after July 1, 1988, and before July 1, 1997, $400,000 for each occurrence and $1,000,000 for all occurrences in any one policy year.

4. Except as provided in subd. 5. , for occurrences on or after July 1, 1997, $1,000,000 for each occurrence and $3,000,000 for all occurrences in any one policy year.

5. For podiatrists licensed under ch. 448 , Stats. , for occurrences on and after November 1, 1989, $1,000,000 for each occurrence and $1,000,000 for all occurrences in any one policy year.

(e) The plan may also issue liability coverage normally incidental to health care liability insurance including all of the following:

1. Owners, landlords and tenants liability insurance.

2. Owners and contractors protective liability insurance.

3. Completed operations and products liability insurance.

4. Contractual liability insurance.

5. Personal injury liability insurance.

(f) The maximum limits of liability for coverage under par. (e) are $1,000,000 per claim and $3,000,000 aggregate for all claims in any one policy year.

(5)   Eligibility for plan coverage. All of the following are eligible for insurance under the plan:

(a) A medical or osteopathic physician or podiatrist licensed under ch. 448 , Stats.

(b) A nurse anesthetist or nurse midwife licensed under ch. 441 , Stats.

(c) A nurse practitioner licensed under ch. 441 , Stats. , who meets at least one of the requirements specified under s. DHS 105.20 (1) .

(d) A partnership comprised of, and organized and operated in this state for the primary purpose of providing the medical services of, physicians, podiatrists, nurse anesthetists, nurse midwives, nurse practitioners or cardiovascular perfusionists.

(e) A corporation or general partnership organized and operated in this state for the primary purpose of providing the medical services of physicians, podiatrists, nurse anesthetists, nurse midwives, nurse practitioners or cardiovascular perfusionists.

(f) An operational cooperative sickness care plan organized under ss. 185.981 to 185.985 , Stats., which directly provides services through salaried employees in its own facility.

(g) An accredited teaching facility conducting approved training programs for medical or osteopathic physicians licensed or to be licensed under ch. 448 , Stats. , or for nurses licensed or to be licensed under ch. 441 , Stats.

(h) A hospital, as defined in s. 50.33 (2) (a) and (c) , Stats., but excluding facilities exempted by s. 50.39 (3) , Stats., except as provided in par. (k) .

(i) An entity operated in this state that is an affiliate of a hospital and that provides diagnosis or treatment of, or care for, patients of the hospital.

(j) A nursing home, as defined in s. 50.01 (3) , Stats., whose operations are combined as a single entity with a hospital, whether or not the nursing home operations are physically separate from the hospital operations.

(k) A health care facility owned or operated by a county, city, village or town in this state, or by a county department established under s. 51.42 or 51.437 , Stats., if the facility would otherwise be eligible for coverage under this subsection.

(L) A corporation organized to manage approved training programs for medical or osteopathic physicians licensed under ch. 448 , Stats.

(m) A cardiovascular perfusionist.

(n) An ambulatory surgery center, as defined in s. DHS 101.03 (10) .

(6)   Definitions.

(a) In this subsection:

1. "Personal injury liability insurance" means any insurance coverage against loss by the personal injury or death of any person for which loss the insured is liable. "Personal injury liability insurance" includes the personal injury liability component of multi-peril policies, but does not include steam boiler insurance authorized under s. Ins 6.75 (2) (a) , worker's compensation insurance authorized under s. Ins 6.75 (2) (k) or medical expense coverage authorized under s. Ins 6.75 (2) (d) or (e) .

2. "Premiums written" means gross direct premiums less return premiums, dividends paid or credited to policyholders and the unused or unabsorbed portions of premium deposits, with respect to personal injury liability insurance covering insureds or risks residing or located in this state.

(b)

1. Each insurer authorized in this state to write personal injury liability insurance, except a town mutual organized under ch. 612 , Stats. , is a member of the plan.

2. An insurer's membership in the plan terminates if the insurer is no longer authorized to write personal injury liability insurance in this state. The effective date of termination shall be the last day of the plan's current fiscal year. A terminated insurer shall continue to be governed by this subsection until it completes all of its obligations under the plan.

3. Subject to the approval of the commissioner, the board may charge a reasonable annual membership fee, not to exceed $50.00.

(c) If the funds available to the plan at any time are not sufficient for the sound financial operation of the plan, the board shall assess the members an amount sufficient to remedy the insufficiency. Each member shall contribute according to the proportion that that member's premiums written during the preceding calendar year bears to the aggregate premiums written by all members during the preceding calendar year. The amounts of premiums written shall be determined on the basis of the annual statements and other reports filed by the members with the commissioner. Assessments are subject to any credit plan developed under sub. (8) (a) 4. When the amount of the assessment is recouped under s. 619.01 (1) (c) 2. , Stats., each member shall be reimbursed the amount of that member's assessment.

(d) The board shall report to the commissioner the name of any member that fails to pay within 30 days any assessment levied under par. (c) .

(7)   Board meetings; quorum. The board shall meet as often as required to perform the general duties of supervising the administration of the plan, or at the call of the commissioner. Seven members of the board shall constitute a quorum.

(8)   Powers and duties of the board. The board may do any of the following:

(a)

1. Invest, borrow and disburse funds, budget expenses, levy assessments and cede and assume reinsurance.

2. Appoint a manager or one or more agents to perform the duties designated by the board.

3. Appoint advisory committees of interested persons, not limited to members of the plan, to advise the board in the fulfillment of its duties and functions.

4. Develop an assessment credit plan subject to the approval of the commissioner, by which a member of the plan receives a credit against an assessment levied under sub. (6) (c) , based on voluntarily written health care liability insurance premiums in this state.

5. Take any action consistent with law to provide the appropriate examining boards or the department of health services with appropriate claims information.

6. Perform any other act necessary or incidental to the proper administration of the plan.

(b) The board shall do all of the following:

1. Develop rates, rating plans, rating and underwriting rules, rate classifications, rate territories and policy forms for the plan.

2. Ensure that all policies written by the plan are separately coded so that appropriate records may be compiled for purposes of calculating the adequate premium level for each classification of risk, and performing loss prevention and other studies of the operation of the plan.

3. Subject to the approval of the commissioner, determine the eligibility of an insurer to act as a servicing company to issue and service the plan's policies. If no qualified insurer elects to be a servicing company, the board shall assume these duties on behalf of member companies.

4. Enter into agreements and contracts as necessary for the execution of this section.

5. By May 1 of each year, report to the members of the plan and to the standing committees on insurance in each house of the legislature summarizing the activities of the plan in the preceding calendar year.

(10)   Application for insurance.

(a) Any person specified in sub. (5) may submit an application for insurance by the plan directly or through any licensed agent. Each application shall request coverage for the applicant's partnership or corporation, if any, and for the applicant's employees acting within the scope of their employment and providing health care services, unless the partnership, corporation or employees are covered by other professional liability insurance.

(b) The plan may bind coverage.

(c) Within 8 business days after receiving an application, the plan shall notify the applicant whether the application is accepted, rejected or held pending further investigation. Any applicant rejected by the plan may appeal the decision to the board as provided in sub. (16) .

(cm) The board may authorize retroactive coverage by the plan for a health care provider, as defined in s. 655.001 (8) , Stats., if the provider submits a timely request for retroactive coverage showing that the failure to procure coverage occurred through no fault of the provider and despite the fact that the provider acted reasonably and in good faith. The provider shall furnish the board with an affidavit describing the necessity for the retroactive coverage and stating that the provider has no notice of any pending claim alleging malpractice or knowledge of a threatened claim or of any occurrence that might give rise to such a claim.

(d) If the application is accepted, the plan shall deliver a policy to the applicant upon payment of the premium.

(12)   Rates, rate classifications and filings.

(a)

1. In developing rates and rate classifications, as provided under sub. (8) (b) 1. , the board shall ensure that the plan complies with ss. 619.01 (1) (c) 2. and 619.04 (5) and ch. 625 , Stats.

2. Rates shall be calculated in accordance with generally accepted actuarial principles, using the best available data.

3. Rates shall be calculated on a basis which will make the plan self-supporting but may not be excessive. Rates shall be presumed excessive if they produce long-term excess funds over the total of the plan's unpaid losses, including reserves for losses incurred but not yet reported, unpaid loss adjustment expenses, additions to the surplus established under s. 619.01 (1) (c) 2. , Stats., and s. Ins 51.80 (3) and (4) , the premium assessment under s. 619.01 (8m) , Stats., and other expenses.

4. The board shall annually determine if the plan has accumulated excess funds as described under subd. 3. and, if so, the board shall return the excess funds to the insureds by means of refunds or prospective rate decreases according to a distribution method and formula established by the board.

5.

a. In establishing the plan's rates, the board shall use loss and expense experience in this state to the extent it is statistically credible supplemented by relevant data from outside this state including, but not limited to, data provided by other insurance companies, rate service organizations or governmental agencies.

b. The board shall annually review the plan's rates using the experience of the plan, supplemented first by the experience of coverage provided in this state by other insurers and, to the extent necessary for statistical credibility, by relevant data from outside this state.

6. The loss and expense experience used in establishing and revising rates shall be adjusted to indicate as nearly as possible the loss and expense experience which will emerge on policies issued by the plan during the period for which the rates were being established. For this purpose loss experience shall include paid and unpaid losses, a provision for incurred but not reported losses and both allocated and unallocated loss adjustment expenses, giving consideration to changes in estimated costs of unpaid claims and to indications of trends in claim frequency, claim severity and level of loss expense.

7. Expense provisions included in the plan's rates shall reflect reasonable prospective operating costs of the plan.

(b) The board shall establish and annually review plan classifications which, in addition to the requirements under s. 619.04 (5) , Stats., do all of the following to the extent possible:

1. Measure variations in exposure to loss and in expenses based upon the best data available.

2. Reflect the past and prospective loss and expense experience of risks insured in the plan and other relevant experience from this and other states.

(c) With each rate and classification filing, the board shall submit supporting information including, in the case of rate filings, the existence, extent and nature of any subjective factors in the rates based on the judgment of technical personnel, such as consideration of the reasonableness of the rates compared with the cost of comparable available coverage.

(12m)   Premium surcharge tables.

(a) This subsection implements s. 619.04 (5m) (a) , Stats., requiring the establishment of an automatic increase in a provider's plan premium based on loss and expense experience.

(b) In this subsection:

1. "Aggregate indemnity" has the meaning given under s. Ins 17.285 (2) (a) .

2. "Closed claim" has the meaning given under s. Ins 17.285 (2) (b) .

3. "Provider" has the meaning given under s. Ins 17.285 (2) (d) .

4. "Review period" has the meaning given under s. Ins 17.285 (2) (e) .

(c) The following tables shall be used in making the determinations required under s. Ins 17.285 as to the percentage increase in a provider's plan premium:

1. For a class 1 and class 8 physician, podiatrist, nurse anesthetist, nurse midwife, nurse practitioner or cardiovascular perfusionist: - See PDF for table

2. For a class 2 physician: - See PDF for table

3. For a class 3 physician: - See PDF for table

4. For a class 4 physician: - See PDF for table

5. For a class 5A physician: - See PDF for table

6. For a class 5 physician: - See PDF for table

7. For a class 6 physician: - See PDF for table

8. For a class 7 physician: - See PDF for table

9. For a class 9 physician: - See PDF for table

(14)   Plan business; cancellation and nonrenewal.

(a) The plan may not cancel or refuse to renew a policy except for one or more of the following reasons:

1. Nonpayment of premium.

2. Revocation of the license of the insured by the appropriate licensing board.

3. Revocation of accreditation, registration, certification or other approval issued to the insured by a state or federal agency or national board, association or organization.

4. If the insured is not licensed, accredited, registered, certified or otherwise approved, failure to provide evidence that the insured continues to provide health care services in accordance with the code of ethics applicable to the insured's profession, if the board requests such evidence.

(b) Each notice of cancellation or nonrenewal under par. (a) shall include a statement of the reason for the cancellation or nonrenewal and a conspicuous statement that the insured has the right to a hearing as provided in sub. (16) .

(15)   Commission.

(a) If the application designates a licensed agent, the plan shall pay the agent a commission for each new or renewal policy issued, as follows:

1. To a health care provider specified in sub. (5) (a) to (e) or (m) , 15% of the premium or $150, whichever is less.

2. To a health care provider specified in sub. (5) (f) to (L) or (n) , 5% of the annual premium or $2,500 per policy period, whichever is less.

(b) An agent need not be listed by the insurer that acts as the plan's servicing company to receive a commission under par. (a) .

(c) If the applicant does not designate an agent on the application, the plan shall retain the commission.

(16)   Right to hearing. Any person satisfying the conditions specified in s. 227.42 (1) , Stats., may request a hearing under ch. Ins 5 within 30 days after receiving notice of the plan's action or failure to act with respect to a matter affecting the person.

(18)   Indemnification.

(a) The plan shall indemnify against any cost, settlement, judgment and expense actually and necessarily incurred in connection with the defense of any action, suit or proceeding in which a person is made a party because of the person's position as any of the following:

1. A member of the board or any of its committees or subcommittees.

2. A member of or a consultant to the peer review council under s. 655.275 , Stats.

3. A member of the plan.

4. The manager or an officer or employee of the plan.

(b) Paragraph (a) does not apply if the person is judged, in the action, suit or proceeding, to be liable because of willful or criminal misconduct in the performance of the person's duties under par. (a) 1. to 4.

(c) Paragraph (a) does not apply to any loss, cost or expense on a policy claim under the plan.

(d) Indemnification under par. (a) does not exclude any other legal right of the person indemnified.

(19)   Applicability. Each person insured by the plan is subject to this section as it existed on the effective date of the person's policy. Any change in this section during the policy term applies to the insured as of the renewal date.

History: Emerg. cr. eff. 3-20-75; cr. Register, June, 1975, No. 234 , eff. 7-1-75; emerg. am. eff. 7-28-75; emerg. r. and recr. eff. 11-1-75; r. and recr. Register, January, 1976, No. 241 , eff. 2-1-76; am. (1) (b), (2), (4) (c), and (5) (a), Register, May, 1976, No. 245 , eff. 6-1-76; emerg. am. (4) (b), eff. 6-22-76; am. (1) (b), (2), (4) (b) and (c) and (5) (a), Register, September, 1976, No. 249 , eff. 10-1-76; am. (1) (b), (2), (4) (c), (5) (a), (5) (f), (10) (a) and (15), cr. (4) (h), Register, May, 1977, No. 257 , eff. 6-1-77; am. (1) (b), (2), (4) (c), (5) (a), (10) (a) and (15), Register, September, 1977, No. 261 , eff. 10-1-77; am. (1) (b), (2), (4) (b) and (c), (5) (a) and (f), and (15), Register, May, 1978, No. 269 , eff. 6-1-78; am. (7) (b) 1.a., Register, March, 1979, No. 279 , eff. 4-1-79; renum. from. Ins 3.35, am. (1) (b), (2), (5) (a) and (10) (a), Register, July, 1979, No. 283 , eff. 8-1-79; r. and recr. (5) (a), Register, April, 1980, No. 292 , eff. 5-1-80; am. (1) (b), (2), (4) (c), (5) (a), (10) (a), (12) (a) 3. and 4. and (15), r. (12) (a) 11. renum. (12) (a) 5. through 10. and 12. to be 7. through 12. and 13., cr. (12) (a) 5. and 6., Register, May, 1985, No. 353 , eff. 6-1-85; emerg. am. (1) (b), (2), (4) (c) and (5) (a) 2., eff. 7-29-86; am. (1) (b), (2), (4) (c) and (5) (a) 2., Register, January, 1987, No. 373 , eff. 2-1-87; emerg. am. (1) (b), (2), (4) (c), (5) (a) 3., 4. and 7., (7) (b) 2., 3. and 5., (10) (a), (12) (intro.), (14) (a) (intro.) and 1. and (15), cr. (5) (a) 11., (7m) and (14) (a) 3. and 4., renum. (5) (a) 11., (b) and (7) (b) 1. intro. to be (5) (am), (b) (intro.) and (7) (b) and am., r. (7) (b) 1. a. and b. eff. 2-16-87; am. (1) (b), (2), (4) (c), (5) (a) 3., 4. and 7., (7) (b) 2., 3. and 5., (10) (a), (12) (intro.), (14) (a) (intro.) and 1. and (15), renum. (5) (a) 11., (b) and (7) (b) 1. to be (5) (am), (b) (intro.) and (7) (b) 1. and am., cr. (5) (a) 7m and 11., (b) 1. to 3., (7) (b) 2m. and (14) (a) 3. and 4., r. (7) (b) 1. a. and b., Register, July, 1987, No. 379 , eff. 8-1-87; r. (12) (a) 13. and (b) 5., cr. (5) (a) 2m. and (12m), am. (16), Register, February, 1988, No. 386 , eff. 3-1-88; r. (4) (g) and (9) (b), renum. (9) (a) to be (9), Register, March, 1988, No. 387 , eff. 4-1-88; cr. (10) (cm), Register, April, 1989, No. 400 , eff. 5-1-89; emerg. am. (5) (b) 3., cr. (5) (b) 4., eff. 10-16-89; am. (5) (b) 3., cr. (5) (b) 4., Register, March, 1990, No. 411 , eff. 4-1-90; am. (1) (a) and (c), (2), (10) (a), (b), (c) and (d), (12) (a) 2. and 3., (14) (a) (intro.) and 4., (b), r. (3), (4) (a), (c), (d), (f) and (h), (5) (am), (d), (e) and (f), (6) (a), (7), (8) (j), (11) (a), (12) (intro.), (a) 4. to 6. intro., b. and c. and 7., (b), (c) 1., 3. and 6., (12m) (c) and (13), r. and recr. (12) (a) 1., (15), (16) and (18), renum. (4) (b) and (e), (5) (a) (intro.) to 11., (5) (b) and (c), (6) (b) and (c), (8) (a) to (i), (9), (11) (b), (12) (a) 6., 8., to 12., (12) (b) 2. and 4. and (17) to be (6) (a) 1. and 2., (5) (intro.) to (m), (3) (d) and (f), (6) (b) 2. and 3., (7), (8) (a), (b) 1. to 4., (8) (a) 3. to 5., (8) (b) 5., (6) (c), (12) (a) 4. to 6., (12) (a) 5. b., (12) (c), (12) (a) 7., (12) (b) 1. and 2., and (6) (d) and am. except (3) (d) 1. to 4., cr. (3) (a) to (c) and (e), (5) (n), (6) (a) (intro.) and (b) 1., (8) (a) (intro.) and 6., (b) (intro.), (12) (b) (intro.) and (19), Register, June, 1990, No. 414 , eff. 7-1-90; am. (10) (cm), Register, April, 1991, No. 424 , eff. 5-1-91; am. (12m) (c) (intro.), Register, January, 1992, No. 433 , eff. 2-1-92; correction in (5) (c) and (n) made under s. 13.93 (2m) (b) 7., Stats., Register, January, 1997, No. 498 ; correction in (12) (a) 3. made under s. 13.93 (2m) (b) 7., Stats., Register, September, 1999, No. 525 ; emerg. am. (3) (d) 3., renum. (3) (d) 4. to be 5. and cr. (3) (d) 4., eff. 7-1-02; CR 02-035 : am. (3) (d) 3., renum. (3) (d) 4. to be (3) (d) 5., cr. (3) (d) 4., Register September 2002 No. 561 , eff. 10-1-02; corrections in (5) (c) and (n) made under s. 13.93 (2m) (b) 7., Stats., Register October 2003 No. 574 ; CR 07-001 : am. (12m), Register June 2007 No. 618 , eff. 7-1-07; corrections in (5) (c), (n), and (8) (a) 5. made under s. 13.92 (4) (b) 6. and 7., Stats., Register June 2009 No. 642 . Note: See the table of Appellate Court Citations for Wisconsin appellate cases citing s. Ins 17.25 .