Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 5 - PROPERTY AND CASUALTY INSURANCE › Subchapter C - TEXAS MEDICAL LIABILITY INSURANCE UNDERWRITING ASSOCIATION › Section 5.2004 - Medical Liability Insurance and General Liability Insurance

Current through Reg. 49, No. 28; July 12, 2024
(a) The policy.
(1) Approval. The procedures regarding rates,
				  rating plans, rating rules, rating classifications, territories, and policy
				  forms applicable to insurance written by the association and related statistics
				  must comply with Insurance Code Chapter 2203, Subchapter E.
(2) Duration of policies.
(A) All policies issued by the association
				  must be written for a term of one year or less, as determined by the
				  association, to begin at 12:01 a.m. on their respective effective
				  dates.
(B) The association may not
				  issue a policy with an effective date after a date set under Insurance Code
				  Article 21.49-3, §11 for a plan of suspension to become effective and
				  operative.
(C) All policies must be
				  written on forms approved by the department, and must contain a provision that
				  requires, as a condition precedent to settlement or compromise of any claim,
				  the consent or acquiescence of the insured. If, however, the insured refuses to
				  consent to any settlement recommended in writing by the association and elects
				  to contest or continue any legal proceedings, the liability of the association
				  must not exceed the amount for which the claim could have been settled plus the
				  cost and expenses incurred up to the date of the refusal.
(3) Installment payment plan. The association
				  may offer an installment plan for coverage obtained through the association or
				  for payment of the stabilization reserve fund charge. The association may
				  require the policyholder to pay the stabilization reserve fund charge as an
				  annual lump sum.
(4) Limits of
				  liability.
(A) No individual or organization
				  may be insured by a policy issued, or caused to be issued, by the association
				  for an amount exceeding a total of $1 million per occurrence (for all coverages
				  combined) and $3 million aggregate per annum (for all coverages combined). As
				  used in this paragraph, the terms "individual" and "organization" mean each
				  physician, health care provider, health care practitioner, and health care
				  facility holding a separate license or accreditation from the appropriate
				  licensing or accrediting agency as applicable.
(B) If provided, general liability limits
				  must be the same as medical liability limits subject to the maximum policy
				  limits specified in subparagraph (A) of this paragraph.
(5) Special provisions.
(A) The association may issue policies with
				  deductibles.
(B) The association
				  may issue policies subject to retrospective rating plans.
(C) Policies of excess medical liability
				  insurance and excess general liability insurance written by the association
				  must:
(i) be on a following form basis to the
				  underlying medical liability insurance or underlying general liability
				  insurance coverage over which it is written;
(ii) be issued subject to review of the
				  underlying coverage if review is deemed necessary by the association or its
				  representatives;
(iii) not be
				  issued in those cases where the net retention at risk by the primary carrier is
				  less than $100,000 per occurrence or less than $300,000 aggregate per annum
				  after applying any applicable deductible;
(iv) be issued only when the underlying
				  insurance coverage is underwritten by a member of the association and the
				  underlying insurance coverage does not have a deductible in excess of
				  $25,000;
(v) terminate
				  automatically if the underlying primary medical liability insurance policy or
				  underlying primary general liability insurance is not maintained for any
				  reason, except exhaustion by payment of a loss or losses. If the aggregate
				  underlying primary medical liability insurance or general liability insurance
				  is exhausted by the payment of a loss or losses occurring during the policy
				  period, the insurance provided by the excess policy must apply in the same
				  manner as if the underlying primary insurance was in full force and
				  effect;
(vi) not be accepted for a
				  hospital or other institutional health care provider or health care facility if
				  the applicant does not provide evidence that all physicians, surgeons,
				  podiatrists, dentists, pharmacists, chiropractors, or other health care
				  providers or health care practitioners with staff privileges are insured for
				  their individual medical liability with limits of liability of at least
				  $100,000 per occurrence and $300,000 aggregate per annum; and
(vii) not be accepted for physicians,
				  surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health
				  care providers or health care practitioners who employ or contract with other
				  physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or
				  other health care providers or health care practitioners if the applicant does
				  not provide evidence that all employed physicians, surgeons, podiatrists,
				  dentists, pharmacists, chiropractors, or other health care providers or health
				  care practitioners who are eligible to obtain coverage from the association are
				  insured for their individual medical liability with limits of liability of at
				  least $100,000 per occurrence and $300,000 aggregate per annum.
(D) No hospital or other
				  institutional health care provider, health care facility or physicians,
				  surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health
				  care providers or health care practitioners that have employed or contracted
				  physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or
				  other health care providers or health care practitioners can be accepted for
				  coverage in the association without evidence that all physicians, surgeons,
				  podiatrists, dentists, pharmacists, chiropractors, or other health care
				  providers, or health care practitioners with staff privileges or employed or
				  contracted by the applicant are insured for their individual medical liability
				  with limits of at least $100,000 per occurrence and $300,000 aggregate per
				  annum.
(E) For purposes of this
				  section, the term "health care providers or health care practitioners" does not
				  include personnel at or below the level of employed registered nurse. Insurance
				  required for physicians, surgeons, podiatrists, dentists, pharmacists,
				  chiropractors, health care practitioners, or other health care providers with
				  hospital staff privileges or employed or contracted by the applicant must be
				  limited to any one of the following entities:
(i) an insurance company authorized and
				  licensed to write and writing health care liability or medical liability
				  insurance in Texas under Insurance Code Chapter 801;
(ii) an insurance company eligible to write
				  and writing health care liability or medical liability insurance in Texas as a
				  surplus lines carrier under Insurance Code Chapter 981;
(iii) the Texas Medical Liability Insurance
				  Underwriting Association, established under Insurance Code Chapter
				  2203;
(iv) a self-insurance trust
				  created to provide health care liability or medical liability insurance,
				  established under Insurance Code Chapter 2212;
(v) a risk retention group or purchasing
				  group writing health care liability or medical liability insurance in Texas,
				  registered under Insurance Code Chapter 2201;
(vi) a plan of self-insurance of an
				  institution of higher education that provides health care liability or medical
				  liability coverage, established under Education Code Chapter 59; or
(vii) a plan of self-insurance that meets
				  each of the following criteria:
(I) the
				  plan's liabilities must be fully funded, and the plan must be solvent. The plan
				  must have a minimum net worth equal to the lesser of $1 million or that amount
				  of net worth that results in a capitalization ratio of 5%. As used in this
				  subclause, "net worth" is calculated by determining the excess, if any, of the
				  plan's total assets over the plan's total liabilities. As used in this
				  subclause, "capitalization ratio" means the ratio of the plan's net worth (as
				  the numerator) to the plan's total assets (as the denominator). Notwithstanding
				  the preceding, the net worth requirements in this subclause do not apply to a
				  plan that lawfully has taxing authority over a segment of the Texas public,
				  provided that the taxing authority may be used to meet the plan's liabilities
				  and other obligations;
(II) the
				  plan must annually obtain from a qualified actuary who is a member in good
				  standing of the American Academy of Actuaries an actuarial analysis that
				  reflects that its operations are viable. Notwithstanding the preceding, an
				  actuarial opinion filed with the department under Insurance Code §
														802.002 may be
				  accepted for purposes of this subsection;
(III) financial statements of the plan must
				  annually be audited by an independent certified public accountant who is a
				  member in good standing of the American Institute of Certified Public
				  Accountants (AICPA). The audits must use generally accepted auditing standards
				  and must result in a report that attests to whether the financial statements
				  comply with generally accepted accounting principles adopted by the AICPA.
				  Notwithstanding the preceding, an audit report filed with the department under
				  Insurance Code Chapter 401 may be accepted for purposes of this subsection;
				  and
(IV) the plan must have
				  competent and trustworthy management who are generally knowledgeable of
				  insurance matters. A plan is not eligible if a plan officer or member of the
				  plan's board of directors or similar governing body has been convicted of a
				  felony involving moral turpitude or breach of fiduciary duty.
(6) Rates,
				  rating plans, and rating rules applicable. The rates, rating plans, rating
				  rules, rating classifications, and territories applicable must be those
				  established under Insurance Code Chapter 2203, Subchapter E.