REGULATION NO. 170
(11 NYCRR 430)
MECHANISM FOR THE EQUITABLE
INSUREDS UNABLE TO OBTAIN MEDICAL MALPRACTICE INSURANCE
I, Neil D. Levin, Superintendent of Insurance of the State of New York, pursuant to the authority granted by Sections 201 and 301 of the Insurance Law and Section 5502 of the Insurance Law as amended by Chapter 147 of the Laws of 2000, do hereby promulgate a new Part 430 of the Official Compilation of Codes, Rules and Regulations of the State of New York (Regulation 170) to take effect upon publication in the State Register. A new Chapter XX entitled "Medical Malpractice Residual Market" is added. Part 430 shall read as follows:
Section 430.0 Preamble
(a) Chapter 147 of the Laws of 2000 amended Section 5502(c) of the Insurance Law to provide for the dissolution of the Medical Malpractice Insurance Association ("MMIA") at such time and under such conditions as the superintendent deems proper. MMIA provides medical malpractice insurance to physicians, dentists, podiatrists, certified registered nurse anesthetists, certified nurse-midwives and hospitals. All policies of insurance written by the MMIA must expire or be transferred prior to its dissolution.
(b) Section 5502(c) was also amended to require the superintendent to promulgate regulations prescribing a plan for the equitable distribution of the insureds of the MMIA, and health care practitioners and facilities which are otherwise unable to secure coverage in the voluntary market following the dissolution of MMIA, to authorized medical malpractice insurers writing such coverage in New York.
(c) In order to provide for this equitable distribution, this Part establishes the New York Medical Malpractice Insurance Plan, of which all insurers licensed in New York and writing medical malpractice insurance on a direct basis are required to be members. Eligible health care providers unable to obtain medical malpractice insurance in the voluntary market will be assigned to members writing the applicable class of business in the rating territory.
Section 430.1 Definitions
For the purposes of this Part:
(a) "Eligible health care provider" means any New York licensed physician, dentist, podiatrist, certified nurse-midwife, certified registered nurse anesthetist or hospital.
(b) "Hospital" has the meaning contained in Section 5501(c) of the New York Insurance Law.
(c) "Medical malpractice insurance" has the meaning contained in Section 5501(b) of the New York Insurance Law.
Section 430.2 Organization of the New York Medical Malpractice Insurance Plan
(a) Except as provided in Section 430.7 of this Part, there shall be created the New York Medical Malpractice Insurance Plan ("Plan"), a mechanism for providing medical malpractice insurance to all eligible health care providers who are unable to secure coverage in the voluntary market after June 30, 2000.
(b) All insurers licensed in New York writing, or that begin writing, medical malpractice insurance in New York on a direct basis after June 30, 2000, shall be members of the Plan.
(c) The Plan shall:
(1) Accept applications from eligible health care providers and assign applicants to members as determined in its plan of operations.
(2) Develop, and submit to the superintendent for approval:
(i) Policy forms and endorsements, on both an occurrence and claims-made basis.
(ii) A manual or manuals containing:
(a) Classifications, territories, rates and rating plans;
(b) Limits and deductibles to be offered to insureds; and
(c) Underwriting rules and procedures.
Section 430.3 Standards for Forms and Rates
(a) All policy forms and endorsements shall be subject to prior approval pursuant to section 2307 of the Insurance Law, and, except as provided in subdivision (b) of this section, all rates, rating plans, or rating classifications or territories of the Plan shall be subject to prior approval pursuant to Section 2305 of the Insurance Law.
(b) Rates for physicians and surgeons are subject to establishment by the superintendent pursuant to Section 40 of Chapter 266 of the Laws of 1986, as amended.
(c) For policy year July 1, 2000 through June 30, 2001, all insureds of the Plan must receive policies with provisions and at a rate which are at least as favorable to the insured as those which would have been provided by the MMIA had that association not been in the process of dissolution. For physicians and surgeons, the rates will be those established for the MMIA for the period July 1, 2000 through June 30, 2001 in Part 70 of this Title (Regulation 101).
(d) Cancellation and nonrenewal of policies issued by the Plan shall be in accordance with the provisions of Section 5504 of the Insurance Law.
Section 430.4 Administration of the New York Medical Malpractice Insurance Plan
(a) The Plan shall be governed by a Board of Directors consisting of the following:
(1) (i) Three members elected by cumulative voting by the members whose votes in such election shall be weighted in accordance with each members net direct premiums written for medical malpractice insurance during the preceding calendar year. At least one of these directors must be an insurer writing medical malpractice insurance in New York but not writing medical malpractice insurance in New York for physicians or hospitals.
(ii) Two members elected by cumulative voting by the members whose votes in such election shall have equal weight.
(iii) Under subparagraphs (i) and (ii) of this paragraph, no member may serve as more than one director at any one time.
(2) Two members appointed by the Superintendent of Insurance, at least one of which is a representative of eligible health care providers.
(3) The superintendent or a duly authorized representative of the superintendent shall serve as a non-voting member of the Board of Directors.
(b) The Plan shall be administered in accordance with a plan of operations approved by the superintendent which provides for economic, fair and non-discriminatory administration and for the prompt and efficient provision of medical malpractice insurance. The plan of operations shall provide:
(1) Authorization for all actions necessary to effectuate the operations of the Plan;
(2) The methodology for determining that applicants for coverage through the Plan have been unable to obtain coverage in the voluntary market;
(3) The methodology for the assignment of policyholders among Plan members; and
(4) Procedures under which:
(i) any member of the Plan may be authorized by the Board, with the approval of the Superintendent of Insurance, to service the assignments of other members of the Plan that desire to be relieved of their responsibility to service their assignments; or
(ii) the members agree to participate in an independent pooling mechanism, subject to the approval of the superintendent, whereby writings, expenses, fees and losses will be shared proportionately among members of the Plan.
(c) Amendments to the plan of operations may be made by the board of directors, subject to the approval of the superintendent, or shall be made at the direction of the superintendent.
Section 430.5 Financial Statements and Other Reporting Requirements
(a) The Plan shall:
(1) File such reports as required by the superintendent; and
(2) Be responsible for all reporting requirements required of insurers in the authorized medical malpractice market.
(b) The superintendent may, at any time, require the Plan to furnish additional information with respect to its transactions, condition, or any matter connected therewith which the superintendent considers to be material and which will assist in the evaluation of the scope, operation or experience of the Plan.
Section 430.6 Examinations
(a) The superintendent shall make an examination into the affairs of the Plan as often as the superintendent deems necessary pursuant to Section 309 of the Insurance Law. The examination shall be conducted and the report filed in the manner prescribed in Article 3 of the Insurance Law.
(b) The expenses of the examination shall be paid by the Plan in the manner prescribed by Section 313 of the Insurance Law.
Section 430.7 Alternative Mechanism
(a) The provisions of sections 430.2 through 430.6 of this Part shall not become effective if, prior to June 30, 2000 the superintendent approves one or more insurers in the voluntary market to provide medical malpractice insurance to all eligible health care providers.
(b) Such insurer must agree to:
(1) Provide coverage for policy year July 1, 2000 June 30, 2001 using policies with provisions and rates which are at least as favorable to the insured as those which would have been provided by the MMIA had that association not been dissolved; and
(2) Notify the superintendent at least 180 days in advance, of its intent to cease providing medical malpractice insurance to all eligible health care providers.
(c) The superintendent may order the suspension or discontinuance of the operations of the Plan at any time after July 1, 2000, following the approval of one or more insurers as described in subdivision (a) of this section.
(d) The Plan shall be activated, or reactivated, at any time after July 1, 2000 if all insurers in the voluntary market approved by the superintendent pursuant to subdivision (a) of this section provide the notice provided for in paragraph (2) of subdivision (b) of this section.
Section 430.8 Temporary Administrator
(a) In order to provide for the orderly transition of policies from the MMIA to the Plan, and to avoid disruption in the medical malpractice insurance market, the superintendent may appoint one or more insurers writing medical malpractice insurance in this state as a temporary administrator, to act on behalf of the Plan for the period beginning June 30, 2000 until such time as the Plan becomes operational.
(b) The temporary administrator shall have the authority, on behalf of the Plan, to:
(1) Accept applications and deposit premiums from prospective insureds; and
(2) Issue binders evidencing insurance.
I, Neil D. Levin, Superintendent of Insurance of the State of New York, do hereby certify that the foregoing is 11 NYCRR 430 (Regulation 170) promulgated by me on February 9, 2001, pursuant to the authority granted by Sections 201 and 301 of the Insurance Law and Section 5502 of the Insurance Law, as amended by Chapter 147 of the Laws of 2000, to take effect upon publication in the State Register.
Pursuant to the provisions of the State Administrative Procedure Act, prior notice of the proposed regulation was published in the State Register on December 20, 2000. No other publication or prior notice is required by statute.
Neil D. Levin
Superintendent of Insurance
February 9, 2001