754 1997 Session Laws of Kansas Ch. 134
An Act concerning the health care provider insurance
availability act; amending K.S.A. 40-
3408 and K.S.A. 1996 Supp. 40-3402, 40-3403 and 40-3404 and
repealing the existing
sections.
Be it enacted by the Legislature of the State of
Kansas:
Section 1. K.S.A. 1996 Supp. 40-3402 is hereby amended to read
as
follows: 40-3402. (a) A policy of professional liability insurance
approved
by the commissioner and issued by an insurer duly authorized to
transact
business in this state in which the limit of the insurer's
liability is not less
than $200,000 per occurrence claim, subject
to not less than a $600,000
annual aggregate for all claims made during the policy period,
shall be
maintained in effect by each resident health care provider as a
condition
to rendering professional service as a health care provider in this
state,
unless such health care provider is a self-insurer. This provision
shall not
apply to optometrists and pharmacists on or after July 1, 1991 nor
to
physical therapists on and after July 1, 1995 nor to health
maintenance
organizations on or after July 1, 1997. Such policy shall
provide as a
minimum coverage for claims made during the term of the policy
which
were incurred during the term of such policy or during the prior
term of
a similar policy. Any insurer offering such policy of professional
liability
insurance to any health care provider may offer to such health care
pro-
vider a policy as prescribed in this section with deductible
options. Such
deductible shall be within such policy limits.
(1) Each insurer providing basic coverage shall within 30 days
after
the premium for the basic coverage is received by the insurer or
within
30 days from the effective date of this act, whichever is later,
notify the
board of governors that such coverage is or will be in effect. Such
noti-
fication shall be on a form approved by the board of governors and
shall
include information identifying the professional liability policy
issued or
to be issued, the name and address of all health care providers
covered
by the policy, the amount of the annual premium, the inception
and
expiration dates of the coverage and such other information as the
com- board of governors shall require. A copy
of the notice required
missioner
by this subsection shall be furnished the named insured.
Ch. 134 1997 Session Laws of Kansas 755
(2) In the event of termination of basic coverage by
cancellation, non-
renewal, expiration or otherwise by either the insurer or named
insured,
notice of such termination shall be furnished by the insurer to the
board
of governors, the state agency which licenses, registers or
certifies the
named insured and the named insured. Such notice shall be provided
no
less than 30 days prior to the effective date of any termination
initiated
by the insurer or within 10 days after the date coverage is
terminated at
the request of the named insured and shall include the name and
address
of the health care provider or providers for whom basic coverage is
ter-
minated and the date basic coverage will cease to be in effect. No
basic
coverage shall be terminated by cancellation or failure to renew by
the
insurer unless such insurer provides a notice of termination as
required
by this subsection.
(3) Any professional liability insurance policy issued,
delivered or in
effect in this state on and after July 1, 1976, shall contain or be
endorsed
to provide basic coverage as required by subsection (a) of this
section.
Notwithstanding any omitted or inconsistent language, any contract
of
professional liability insurance shall be construed to obligate the
insurer
to meet all the mandatory requirements and obligations of this act.
The
liability of an insurer for claims made prior to July 1, 1984,
shall not
exceed those limits of insurance provided by such policy prior to
July 1,
1984.
(b) Unless a nonresident health care provider is a self-insurer,
such
health care provider shall not render professional service as a
health care
provider in this state unless such health care provider maintains
coverage
in effect as prescribed by subsection (a), except such coverage may
be
provided by a nonadmitted insurer who has filed the form required
by
subsection (b)(1). This provision shall not apply to optometrists
and phar-
macists on or after July 1, 1991 nor to physical therapists on and
after
July 1, 1995.
(1) Every insurance company authorized to transact business in
this
state, that is authorized to issue professional liability insurance
in any
jurisdiction, shall file with the commissioner, as a condition of
its contin-
ued transaction of business within this state, a form prescribed by
the
commissioner declaring that its professional liability insurance
policies,
wherever issued, shall be deemed to provide at least the insurance
re-
quired by this subsection when the insured is rendering
professional serv-
ices as a nonresident health care provider in this state. Any
nonadmitted
insurer may file such a form.
(2) Every nonresident health care provider who is required to
main-
tain basic coverage pursuant to this subsection shall pay the
surcharge
levied by the board of governors pursuant to subsection (a) of
K.S.A.
40-3404 and amendments thereto directly to the board of governors
and
shall furnish to the board of governors the information required in
sub-
section (a)(1).
756 1997 Session Laws of Kansas Ch. 134
(c) Every health care provider that is a self-insurer, the
university of
Kansas medical center for persons engaged in residency training, as
de-
scribed in subsection (r)(1) of K.S.A. 40-3401 and amendments
thereto,
the employers of persons engaged in residency training, as
described in
subsection (r)(2) of K.S.A. 40-3401 and amendments thereto, the
private
practice corporations or foundations and their full-time physician
faculty
employed by the university of Kansas medical center or a medical
care
facility or mental health center for self-insurers under subsection
(e) of
K.S.A. 40-3414 and amendments thereto shall pay the surcharge
levied
by the board of governors pursuant to subsection (a) of K.S.A.
40-3404
and amendments thereto directly to the board of governors and
shall
furnish to the board of governors the information required in
subsection
(a)(1) and (a)(2).
(d) In lieu of a claims made policy otherwise required under
this
section, a person engaged in residency training who is providing
services
as a health care provider but while providing such services is not
covered
by the self-insurance provisions of subsection (d) of K.S.A.
40-3414 and
amendments thereto may obtain basic coverage under an
occurrence
form policy if such policy provides professional liability
insurance cover-
age and limits which are substantially the same as the professional
liability
insurance coverage and limits required by subsection (a) of K.S.A.
40-
3402 and amendments thereto. Where such occurrence form policy is
in
effect, the provisions of the health care provider insurance
availability act
referring to claims made policies shall be construed to mean
occurrence
form policies.
(e) The provisions of this section shall expire on July
1, 1994, if the
health care stabilization fund oversight committee recommends
provi-
sions that are enacted on or before July 1, 1994, which: (1)
Provide for
the equitable apportionment of risk among insurers of applicants
for pro-
fessional liability insurance, who are unable to procure such
insurance
through ordinary methods after June 30, 1994; (2) provide for the
ap-
portionment, on a pro rata basis, of any balance remaining in the
fund
after all liabilities have been paid, to each health care provider
who paid
the applicable surcharge levied pursuant to K.S.A. 40-3404, and
amend-
ments thereto, during the period July 1, 1991, to June 30, 1994;
and (3)
provide a plan for addressing the professional liability insurance
needs of
faculty, residents and private practice foundations and
corporations at the
university of Kansas school of medicine after June 30,
1994.
Sec. 2. K.S.A. 1996 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,
Ch. 134 1997 Session Laws of Kansas 757
there is hereby established the health care stabilization fund.
The fund
shall be held in trust in the state treasury and accounted for
separately
from other state funds. 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 There is hereby created
a board of
existence on the day preceding such effective date is hereby
abolished.
On the effective date of this act,
governors 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;
758 1997 Session Laws of Kansas Ch. 134
(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 When 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
pro-
fessional 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 va-
cancy 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 commissioner 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 of governors, the commissioner shall notify the
professional
society or association which represents the category of health care
pro-
vider required for the vacant position and request a list of three
nomi-
nations 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;
Ch. 134 1997 Session Laws of Kansas 759
(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) (4) The board of governors shall
organize at its first meeting inon July 1 of each year
January of 1995, and at its first meeting subsequent to July 1,
1995, andthereafter and shall elect a chairperson and
vice-
chairperson from among its membership. Meetings shall be called by
the
chairperson or by a written notice signed by three members of the
board.
(6) (5) 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
760 1997 Session Laws of Kansas Ch. 134
be approved by the chairperson of the board or a person
designated by (6) (A) The board shall appoint
an executive di-
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,
rector who shall be in the unclassified service under the Kansas
civil serv-
ice act.
(b) The board may appoint such additional employees, and
provide
all office space, services, equipment, materials and supplies, and
all budg-
eting, personnel, purchasing and related management functions
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) (7) 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
Ch. 134 1997 Session Laws of Kansas 761
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)
and (q), 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
762 1997 Session Laws of Kansas Ch. 134
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-
insurers 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
Ch. 134 1997 Session Laws of Kansas 763
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
764 1997 Session Laws of Kansas Ch. 134
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
Ch. 134 1997 Session Laws of Kansas 765
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.
766 1997 Session Laws of Kansas Ch. 134
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. Any election of fund coverage limits, whenever made,
shall be 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
the effective date of such election of fund coverage limits.
Such election
shall be made for persons engaged in residency training and persons
en-
gaged 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.
Ch. 134 1997 Session Laws of Kansas 767
(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
768 1997 Session Laws of Kansas Ch. 134
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 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, 1997, against a health maintenance organization relating to
any
injury or death arising out of the rendering of or failure to
render pro-
fessional services by such health maintenance organization prior to
July
1, 1997, unless such health maintenance organization qualified as
an in-
active health care provider prior to July 1, 1997, and obtained
coverage
pursuant to subsection (m). Health maintenance organizations not
qual-
ified as inactive health care providers prior to July 1, 1997, may
purchase
coverage from the fund for periods of prior compliance by making
appli-
cation prior to August 1, 1997, 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
actu-
arial principles.
(p) (q) 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 re-
lating 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
incurred 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. 3. K.S.A. 1996 Supp. 40-3404 is hereby amended to read
as
follows: 40-3404. (a) Except for any health care provider whose
partici-
pation in the fund has been terminated pursuant to subsection (i)
of
K.S.A. 40-3403 and amendments thereto, the board of governors
shall
levy an annual premium surcharge on each health care provider who
has
obtained basic coverage and upon each self-insurer for each fiscal
year.
This provision shall not apply to optometrists and pharmacists on
or after
July 1, 1991 nor to physical therapists on or after July 1,
1995, nor to
health maintenance organizations on and after July 1, 1997.
Such pre-
mium surcharge shall be an amount equal to a percentage of
the annual
premium paid by the health care provider for the basic coverage
required
to be maintained as a condition to coverage by the fund by
subsection (a)
of K.S.A. 40-3402 and amendments thereto. The annual premium
sur-
charge upon each self-insurer, except for persons engaged in
residency
training, shall be an amount equal to a percentage of the amount
such
Ch. 134 1997 Session Laws of Kansas 769
self-insurer would pay for basic coverage as calculated
in accordance with based upon a rating
classification system
rating procedures approved by the commissioner pursuant to K.S.A.
40-
3413 and amendments thereto
established by the board of governors which is reasonable, adequate
and
not unfairly discriminating. The annual premium surcharge upon
the
university of Kansas medical center for persons engaged in
residency
training, as described in subsection (r)(1) of K.S.A. 40-3401, and
amend-
ments thereto, shall be an amount equal to a percentage
of based on an
assumed aggregate premium of $600,000. The annual premium
surcharge
upon the employers of persons engaged in residency training, as
de-
scribed in subsection (r)(2) of K.S.A. 40-3401, and amendments
thereto,
shall be an amount equal to a percentage of
based on an assumed aggre-
gate premium of $400,000. The surcharge on such $400,000 amount
shall
be apportioned among the employers of persons engaged in
residency
training, as described in subsection (r)(2) of K.S.A. 40-3401, and
amend-
ments thereto, based on the number of residents employed as of July
1
of each year.
(b) In the case of a resident health care provider who is not a
self-
insurer, the premium surcharge shall be collected in addition to
the an-
nual premium for the basic coverage by the insurer and shall not
be
subject to the provisions of K.S.A. 40-252, 40-1113 and 40-2801
et seq.,
and amendments thereto. The amount of the premium surcharge
shall
be shown separately on the policy or an endorsement thereto and
shall
be specifically identified as such. Such premium surcharge shall be
due
and payable by the insurer to the board of governors within 30 days
after
the annual premium for the basic coverage is received by the
insurer, but
in the event basic coverage is in effect at the time this act
becomes ef-
fective, such surcharge shall be based upon the unearned premium
until
policy expiration and annually thereafter. Within 15 days
immediately
following the effective date of this act, the board of governors
shall send
to each insurer information necessary for their compliance with
this sub-
section. The certificate of authority of any insurer who fails to
comply
with the provisions of this subsection shall be suspended pursuant
to
K.S.A. 40-222 and amendments thereto until such insurer shall pay
the
annual premium surcharge due and payable to the board of
governors.
In the case of a nonresident health care provider or a
self-insurer, the
premium surcharge shall be collected in the manner prescribed in
K.S.A.
40-3402 and amendments thereto.
(c) The premium surcharge made for any annual period
beginning In
setting the amount
on or after July 1, 1991, shall be in an amount deemed sufficient
by the
board of governors, together with the premium surcharges for any
sub-
sequent annual periods made prior to July 1, 1994, to fund the
total of
any existing deficiencies in the fund on July 1, 1991, and all
anticipated
claims to be made before July 1, 1994, for which the fund will be
liable
based upon reasonably prudent actuarial principles.
770 1997 Session Laws of Kansas Ch. 134
of such surcharge, the board of governors: (1)
may require any health
care provider who has paid a surcharge for less than 24 months to
pay a
higher surcharge than other health care providers; and (2)
shall require.
that any health care provider who is insured by a policy of
professional
liability insurance with deductibles pay a surcharge based on an
amount
equal to a percentage on the annual amount of premium that would
have
been paid by the health care provider for basic coverage required
to be
maintained by the fund as provided by K.S.A. 40-3402 and
amendments
thereto without any deductibles
Sec. 4. K.S.A. 40-3408 is hereby amended to read as follows:
40-
3408. (a) The insurer of a health care provider covered by
the fund or
self-insurer shall be liable only for the first $200,000 of a claim
for per-
sonal injury or death arising out of the rendering of or the
failure to render
professional services by such health care provider, subject to an
annual
aggregate of $600,000 for all such claims against the health care
provider.
However, if any liability insurance in excess of such amounts is
applicable
to any claim or would be applicable in the absence of this act, any
pay-
ments from the fund shall be excess over such amounts paid, payable
or
that would have been payable in the absence of this act. The
liability of
an insurer for claims made prior to July 1, 1984, shall not exceed
those
limits of insurance provided by such policy prior to July 1,
1984.
(b) If any inactive health care provider has liability
insurance in effect
which is applicable to any claim or would be applicable in the
absence of
this act, any payments from the fund shall be excess over such
amounts
paid, payable or that would have been payable in the absence of
this act.
(c) Notwithstanding anything in article 34 of chapter 40
of the Kansas
Statutes Annotated to the contrary, an insurer that provides
coverage to
a health care provider may exclude from coverage any liability
incurred
by such provider:
(a) (1) From the rendering of or the
failure to render professional
services by any other health care provider who is required by
K.S.A.
40-3402 and amendments thereto to maintain professional liability
insur-
ance in effect as a condition to rendering professional services as
a health
care provider in this state; or
(b) (2) based upon or relating to the
health care provider's sexual acts
or activity, but in such cases the insurer may provide reasonable
and
necessary expenses for attorney fees incurred in defending against
such
claim. The insurer may recover all or a portion of such expenses
for at-
torney 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. 5. K.S.A. 40-3408 and K.S.A. 1996 Supp. 40-3402, 40-3403
and
40-3404 are hereby repealed.
Ch. 134 1997 Session Laws of Kansas 771
Sec. 6. This act shall take effect and be in force from and
after its
publication in the statute book.
Approved April 24, 1997.