Florida Regulations 69O-191.069: Insurance – General Liability and Medical Malpractice/Professional Liability
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(1) Each HMO, in order to obtain its Certificate of Authority, shall furnish evidence of adequate insurance coverage or an adequate plan for self-insurance to respond to claims for injuries arising out of the furnishing of comprehensive health care. Once the HMO obtains its Certificate of Authority, it shall maintain on file with the Office continued evidence of adequate insurance coverage or evidence of the continuation of the self-insurance plan. Any reduction in the insurance coverage for the HMO shall be submitted to and approved by the Office prior to the time at which the reduction takes place. Evidence of the existence of the approved insurance plan shall also be submitted with each annual report. If the HMO is a staff model, the medical malpractice insurance shall insure coverage for the HMO as well as any physicians employed by the HMO. If the HMO is an IPA model, professional liability insurance coverage shall be obtained and the HMO shall require in its contract with providers that the providers certify and maintain appropriate levels of medical malpractice insurance or its equivalent in compliance with Florida Statutes.
(2) The Office of Insurance Regulation shall be listed on the General Liability and Medical Malpractice/Professional Liability insurance policies for HMOs such that the Office shall receive written notification of any reduction of coverage, cancellation, non-renewal or termination of any insurance policy referenced in Florida Statutes or these rules. Except for non-payment of premium, each agreement shall remain in full force and effect until replaced or for at least 30 days following written notification to the Office by registered mail of cancellation or termination of the policy by either party. If coverage is cancelled or terminated due to non-payment of premium, coverage shall remain in full force and effect for at least ten days following written notification to the Office by registered mail. Any substantial change to the policy shall be immediately reported, in writing, to the Office.
(3) Medical Malpractice/Professional Liability for HMOs. Acceptable insurance coverage is defined as follows:
Insurance – Minimum Limits
Members
Single Occurrence
Aggregate
0-19,999
$1,000,000
$ 1,000,000
20,000-39,999
$1,000,000
$ 2,000,000
40,000-49,999
$1,000,000
$ 3,000,000
50,000-59,999
$1,000,000
$ 5,000,000
60,000-79,999
$1,000,000
$ 6,000,000
80,000-89,999
$1,000,000
$ 7,000,000
90,000-99,999
$1,000,000
$ 8,000,000
100,000-109,999
$1,000,000
$ 9,000,000
110,000 or more
$1,000,000
$10,000,000
If the level of insurance calculated above exceeds what is available in the insurance market (including the Florida Medical Malpractice Joint Underwriting Association – FMMJUA) the level of coverage will be the maximum available by market conditions. Maximum coverage available by market conditions is subject to Office verification and approval.
(4) General Liability. Acceptable insurance coverage is defined as follows:
Members
Single Occurrence
Aggregate
0-19,999
$500,000
$ 500,000
20,000-39,999
$500,000
$1,000,000
40,000-64,999
$1,000,000
$2,000,000
65,000-79,999
$1,000,000
$3,000,000
80,000-94,999
$1,000,000
$4,000,000
95,000-109,999
$1,000,000
$5,000,000
110,000-124,999
$1,000,000
$6,000,000
125,000-139,999
$1,000,000
$7,000,000
140,000-154,999
$1,000,000
$8,000,000
155,000 or more
$1,000,000
$9,000,000
If the level of insurance calculated above exceeds what is available in the insurance market, the level of coverage will be the maximum available by market conditions. Maximum coverage available by market conditions is subject to Office verification and approval. Limits can be achieved separately or in concert with a following form umbrella policy.
(5) Self-Insurance.
(a) Any HMO choosing to implement a self-insurance plan shall support its proposed plan for self-insurance by filing with the Office an actuarial study prepared by an actuarial firm acceptable to the Office or supervised by an actuary who is a member of the Casualty Actuarial Society.
1. The study shall establish a funding level based on the following factors:
a. Past and prospective loss and expense experience of other HMOs and other health care providers with similar exposure;
b. The prior claims experience of the HMO;
c. A risk loading sufficient to reduce the probability of the need for additional funding of the self-insurance plan for any policy year to 10% or less;
d. Administrative expenses necessary to administer the self-insured plan.
2. The HMO shall also submit a current actuarial study to the Office with each annual report.
3. The actuarial report shall state the reserve needed for:
a. The expected amount of unpaid losses including losses that are incurred but not reported;
b. The expected amount of unpaid loss adjustment expense, including expenses associated with losses that are incurred but not reported;
c. The expected amount of administrative expense. The report shall include funding levels for past periods with outstanding liabilities and the current year.
(b) Each HMO shall purchase insurance or establish a self-insurance plan or a combination thereof to adequately fund for medical malpractice or professional liability claims pursuant to the annual actuarial study.
(c) If the HMO uses a self-insurance plan to meet these requirements, periodic payments shall be made by the HMO to an escrow account in the amount required by the actuarial study.
(d) The investment medium used shall be capable of producing the income rate assumed actuarially, and shall be in compliance with Sections 641.35(13)-(17), F.S.
(e) Self-insurance plans shall comply with Florida Statutes § 627.4147
(f) Escrow Account.
1. An escrow account shall be established to reserve against professional liability claims and general liability claims, including all patient injuries which may be asserted against the HMO.
2. The escrow account shall be established in a Florida Bank, Florida Savings and Loan Association, or Florida Trust Company which participates in the Security for Public Deposits Act under Florida Statutes Chapter 280, or on deposit with the Office; and the funds deposited therein shall be kept and maintained in an account separate and apart from the HMO’s business accounts. An escrow agent shall be named and shall be independent of the HMO.
3. An escrow agreement shall be entered into between the bank, savings and loan association, or trust company and the HMO under which the HMO obligates itself to periodic payments in the amount required by the actuarial study. A copy of the escrow agreement must be submitted to and approved by the Office prior to execution of the agreement.
4. The escrow account shall be used only to pay, contest, or settle claims, to release, in whole or in part, any claim filed against the trust to the extent the claim is uncollectible, and to pay expenses reasonably incurred in connection with the payment, contested claims, settlement or release of any claim.
5. The Office shall be listed as a third party beneficiary of the escrow agreement with power to enforce same.
6. The escrow agreement shall state that the trust is irrevocable and that no termination, modification or amendment of the escrow agreement or appointment of successor escrow agent may occur without the prior approval of the Office.
7. The escrow account must be structured to survive the insolvency of the HMO.
8. At the request of either the HMO or the Office, the escrow agent shall issue a statement indicating the status of the escrow account.
9. All books and records relating to the self-insurance plan and the escrow account shall be available for inspection or examination by the Office at all times within normal business hours.
10. Contingency Reserves and Release of Excess Funds. Excess funds, as defined below shall be used as a contingency reserve or may be released to the HMO under the conditions listed below.
a. Excess funds are defined as:
I. The total assets of the trust, minus;
II. Loss and reserve liabilities as determined by the current actuarial report required by subparagraph (5)(a)3.; and,
III. All other liabilities, including the contingency reserve.
b. Assets shall consist of cash or assets eligible for deposit in accordance with Florida Statutes § 641.35(13)
c. A contingency reserve shall be maintained in an amount equal to the excess funds as determined above not to exceed the total of sub-sub-subparagraphs a.II. and a.III., above. The contingency reserve shall be shown as a liability for financial reporting purposes to the Office.
d. Release to the HMO of excess funds not needed to fund the contingency reserve shall be made subject to prior approval of the Office. No releases shall be approved until the trust has been in operation for five years. The Office may request an updated actuarial study if it deems the last actuarial study to be out of date. The Office shall review a request for approval of any release based on a current actuarial study of the fund.
11. Deficit Funding. If the assets of the trust do not equal the liabilities of the trust, as determined under sub-subparagraph (5)(f)10.a., the escrow agent shall notify the Office within 10 working days after the occurrence of the deficiency, and the HMO shall, within 60 days, present a plan for funding the deficit within six months after the occurrence of the deficiency. At the end of the six month period, the HMO shall submit to the Office a status report prepared by the escrow agent showing the status of the escrow account.
Rulemaking Authority 641.36 FS. Law Implemented 641.22(2), (5), 641.221 FS. History-New 2-22-88, Amended 10-25-89, Formerly 4-31.069, Amended 5-28-92, Formerly 4-191.069.
Terms Used In Florida Regulations 69O-191.069
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contract: A legal written agreement that becomes binding when signed.
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(3) Medical Malpractice/Professional Liability for HMOs. Acceptable insurance coverage is defined as follows:
Insurance – Minimum Limits
Members
Single Occurrence
Aggregate
0-19,999
$1,000,000
$ 1,000,000
20,000-39,999
$1,000,000
$ 2,000,000
40,000-49,999
$1,000,000
$ 3,000,000
50,000-59,999
$1,000,000
$ 5,000,000
60,000-79,999
$1,000,000
$ 6,000,000
80,000-89,999
$1,000,000
$ 7,000,000
90,000-99,999
$1,000,000
$ 8,000,000
100,000-109,999
$1,000,000
$ 9,000,000
110,000 or more
$1,000,000
$10,000,000
If the level of insurance calculated above exceeds what is available in the insurance market (including the Florida Medical Malpractice Joint Underwriting Association – FMMJUA) the level of coverage will be the maximum available by market conditions. Maximum coverage available by market conditions is subject to Office verification and approval.
(4) General Liability. Acceptable insurance coverage is defined as follows:
Members
Single Occurrence
Aggregate
0-19,999
$500,000
$ 500,000
20,000-39,999
$500,000
$1,000,000
40,000-64,999
$1,000,000
$2,000,000
65,000-79,999
$1,000,000
$3,000,000
80,000-94,999
$1,000,000
$4,000,000
95,000-109,999
$1,000,000
$5,000,000
110,000-124,999
$1,000,000
$6,000,000
125,000-139,999
$1,000,000
$7,000,000
140,000-154,999
$1,000,000
$8,000,000
155,000 or more
$1,000,000
$9,000,000
If the level of insurance calculated above exceeds what is available in the insurance market, the level of coverage will be the maximum available by market conditions. Maximum coverage available by market conditions is subject to Office verification and approval. Limits can be achieved separately or in concert with a following form umbrella policy.
(5) Self-Insurance.
(a) Any HMO choosing to implement a self-insurance plan shall support its proposed plan for self-insurance by filing with the Office an actuarial study prepared by an actuarial firm acceptable to the Office or supervised by an actuary who is a member of the Casualty Actuarial Society.
1. The study shall establish a funding level based on the following factors:
a. Past and prospective loss and expense experience of other HMOs and other health care providers with similar exposure;
b. The prior claims experience of the HMO;
c. A risk loading sufficient to reduce the probability of the need for additional funding of the self-insurance plan for any policy year to 10% or less;
d. Administrative expenses necessary to administer the self-insured plan.
2. The HMO shall also submit a current actuarial study to the Office with each annual report.
3. The actuarial report shall state the reserve needed for:
a. The expected amount of unpaid losses including losses that are incurred but not reported;
b. The expected amount of unpaid loss adjustment expense, including expenses associated with losses that are incurred but not reported;
c. The expected amount of administrative expense. The report shall include funding levels for past periods with outstanding liabilities and the current year.
(b) Each HMO shall purchase insurance or establish a self-insurance plan or a combination thereof to adequately fund for medical malpractice or professional liability claims pursuant to the annual actuarial study.
(c) If the HMO uses a self-insurance plan to meet these requirements, periodic payments shall be made by the HMO to an escrow account in the amount required by the actuarial study.
(d) The investment medium used shall be capable of producing the income rate assumed actuarially, and shall be in compliance with Sections 641.35(13)-(17), F.S.
(e) Self-insurance plans shall comply with Florida Statutes § 627.4147
(f) Escrow Account.
1. An escrow account shall be established to reserve against professional liability claims and general liability claims, including all patient injuries which may be asserted against the HMO.
2. The escrow account shall be established in a Florida Bank, Florida Savings and Loan Association, or Florida Trust Company which participates in the Security for Public Deposits Act under Florida Statutes Chapter 280, or on deposit with the Office; and the funds deposited therein shall be kept and maintained in an account separate and apart from the HMO’s business accounts. An escrow agent shall be named and shall be independent of the HMO.
3. An escrow agreement shall be entered into between the bank, savings and loan association, or trust company and the HMO under which the HMO obligates itself to periodic payments in the amount required by the actuarial study. A copy of the escrow agreement must be submitted to and approved by the Office prior to execution of the agreement.
4. The escrow account shall be used only to pay, contest, or settle claims, to release, in whole or in part, any claim filed against the trust to the extent the claim is uncollectible, and to pay expenses reasonably incurred in connection with the payment, contested claims, settlement or release of any claim.
5. The Office shall be listed as a third party beneficiary of the escrow agreement with power to enforce same.
6. The escrow agreement shall state that the trust is irrevocable and that no termination, modification or amendment of the escrow agreement or appointment of successor escrow agent may occur without the prior approval of the Office.
7. The escrow account must be structured to survive the insolvency of the HMO.
8. At the request of either the HMO or the Office, the escrow agent shall issue a statement indicating the status of the escrow account.
9. All books and records relating to the self-insurance plan and the escrow account shall be available for inspection or examination by the Office at all times within normal business hours.
10. Contingency Reserves and Release of Excess Funds. Excess funds, as defined below shall be used as a contingency reserve or may be released to the HMO under the conditions listed below.
a. Excess funds are defined as:
I. The total assets of the trust, minus;
II. Loss and reserve liabilities as determined by the current actuarial report required by subparagraph (5)(a)3.; and,
III. All other liabilities, including the contingency reserve.
b. Assets shall consist of cash or assets eligible for deposit in accordance with Florida Statutes § 641.35(13)
c. A contingency reserve shall be maintained in an amount equal to the excess funds as determined above not to exceed the total of sub-sub-subparagraphs a.II. and a.III., above. The contingency reserve shall be shown as a liability for financial reporting purposes to the Office.
d. Release to the HMO of excess funds not needed to fund the contingency reserve shall be made subject to prior approval of the Office. No releases shall be approved until the trust has been in operation for five years. The Office may request an updated actuarial study if it deems the last actuarial study to be out of date. The Office shall review a request for approval of any release based on a current actuarial study of the fund.
11. Deficit Funding. If the assets of the trust do not equal the liabilities of the trust, as determined under sub-subparagraph (5)(f)10.a., the escrow agent shall notify the Office within 10 working days after the occurrence of the deficiency, and the HMO shall, within 60 days, present a plan for funding the deficit within six months after the occurrence of the deficiency. At the end of the six month period, the HMO shall submit to the Office a status report prepared by the escrow agent showing the status of the escrow account.
Rulemaking Authority 641.36 FS. Law Implemented 641.22(2), (5), 641.221 FS. History-New 2-22-88, Amended 10-25-89, Formerly 4-31.069, Amended 5-28-92, Formerly 4-191.069.