Bill Summary – FastDemocracy

WEST VIRGINIA LEGISLATURE
REGULAR SESSION
              Engrossed Senate Bill 686
            BY SENATOR AZINGER
    [Introduced February 7, 2024; referred to the Committee on Finance]
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  A BILL to amend and reenact §29-12-5 of the Code of West Virginia, 1931, as amended, relating
          to actions for damages or attorney's fees in cases involving Board of Risk and Insurance
          Management; clarifying that no action for damages or attorney’s fees under Shamblin v.
          Nationwide Mut. Ins. Co., 183 W. Va. 585 (1990) shall be awardable or cognizable against
          the board or any person employed by the board or any entity with which the board has
          contracted to administer the board’s programs; and providing for retrospective application
          to all pending claims and actions.
     Be it enacted by the Legislature of West Virginia:
     ARTICLE 12. STATE INSURANCE.
     §29-12-5. Powers and duties of board.
          (a)(1) The board has, without limitation and in its discretion as it seems necessary for the
  benefit of the insurance program, general supervision and control over the insurance of state
  property, activities and responsibilities, including:
          (A) The acquisition and cancellation of state insurance;
          (B) Determination of the kind or kinds of coverage;
          (C) Determination of the amount or limits for each kind of coverage;
          (D) Determination of the conditions, limitations, exclusions, endorsements, amendments
  and deductible forms of insurance coverage;
          (E) Inspections or examinations relating to insurance coverage of state property, activities
 and responsibilities;
         (F) Reinsurance; and
         (G) Any and all matters, factors and considerations entering into negotiations for
 advantageous rates on and coverage of such state property, activities and responsibilities.
         (2) The board shall endeavor to secure reasonably broad protection against loss, damage
 or liability to state property and on account of state activities and responsibilities by proper,
 adequate, available and affordable insurance coverage and through the introduction and
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 employment of sound and accepted principles of insurance, methods of protection and principles
 of loss control and risk.
         (3) The board is not required to provide insurance for every state property, activity or
 responsibility.
         (4) Any policy of insurance purchased or contracted for by the board shall provide that the
 insurer shall be barred and estopped from relying upon the Constitutional immunity of the State
 of West Virginia against claims or suits: Provided, That nothing herein shall bar a state agency or
 state instrumentality from relying on the Constitutional immunity granted the State of West Virginia
 against claims or suits arising from or out of any state property, activity or responsibility not
 covered by a policy or policies of insurance: Provided, however, That nothing herein shall bar the
 insurer of political subdivisions from relying upon any statutory immunity granted such political
 subdivisions against claims or suits.
         (5) The board shall make a complete survey of all presently owned and subsequently
 acquired state property subject to insurance coverage by any form of insurance, which survey
 shall include and reflect inspections, appraisals, exposures, fire hazards, construction and any
 other objectives or factors affecting or which might affect the insurance protection and coverage
 required.
         (6) The board shall keep itself currently informed on new and continuing state activities
 and responsibilities within the insurance coverage herein contemplated. The board shall work
 closely in cooperation with the state Fire Marshal's office in applying the rules of that office insofar
 as the appropriations and other factors peculiar to state property will permit.
         (7) The board may negotiate and effect settlement of any and all insurance claims arising
 on or incident to losses of and damages to covered state properties, activities and responsibilities
 hereunder and shall have authority to execute and deliver proper releases of all such claims when
 settled. The board may adopt rules and procedures for handling, negotiating and settlement of all
 such claims. Any discussion or consideration of the financial or personal information of an insured
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 may be held by the board in executive session closed to the public, notwithstanding the provisions
 of §6-9A-1 et seq. of this code.
         (8) The board may employ an executive director and such other employees, including
 legal counsel, as may be necessary to carry out its duties. The executive director shall receive an
 annual salary as provided in §6-7-2a of this code. The legal counsel may represent the board
 before any judicial or administrative tribunal and perform such other duties as may be requested
 by the board.
         (9) The board may enter into any contracts necessary to the execution of the powers
 granted to it by this article or to further the intent of this article.
         (10) The board may make rules governing its functions and operations and the
 procurement of state insurance. Except where otherwise provided by statute, rules of the board
 are subject to the provisions of §29A-3-1 et seq. of this code.
         (11) The funds received by the board, including, but not limited to, state agency premiums,
 mine subsidence premiums and political subdivision premiums, shall be deposited with the West
 Virginia Investment Management Board with the interest income and returns on investment a
 proper credit to such property insurance trust fund or liability insurance trust fund as applicable.
         (b) (1) Definitions. — The following words and phrases when used in this subsection, for
 the purposes of this subsection, have the meanings respectively ascribed to them in this
 subsection;
         (A) "Political subdivision" has the same meaning as in §29-12A-3 of this code;
         (B) "Charitable" or "public service organization" means any hospital in this state which has
 been certified as a critical access hospital by the federal Centers for Medicare and Medicaid upon
 the designation of the state Office of Rural Health Policy, the Office of Community and Rural
 Health Services, the Bureau for Public Health or the Department of Health and any bona fide, not-
 for-profit, tax-exempt, benevolent, educational, philanthropic, humane, patriotic, civic, religious,
 eleemosynary, incorporated or unincorporated association or organization or a rescue unit or
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 other similar volunteer community service organization or association, but does not include any
 nonprofit association or organization, whether incorporated or not, which is organized primarily
 for the purposes of influencing legislation or supporting or promoting the campaign of any
 candidate for public office; and
         (C) "Emergency medical service agency" has the same meaning as in §16-4C-3 of this
 code.
         (2) If requested by a political subdivision, a charitable or public service organization or an
 emergency medical services agency, the board may, but is not required to, provide property and
 liability insurance to insure the property, activities and responsibilities of the political subdivision,
 charitable or public service organization or emergency medical services agency. The board may
 enter into any contract necessary to the execution of the powers granted by this article or to further
 the intent of this article.
         (A) Property insurance provided by the board pursuant to this subsection may also include
 insurance on property leased to or loaned to the political subdivision, a charitable or public service
 organization or an emergency medical services agency which is required to be insured under a
 written agreement.
         (B) The cost of insurance, as determined by the board, shall be paid by the political
 subdivision, the charitable or public service organization or the emergency medical services
 agency and may include administrative expenses. For purposes of this section, if an emergency
 medical services agency is a for-profit entity, its claims history may not adversely affect other
 participants' rates in the same class.
         (c)(1) The board has general supervision and control over the optional medical liability
 insurance programs providing coverage to health care providers as authorized by the provisions
 of §29-12B-1 et seq. of this code. The board is hereby granted and may exercise all powers
 necessary or appropriate to carry out and effectuate the purposes of this article.
         (2) The board shall:
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         (A) Administer the preferred medical liability program and the high risk medical liability
  program and exercise and perform other powers, duties and functions specified in this article;
         (B) Obtain and implement, at least annually, from an independent outside source, such as
  a medical liability actuary or a rating organization experienced with the medical liability line of
  insurance, written rating plans for the preferred medical liability program and high-risk medical
 liability program on which premiums shall be based;
        (C) Prepare and annually review written underwriting criteria for the preferred medical
 liability program and the high-risk medical liability program. The board may utilize review panels,
 including, but not limited to, the same specialty review panels to assist in establishing criteria;
        (D) Prepare and publish, before each regular session of the Legislature, separate
 summaries for the preferred medical liability program and high-risk medical liability program
 activity during the preceding fiscal year, each summary to be included in the board of Risk and
 Insurance Management audited financial statements as "other financial information" and which
 shall include a balance sheet, income statement and cash flow statement, an actuarial opinion
 addressing adequacy of reserves, the highest and lowest premiums assessed, the number of
 claims filed with the program by provider type, the number of judgments and amounts paid from
 the program, the number of settlements and amounts paid from the program and the number of
 dismissals without payment;
        (E) Determine and annually review the claims history debit or surcharge for the high-risk
 medical liability program;
        (F) Determine and annually review the criteria for transfer from the preferred medical
 liability program to the high-risk medical liability program;
        (G) Determine and annually review the role of independent agents, the amount of
 commission, if any, to be paid therefor and agent appointment criteria;
        (H) Study and annually evaluate the operation of the preferred medical liability program
 and the high-risk medical liability program and make recommendations to the Legislature, as may
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 be appropriate, to ensure their viability, including, but not limited to, recommendations for civil
 justice reform with an associated cost-benefit analysis, recommendations on the feasibility and
 desirability of a plan which would require all health care providers in the state to participate with
 an associated cost-benefit analysis, recommendations on additional funding of other state-run
 insurance plans with an associated cost-benefit analysis and recommendations on the desirability
 of ceasing to offer a state plan with an associated analysis of a potential transfer to the private
 sector with a cost-benefit analysis, including impact on premiums;
        (I) Establish a five-year financial plan to ensure an adequate premium base to cover the
 long-tail nature of the claims-made coverage provided by the preferred medical liability program
 and the high-risk medical liability program. The plan shall be designed to meet the program's
 estimated total financial requirements, taking into account all revenues projected to be made
 available to the program and apportioning necessary costs equitably among participating classes
 of health care providers. For these purposes, the board shall:
        (i) Retain the services of an impartial, professional actuary, with demonstrated experience
 in analysis of large group malpractice plans, to estimate the total financial requirements of the
 program for each fiscal year and to review and render written professional opinions as to financial
 plans proposed by the board. The actuary shall also assist in the development of alternative
 financing options and perform any other services requested by the board or the executive director.
 All reasonable fees and expenses for actuarial services shall be paid by the board. Any financial
 plan or modifications to a financial plan approved or proposed by the board pursuant to this
 section shall be submitted to and reviewed by the actuary and may not be finally approved and
 submitted to the Governor and to the Legislature without the actuary's written professional opinion
 that the plan may be reasonably expected to generate sufficient revenues to meet all estimated
 program and administrative costs, including incurred but not reported claims, for the fiscal year
 for which the plan is proposed. The actuary's opinion for any fiscal year shall include a
 requirement for establishment of a reserve fund;
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         (ii) Submit its final, approved five-year financial plan, after obtaining the necessary
 actuary's opinion, to the Governor and to the Legislature no later than January 1, preceding the
 fiscal year. The financial plan for a fiscal year becomes effective and shall be implemented by the
 executive director on July 1, of the fiscal year. In addition to each final, approved financial plan
 required under this section, the board shall also simultaneously submit an audited financial
 statement based on generally accepted accounting practices (GAAP) and which shall include
 allowances for incurred but not reported claims: Provided, That the financial statement and the
 accrual-based financial plan restatement shall not affect the approved financial plan. The
 provisions of §29A-1-1 et seq. of this code shall not apply to the preparation, approval and
 implementation of the financial plans required by this section;
         (iii) Submit to the Governor and the Legislature a prospective five-year financial plan
 beginning on January 1, 2003, and every year thereafter, for the programs established by the
 provisions of §29-12B-1 et seq. of this code. Factors that the board shall consider include, but
 shall not be limited to, the trends for the program and the industry; claims history, number and
 category of participants in each program; settlements and claims payments; and judicial results;
         (iv) Obtain annually certification from participants that they have made a diligent search
 for comparable coverage in the voluntary insurance market and have been unable to obtain the
 same;
         (J) Meet on at least a quarterly basis to review implementation of its current financial plan
 in light of the actual experience of the medical liability programs established in §29-12B-1 et seq.
 of this code. The board shall review actual costs incurred, any revised cost estimates provided by
 the actuary, expenditures and any other factors affecting the fiscal stability of the plan and may
 make any additional modifications to the plan necessary to ensure that the total financial
 requirements of these programs for the current fiscal year are met;
         (K) To analyze the benefit of and necessity for excess verdict liability coverage;
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        (L) Consider purchasing reinsurance, in the amounts as it may, from time to time,
 determine is appropriate, and the cost thereof shall be considered to be an operating expense of
 the board;
        (M) Make available to participants optional extended reporting coverage or tail coverage:
 Provided, That, at least five working days prior to offering such coverage to a participant or
 participants, the board shall notify the President of the Senate and the Speaker of the House of
 Delegates in writing of its intention to do so and such notice shall include the terms and conditions
 of the coverage proposed;
        (N) Review and approve, reject or modify rules that are proposed by the executive director
 to implement, clarify or explain administration of the preferred medical liability program and the
 high-risk medical liability program. Notwithstanding any provisions in this code to the contrary,
 rules promulgated pursuant to this paragraph are not subject to the provisions of §29A-3-9
 through §29A-3-16 of this code. The board shall comply with the remaining provisions of article
 three and shall hold hearings or receive public comments before promulgating any proposed rule
 filed with the Secretary of State: Provided, That the initial rules proposed by the executive director
 and promulgated by the board shall become effective upon approval by the board notwithstanding
 any provision of this code;
        (O) Enter into settlements and structured settlement agreements whenever appropriate.
 The policy may not require