Session Law

Identifying Information:L. 2001 ch. 204
Other Identifying Information:2001 Senate Bill 366
Tax Type:Other
Brief Description:An Act concerning health care provider insurance; amending K.S.A. 40-3401, 40-3403,40-3404 and 40-3414 and repealing the existing sections.
Keywords:


Body:

CHAPTER 204

SENATE BILL No. 366


An Act concerning health care provider insurance; amending K.S.A. 40-3401, 40-3403,

40-3404 and 40-3414 and repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 40-3401 is hereby amended to read as follows: 40-

3401. As used in this act the following terms shall have the meanings

respectively ascribed to them herein.

(a) ``Applicant'' means any health care provider.

(b) ``Basic coverage'' means a policy of professional liability insurance

required to be maintained by each health care provider pursuant to the

provisions of subsection (a) or (b) of K.S.A. 40-3402 and amendments

thereto.

(c) ``Commissioner'' means the commissioner of insurance.

(d) ``Fiscal year'' means the year commencing on the effective date

of this act and each year, commencing on the first day of that month,

thereafter.

(e) ``Fund'' means the health care stabilization fund established pur-

suant to subsection (a) of K.S.A. 40-3403 and amendments thereto.

(f) ``Health care provider'' means a person licensed to practice any

branch of the healing arts by the state board of healing arts with the

exception of physician assistants, a person who holds a temporary permit

to practice any branch of the healing arts issued by the state board of

healing arts, a person engaged in a postgraduate training program ap-

proved by the state board of healing arts, a medical care facility licensed

by the department of health and environment, a health maintenance or-

ganization issued a certificate of authority by the commissioner of insur-

ance, a podiatrist licensed by the state board of healing arts, an optom-

etrist licensed by the board of examiners in optometry, a pharmacist

licensed by the state board of pharmacy, a licensed professional nurse

who is authorized to practice as a registered nurse anesthetist, a licensed

professional nurse who has been granted a temporary authorization to

practice nurse anesthesia under K.S.A. 65-1153 and amendments thereto,

a professional corporation organized pursuant to the professional corpo-

ration law of Kansas by persons who are authorized by such law to form

such a corporation and who are health care providers as defined by this

subsection, a Kansas limited liability company organized for the purpose

of rendering professional services by its members who are health care

providers as defined by this subsection and who are legally authorized to

render the professional services for which the limited liability company

is organized, a partnership of persons who are health care providers under

this subsection, a Kansas not-for-profit corporation organized for the pur-

pose of rendering professional services by persons who are health care

providers as defined by this subsection, a nonprofit corporation organized

to administer the graduate medical education programs of community

hospitals or medical care facilities affiliated with the university of Kansas

school of medicine, a dentist certified by the state board of healing arts

to administer anesthetics under K.S.A. 65-2899 and amendments thereto,

a physical therapist registered by the state board of healing arts, a psy-

chiatric hospital licensed under K.S.A. 75-3307b and amendments

thereto, or a mental health center or mental health clinic licensed by the

secretary of social and rehabilitation services, except that health care pro-

vider does not include (1) any state institution for the mentally retarded,

(2) any state psychiatric hospital, (3) any person holding an exempt license

issued by the state board of healing arts or (4) any person holding a visiting

clinical professor license from the state board of healing arts.

(g) ``Inactive health care provider'' means a person or other entity

who purchased basic coverage or qualified as a self-insurer on or subse-

quent to the effective date of this act but who, at the time a claim is made

for personal injury or death arising out of the rendering of or the failure

to render professional services by such health care provider, does not

have basic coverage or self-insurance in effect solely because such person

is no longer engaged in rendering professional service as a health care

provider.

(h) ``Insurer'' means any corporation, association, reciprocal

exchange, inter-insurer and any other legal entity authorized to write bod-

ily injury or property damage liability insurance in this state, including

workers compensation and automobile liability insurance, pursuant to the

provisions of the acts contained in article 9, 11, 12 or 16 of chapter 40 of

Kansas Statutes Annotated.

(i) ``Plan'' means the operating and administrative rules and proce-

dures developed by insurers and rating organizations or the commissioner

to make professional liability insurance available to health care providers.

(j) ``Professional liability insurance'' means insurance providing cov-

erage for legal liability arising out of the performance of professional

services rendered or which should have been rendered by a health care

provider.

(k) ``Rating organization'' means a corporation, an unincorporated as-

sociation, a partnership or an individual licensed pursuant to K.S.A. 40-

930 or 40-1114, or both 40-956, and amendments thereto, to make rates

for professional liability insurance.

(l) ``Self-insurer'' means a health care provider who qualifies as a self-

insurer pursuant to K.S.A. 40-3414 and amendments thereto.

(m) ``Medical care facility'' means the same when used in the health

care provider insurance availability act as the meaning ascribed to that

term in K.S.A. 65-425 and amendments thereto, except that as used in

the health care provider insurance availability act such term, as it relates

to insurance coverage under the health care provider insurance availa-

bility act, also includes any director, trustee, officer or administrator of a

medical care facility.

(n) ``Mental health center'' means a mental health center licensed by

the secretary of social and rehabilitation services under K.S.A. 75-3307b

and amendments thereto, except that as used in the health care provider

insurance availability act such term, as it relates to insurance coverage

under the health care provider insurance availability act, also includes any

director, trustee, officer or administrator of a mental health center.

(o) ``Mental health clinic'' means a mental health clinic licensed by

the secretary of social and rehabilitation services under K.S.A. 75-3307b

and amendments thereto, except that as used in the health care provider

insurance availability act such term, as it relates to insurance coverage

under the health care provider insurance availability act, also includes any

director, trustee, officer or administrator of a mental health clinic.

(p) ``State institution for the mentally retarded'' means Winfield state

hospital and training center, Parsons state hospital and training center

and the Kansas neurological institute.

(q) ``State psychiatric hospital'' means Larned state hospital, Osawa-

tomie state hospital, and Rainbow mental health facility and Topeka state

hospital.

(r) ``Person engaged in residency training'' means:

(1) A person engaged in a postgraduate training program approved

by the state board of healing arts who is employed by and is studying at

the university of Kansas medical center only when such person is engaged

in medical activities which do not include extracurricular, extra-institu-

tional medical service for which such person receives extra compensation

and which have not been approved by the dean of the school of medicine

and the executive vice-chancellor of the university of Kansas medical cen-

ter. Persons engaged in residency training shall be considered resident

health care providers for purposes of K.S.A. 40-3401 et seq., and amend-

ments thereto; and

(2) a person engaged in a postgraduate training program approved by

the state board of healing arts who is employed by a nonprofit corporation

organized to administer the graduate medical education programs of com-

munity hospitals or medical care facilities affiliated with the university of

Kansas school of medicine or who is employed by an affiliate of the uni-

versity of Kansas school of medicine as defined in K.S.A. 76-367 and

amendments thereto only when such person is engaged in medical activ-

ities which do not include extracurricular, extra-institutional medical serv-

ice for which such person receives extra compensation and which have

not been approved by the chief operating officer of the nonprofit cor-

poration or the chief operating officer of the affiliate and the executive

vice-chancellor of the university of Kansas medical center.

(s) ``Full-time physician faculty employed by the university of Kansas

medical center'' means a person licensed to practice medicine and surgery

who holds a full-time appointment at the university of Kansas medical

center when such person is providing health care.

(t) ``Sexual act'' or ``sexual activity'' means that sexual conduct which

constitutes a criminal or tortious act under the laws of the state of Kansas.

Sec. 2. K.S.A. 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 serv-

ices 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, 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) There is hereby created a board of governors which shall be

composed of such members and shall have such powers, duties and func-

tions 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;

(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) When a vacancy occurs in the membership of the board of gov-

ernors created by this act, the commissioner shall appoint a successor of

like qualifications from a list of three nominees submitted to the com-

missioner by the professional society or association prescribed by this

section for the category of health care provider required for the vacant

position on the board of governors. 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 vacancy 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 as-

sociation which represents the category of health care provider required

for the vacant position and request a list of three nominations of health

care providers from which to make the appointment.

(4) The board of governors shall organize on July 1 of each year and

shall elect a chairperson and vice-chairperson from among its member-

ship. Meetings shall be called by the chairperson or by a written notice

signed by three members of the board.

(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.

(6) (A) The board shall appoint an executive director who shall be in

the unclassified service under the Kansas civil service act and may appoint

such attorneys, legal assistants, claims managers and compliance auditors

who shall also be in the unclassified service under the Kansas civil service

act. Such executive director, attorneys, legal assistants, claims managers

and compliance auditors shall receive compensation fixed by the board,

in accordance with appropriation acts of the legislature, not subject to

approval of the governor.

(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.

(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.

(c) Subject to subsections (d), (e), (f), (i), (k), (m), (n), (o), (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

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-in-

surers 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

residency training or the private practice corporations or foundations and

their full-time physician faculty employed by the university of Kansas

medical center or any nonprofit corporation organized to administer the

graduate medical education programs of community hospitals or medical

care facilities affiliated with the university of Kansas school of medicine

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 or any nonprofit cor-

poration organized to administer the graduate medical education pro-

grams of community hospitals or medical care facilities affiliated with the

university of Kansas school of medicine;

(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

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

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) or (4) 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) or

(4) of this subsection (j), from the state general fund to the health care

stabilization 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) The graduate medical education administration reserve fund is

hereby established in the state treasury. If the balance in such reserve

fund is less than $40,000 on July 1 of any year, the nonprofit corporations

organized to administer the graduate medical education programs of com-

munity hospitals or medical care facilities affiliated with the university of

Kansas school of medicine shall remit the amount necessary to increase

such balance to $40,000 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 provisions 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 re-

spect to any nonprofit corporations organized to administer the graduate

medical education programs of community hospitals or medical care fa-

cilities affiliated with the university of Kansas school of medicine the di-

rector of accounts and reports shall transfer an amount equal to the

amount paid from the graduate medical education administration 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.

(5) 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.

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 engaged 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.

The election of fund coverage limits for a nonprofit corporation organized

to administer the graduate medical education programs of community

hospitals or medical care facilities affiliated with the university of Kansas

school of medicine shall be deemed to be effective at the highest option.

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.

(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.

(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.

(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 ap-

plication 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.

(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 relating 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 in-

curred 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. 40-3414 is hereby amended to read as follows: 40-

3414. (a) Any health care provider, or any health care system organized

and existing under the laws of this state which owns and operates two or

more medical care facilities licensed by the department of health and

environment, whose aggregate annual insurance premium is or would be

$100,000 or more for basic coverage calculated in accordance with rating

procedures approved by the commissioner pursuant to K.S.A. 40-3413

and amendments thereto, may qualify as a self-insurer by obtaining a

certificate of self-insurance from the board of governors. Upon applica-

tion of any such health care provider or health care system, on a form

prescribed by the board of governors, the board of governors may issue

a certificate of self-insurance if the board of governors is satisfied that

the applicant is possessed and will continue to be possessed of ability to

pay any judgment for which liability exists equal to the amount of basic

coverage required of a health care provider obtained against such appli-

cant arising from the applicant's rendering of professional services as a

health care provider. In making such determination the board of gover-

nors shall consider (1) the financial condition of the applicant, (2) the

procedures adopted and followed by the applicant to process and handle

claims and potential claims, (3) the amount and liquidity of assets reserved

for the settlement of claims or potential claims and (4) any other relevant

factors. The certificate of self-insurance may contain reasonable condi-

tions prescribed by the board of governors. Upon notice and a hearing in

accordance with the provisions of the Kansas administrative procedure

act, the board of governors may cancel a certificate of self-insurance upon

reasonable grounds therefor. Failure to pay any judgment for which the

self-insurer is liable arising from the self-insurer's rendering of profes-

sional services as a health care provider, the failure to comply with any

provision of this act or the failure to comply with any conditions contained

in the certificate of self-insurance shall be reasonable grounds for the

cancellation of such certificate of self-insurance. The provisions of this

subsection shall not apply to the Kansas soldiers' home, the Kansas vet-

erans' home or to any person who is a self-insurer pursuant to subsection

(d) or (e).

(b) Any such health care provider or health care system that holds a

certificate of self-insurance shall pay the applicable surcharge set forth in

subsection (c) of K.S.A. 40-3402 and amendments thereto.

(c) The Kansas soldiers' home and the Kansas veterans' home shall

be self-insurers and shall pay the applicable surcharge set forth in sub-

section (c) of K.S.A. 40-3402 and amendments thereto.

(d) Persons engaged in residency training as provided in subsections

(r)(1) and (2) of K.S.A. 40-3401, and amendments thereto, shall be self-

insured by the state of Kansas for occurrences arising during such train-

ing, and such person shall be deemed a self-insurer for the purposes of

the health care provider insurance availability act. Such self-insurance

shall be applicable to a person engaged in residency training only when

such person is engaged in medical activities which do not include extra-

curricular, extra-institutional medical service for which such person re-

ceives extra compensation and which have not been approved as provided

in subsections (r)(1) and (2) of K.S.A. 40-3401, and amendments thereto.

(e) (1) A person engaged in a postgraduate training program ap-

proved by the state board of healing arts at a medical care facility or

mental health center in this state may be self-insured by such medical

care facility or mental health center in accordance with this subsection

(e) and in accordance with such terms and conditions of eligibility therefor

as may be specified by the medical care facility or mental health center

and approved by the board of governors. A person self-insured under this

subsection (e) by a medical care facility or mental health center shall be

deemed a self-insurer for purposes of the health care provider insurance

availability act. Upon application by a medical care facility or mental

health center, on a form prescribed by the board of governors, the board

of governors may authorize such medical care facility or mental health

center to self-insure persons engaged in postgraduate training programs

approved by the state board of healing arts at such medical care facility

or mental health center if the board of governors is satisfied that the

medical care facility or mental health center is possessed and will continue

to be possessed of ability to pay any judgment for which liability exists

equal to the amount of basic coverage required of a health care provider

obtained against a person engaged in such a postgraduate training pro-

gram and arising from such person's rendering of or failure to render

professional services as a health care provider.

(2) In making such determination the board of governors shall con-

sider (A) the financial condition of the medical care facility or mental

health center, (B) the procedures adopted by the medical care facility or

mental health center to process and handle claims and potential claims,

(C) the amount and liquidity of assets reserved for the settlement of

claims or potential claims by the medical care facility or mental health

center and (D) any other factors the board of governors deems relevant.

The board of governors may specify such conditions for the approval of

an application as the board of governors deems necessary. Upon approval

of an application, the board of governors shall issue a certificate of self-

insurance to each person engaged in such postgraduate training program

at the medical care facility or mental health center who is self-insured by

such medical care facility or mental health center.

(3) Upon notice and a hearing in accordance with the provisions of

the Kansas administrative procedure act, the board of governors may

cancel, upon reasonable grounds therefor, a certificate of self-insurance

issued pursuant to this subsection (e) or the authority of a medical care

facility or mental health center to self-insure persons engaged in such

postgraduate training programs at the medical care facility or mental

health center. Failure of a person engaged in such postgraduate training

program to comply with the terms and conditions of eligibility to be self-

insured by the medical care facility or mental health center, the failure

of a medical care facility or mental health center to pay any judgment for

which such medical care facility or mental health center is liable as self-

insurer of such person, the failure to comply with any provisions of the

health care provider insurance availability act or the failure to comply

with any conditions for approval of the application or any conditions con-

tained in the certificate of self-insurance shall be reasonable grounds for

cancellation of such certificate of self-insurance or the authority of a med-

ical care facility or mental health center to self-insure such persons.

(4) A medical care facility or mental health center authorized to self-

insure persons engaged in such postgraduate training programs shall pay

the applicable surcharge set forth in subsection (c) of K.S.A. 40-3402 and

amendments thereto on behalf of such persons.

(5) As used in this subsection (e), ``medical care facility'' does not

include the university of Kansas medical center or those community hos-

pitals or medical care facilities described in subsection (r)(2) of K.S.A.

40-3401, and amendments thereto.

(f) For the purposes of subsection (a), ``health care provider'' may

include each health care provider in any group of health care providers

who practice as a group to provide physician services only for a health

maintenance organization, any professional corporations, partnerships or

not-for-profit corporations formed by such group and the health main-

tenance organization itself. The premiums for each such provider, health

maintenance organization and group corporation or partnership may be

aggregated for the purpose of being eligible for and subject to the stat-

utory requirements for self-insurance as set forth in this section.

(g) The provisions of subsections (a) and (f), relating to health care

systems, shall not affect the responsibility of individual health care pro-

viders as defined in subsection (f) of K.S.A. 40-3401 and amendments

thereto or organizations whose premiums are aggregated for purposes of

being eligible for self-insurance from individually meeting the require-

ments imposed by K.S.A. 40-3402 and amendments thereto with respect

to the ability to respond to injury or damages to the extent specified

therein and K.S.A. 40-3404 and amendments thereto with respect to the

payment of the health care stabilization fund surcharge.

(h) Each private practice corporation or foundation and their full-

time physician faculty employed by the university of Kansas medical cen-

ter and each nonprofit corporation organized to administer the graduate

medical education programs of community hospitals or medical care fa-

cilities affiliated with the university of Kansas school of medicine shall be

deemed a self-insurer for the purposes of the health care provider insur-

ance availability act. The private practice corporation or foundation of

which the full-time physician faculty is a member and each nonprofit

corporation organized to administer the graduate medical education pro-

grams of community hospitals or medical care facilities affiliated with the

university of Kansas school of medicine shall pay the applicable surcharge

set forth in subsection (a) of K.S.A. 40-3404, and amendments thereto,

on behalf of the private practice corporation or foundation and their full-

time physician faculty employed by the university of Kansas medical cen-

ter or on behalf of a nonprofit corporation organized to administer the

graduate medical education programs of community hospitals or medical

care facilities affiliated with the university of Kansas school of medicine.

(i) (1) Subject to the provisions of paragraph (4), for the purposes of

the health care provider insurance availability act, each nonprofit cor-

poration organized to administer the graduate medical education pro-

grams of community hospitals or medical care facilities affiliated with the

university of Kansas school of medicine shall be deemed to have been a

health care provider as defined in section 1, and amendments thereto,

from and after July 1, 1997.

(2) Subject to the provisions of paragraph (4), for the purposes of the

health care provider insurance availability act, each nonprofit corporation

organized to administer the graduate medical education programs of com-

munity hospitals or medical care facilities affiliated with the university of

Kansas school of medicine shall be deemed to have been a self insurer

within the meaning of subsection (h) of this section, and amendments

thereto, from and after July 1, 1997.

(3) Subject to the provisions of paragraph (4), for the purposes of the

health care provider insurance availability act, the election of fund cov-

erage limits for each nonprofit corporation organized to administer the

graduate medical education programs of community hospitals or medical

care facilities affiliated with the university of Kansas school of medicine

shall be deemed to have been effective at the highest option, as provided

in subsection (1) of section 2, and amendments thereto, from and after

July 1, 1997.

(4) No nonprofit corporation organized to administer the graduate

medical education programs of community hospitals or medical care fa-

cilities affiliated with the university of Kansas school of medicine shall be

required to pay to the fund any annual premium surcharge for any period

prior to the effective date of this act. Any annual premium surcharge for

the period commencing on the effective date of this act and ending on

June 30, 2001, shall be prorated.

Sec. 4. K.S.A. 40-3404 is hereby amended to read as follows: 40-

3404. (a) Except for any health care provider whose participation 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 mainte-

nance organizations on and after July 1, 1997. Such premium surcharge

shall be an amount based upon a rating classification system 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 de-

scribed in paragraph (1) of subsection (r)(1) of K.S.A. 40-3401, and

amendments thereto, shall be based on an assumed aggregate premium

of $600,000. The annual premium surcharge upon the employers of per-

sons engaged in residency training, as described in paragraph (2) of sub-

section (r)(2) of K.S.A. 40-3401, and amendments thereto, shall be based

on an assumed aggregate 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 paragraph (2) of subsection

(r)(2) of K.S.A. 40-3401, and amendments thereto, based on the number

of residents employed as of July 1 of each year. The annual premium

surcharge upon any nonprofit corporation organized to administer the

graduate medical education programs of community hospitals or medical

care facilities affiliated with the university of Kansas school of medicine

shall be based upon an assumed aggregate premium of $10,000. The sur-

charge on such assumed aggregate premium shall be apportioned among

all such nonprofit corporations.

(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 40-955 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

effective, 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) In setting the amount of such surcharge, the board of governors

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 provid-

ers.

Sec. 5. K.S.A. 40-3401, 40-3403, 40-3404 and 40-3414 are hereby

repealed.

Sec. 6. This act shall take effect and be in force from and after its

publication in the Kansas register.

Approved May 22, 2000.

Published in the Kansas Register May 31, 2000.


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Date Composed: 09/25/2001 Date Modified: 09/25/2001