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1 | AN ACT concerning insurance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||
5 | Illinois Common Sense Medical Malpractice Insurance Reform | ||||||||||||||||||||||||
6 | Act. | ||||||||||||||||||||||||
7 | Section 5. Findings and Declaration. The General Assembly | ||||||||||||||||||||||||
8 | of the State of Illinois finds and declares as follows: | ||||||||||||||||||||||||
9 | Excessive, unjustified, and arbitrary increases in the | ||||||||||||||||||||||||
10 | cost of liability insurance have made it both unaffordable and | ||||||||||||||||||||||||
11 | unavailable to many Illinois physicians, hospitals, and other | ||||||||||||||||||||||||
12 | healthcare entities (hereinafter "healthcare providers"). | ||||||||||||||||||||||||
13 | The existing laws inadequately protect healthcare | ||||||||||||||||||||||||
14 | providers and allow insurance companies to charge excessive, | ||||||||||||||||||||||||
15 | unjustified and arbitrary rates. | ||||||||||||||||||||||||
16 | Therefore, the General Assembly of the State of Illinois | ||||||||||||||||||||||||
17 | declares that healthcare provider liability insurance reform | ||||||||||||||||||||||||
18 | is necessary. First, liability insurance rates for all | ||||||||||||||||||||||||
19 | healthcare providers shall be immediately rolled back to those | ||||||||||||||||||||||||
20 | existing on January 1, 2003, and reduced no less than an | ||||||||||||||||||||||||
21 | additional 20%. Second, liability insurance rates for | ||||||||||||||||||||||||
22 | healthcare providers shall be determined primarily by the | ||||||||||||||||||||||||
23 | healthcare provider's claims record. Third, healthcare | ||||||||||||||||||||||||
24 | provider liability insurance rates shall be maintained at fair | ||||||||||||||||||||||||
25 | levels by requiring insurers to justify all future increases. | ||||||||||||||||||||||||
26 | Finally, insurance companies writing policies for liability | ||||||||||||||||||||||||
27 | insurance for healthcare providers shall pay a fee to cover the | ||||||||||||||||||||||||
28 | costs of administering these new laws so that this reform will | ||||||||||||||||||||||||
29 | cost taxpayers nothing. | ||||||||||||||||||||||||
30 | Section 10. Purpose. The purpose of this Act is to protect | ||||||||||||||||||||||||
31 | healthcare providers from arbitrary insurance rates and |
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1 | practices, to encourage a competitive insurance marketplace, | ||||||
2 | and to ensure that liability insurance is fair, available, and | ||||||
3 | affordable for all Illinois healthcare providers. | ||||||
4 | Section 15. Reduction and Control of Insurance Rates. | ||||||
5 | (a) Insurance Rate Rollback. | ||||||
6 | (1) For any liability policy for healthcare providers | ||||||
7 | issued or renewed on or after January 1, 2004, every | ||||||
8 | insurer shall reduce its rates and premiums to no more than | ||||||
9 | 80% of the rate and premium for the same coverage which was | ||||||
10 | in effect on January 1, 2003. | ||||||
11 | (2) Between January 1, 2004, and January 1, 2005, rates | ||||||
12 | and premiums (after reduction pursuant to subdivision (a)) | ||||||
13 | may be increased if the Director of Insurance finds, after | ||||||
14 | a hearing, that an insurer is substantially threatened with | ||||||
15 | insolvency. | ||||||
16 | (3) Commencing January 1, 2004, healthcare provider | ||||||
17 | liability insurance rates and premiums may be increased | ||||||
18 | pursuant to Section 30. | ||||||
19 | (4) A healthcare provider applying for a healthcare | ||||||
20 | providers liability insurance policy for the first time on | ||||||
21 | or after January 1, 2004, shall not be charged more than | ||||||
22 | 80% of the rate and premium which was being charged by that | ||||||
23 | insurer on January 1, 2003, for similarly situated risks. | ||||||
24 | (5) Any separate affiliate of a healthcare provider | ||||||
25 | liability insurer established on or after January 1, 2003, | ||||||
26 | shall be subject to the provisions of this Section and | ||||||
27 | shall reduce its rates and premiums to no more than 80% at | ||||||
28 | the insurer's rates and premiums in effect on January 1, | ||||||
29 | 2003. | ||||||
30 | (b) Insurance Rates and Premiums for Healthcare Providers. | ||||||
31 | Rates and premiums for liability insurance policies for | ||||||
32 | healthcare providers shall be determined by application of the | ||||||
33 | following factors in decreasing order of importance: | ||||||
34 | (1) The insured's claims record. | ||||||
35 | (2) If a licensed practitioner, the specialty or |
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1 | subspecialty, if any. | ||||||
2 | (3) If a licensed practitioner, the number of years of | ||||||
3 | practice experience the insured has had | ||||||
4 | (4) If a licensed practitioner, the number of patients | ||||||
5 | he or she sees annually. | ||||||
6 | (5) Such other factors as the Director of Insurance may | ||||||
7 | adopt by rule that have a substantial relationship to the | ||||||
8 | risk of loss. The rules shall set forth the respective | ||||||
9 | weight to be given each factor in determining rates and | ||||||
10 | premiums. Notwithstanding any other provision of law, the | ||||||
11 | use of any criterion without such approval shall constitute | ||||||
12 | unfair discrimination. | ||||||
13 | (c) The fact that a healthcare provider has had no prior | ||||||
14 | liability insurance coverage, in and of itself, shall not be | ||||||
15 | used as criteria for rates, premiums, or insurability. | ||||||
16 | (d) This Section shall become operative on January 1, 2004. | ||||||
17 | The Director of Insurance shall adopt rules implementing this | ||||||
18 | Section and insurers may submit applications for rate and | ||||||
19 | premium approval pursuant to this Act which comply with those | ||||||
20 | rules prior to that date, provided that no such application | ||||||
21 | shall be approved prior to that date. | ||||||
22 | Section 20. Prohibition of Unfair Insurance Practices. | ||||||
23 | (a) The business of insurance shall be subject to the laws | ||||||
24 | of Illinois applicable to any other business, including, but | ||||||
25 | not limited to the antitrust and unfair business practices | ||||||
26 | laws. | ||||||
27 | (b) Nothing in this Section shall be construed to prohibit | ||||||
28 | (1) any agreement to collect, compile, and disseminate | ||||||
29 | historical data on paid claims or reserves for reported claims, | ||||||
30 | provided such data is contemporaneously transmitted to the | ||||||
31 | Director of Insurance, (2) participation in any joint | ||||||
32 | arrangement established by statute or the Director of Insurance | ||||||
33 | to assure availability of insurance, (3) any agent or broker, | ||||||
34 | representing one or more insurers, from obtaining from any | ||||||
35 | insurer it represents information relative to the premium for |
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1 | any policy or risk to be underwritten by that insurer, (4) any | ||||||
2 | agent or broker from disclosing to an insurer it represents any | ||||||
3 | quoted rate or charge offered by another insurer represented by | ||||||
4 | that agent or broker for the purpose of negotiating a lower | ||||||
5 | rate, charge, or term from the insurer to whom the disclosure | ||||||
6 | is made, or (5) any agents, brokers, or insurers from utilizing | ||||||
7 | or participating with multiple insurers or reinsurers for | ||||||
8 | underwriting a single risk or group of risks. | ||||||
9 | (c) Notwithstanding any other provision of law, a notice of | ||||||
10 | cancellation or non-renewal of a policy of liability insurance | ||||||
11 | for healthcare providers shall be effective only if it is based | ||||||
12 | upon one or more of the following: | ||||||
13 | (1) non-payment of premium; | ||||||
14 | (2) fraud or material misrepresentation affecting the | ||||||
15 | policy or insured; | ||||||
16 | (3) a substantial and verifiable increase in the hazard | ||||||
17 | insured against. | ||||||
18 | Section 25. Full Disclosure of Insurance Information. Upon | ||||||
19 | request, and for a reasonable fee to cover costs, the Director | ||||||
20 | of Insurance shall provide healthcare providers with a | ||||||
21 | comparison of the existing premium for each insurer who | ||||||
22 | provides a similar line of liability insurance for healthcare | ||||||
23 | providers. | ||||||
24 | Section 30. Approval of Insurance Rates and Premiums. | ||||||
25 | (a) No rate or premium shall remain in effect which is | ||||||
26 | excessive, unjustified, arbitrary, unfairly discriminatory, or | ||||||
27 | otherwise in violation of this Act. In considering whether a | ||||||
28 | rate or premium is excessive, unjustified, arbitrary, or | ||||||
29 | unfairly discriminatory, no consideration shall be given to the | ||||||
30 | degree of competition. The Director of Insurance shall also | ||||||
31 | consider whether the rate mathematically reflects the | ||||||
32 | insurance company's investment income. | ||||||
33 | (b) Every insurer which desires to change any rate or | ||||||
34 | premium shall file a complete rate application with the |
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1 | Director of Insurance. A complete rate application shall | ||||||
2 | include all data supporting the change and such other | ||||||
3 | information as the Director of Insurance may require. The | ||||||
4 | applicant shall have the burden of proving that the requested | ||||||
5 | rate or premium change is justified and meets the requirements | ||||||
6 | of this Act. | ||||||
7 | (c) The Director of Insurance shall notify the public of | ||||||
8 | any application for a rate change by a liability insurer for | ||||||
9 | healthcare providers. The application shall be deemed approved | ||||||
10 | 60 days after public notice unless (1) a healthcare provider or | ||||||
11 | his or her representative requests a hearing within 45 days of | ||||||
12 | public notice and the Director of Insurance grants the hearing, | ||||||
13 | or determines not to grant the hearing and issues written | ||||||
14 | findings in support of that decision, or (2) the Director of | ||||||
15 | Insurance on his or her own motion determines to hold a | ||||||
16 | hearing, or (3) the proposed rate adjustment exceeds 9% of the | ||||||
17 | then applicable rate for that insurer's healthcare providers | ||||||
18 | liability lines, in which case the Director of Insurance must | ||||||
19 | hold a hearing upon a timely request. In any event, a rate | ||||||
20 | change application shall be deemed approved 180 days after the | ||||||
21 | rate application is received by the Director of Insurance | ||||||
22 | unless (A) that application has been disapproved by a final | ||||||
23 | order of the Director of Insurance subsequent to a hearing, or | ||||||
24 | (B) extraordinary circumstances exist. For purposes of this | ||||||
25 | Section, "received" means the date delivered to the Department | ||||||
26 | of Insurance. | ||||||
27 | (d) For purposes of this Section, extraordinary | ||||||
28 | circumstances include the following: | ||||||
29 | (1) Rate change application hearings commenced during | ||||||
30 | the 180-day period provided by subdivision (c). If a | ||||||
31 | hearing is commenced during the 180-day period, the rate | ||||||
32 | change application shall be deemed approved upon | ||||||
33 | expiration of the 180-day period or 60 days after the close | ||||||
34 | of the record of the hearing, whichever is later, unless | ||||||
35 | disapproved prior to that date. | ||||||
36 | (2) Rate change applications that are not approved or |
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1 | disapproved within the 180-day period provided by | ||||||
2 | subdivision (c) as a result of a judicial proceeding | ||||||
3 | directly involving the application and initiated by the | ||||||
4 | applicant or an intervenor. During the pendency of the | ||||||
5 | judicial proceedings, the 180-day period is tolled, except | ||||||
6 | that in no event shall the Director of Insurance have less | ||||||
7 | than 30 days after conclusion of the judicial proceedings | ||||||
8 | to approve or disapprove the application. Notwithstanding | ||||||
9 | any other provision of law, nothing shall preclude the | ||||||
10 | Director of Insurance from disapproving an application | ||||||
11 | without a hearing if a stay is in effect barring the | ||||||
12 | Director from holding a hearing within the 180-day period. | ||||||
13 | (3) The hearing has been continued. The 180-day period | ||||||
14 | provided by subdivision (c) shall be tolled during any | ||||||
15 | period in which a hearing is continued. A continuance shall | ||||||
16 | be decided on a case by case basis. If the hearing is | ||||||
17 | commenced or continued during the 180-day period, the rate | ||||||
18 | change application shall be deemed approved upon the | ||||||
19 | expiration of the 180-day period or 100 days after the case | ||||||
20 | is submitted, whichever is later, unless disapproved prior | ||||||
21 | to that date | ||||||
22 | Section 35. Rules Pertaining to Hearings by Director of | ||||||
23 | Insurance. | ||||||
24 | (a) The Director of Insurance shall adopt rules governing | ||||||
25 | hearings required by subdivision (c) of Section 30 on or before | ||||||
26 | 120 days after the enactment of this Section. Those rules | ||||||
27 | shall, at the minimum, include timelines for scheduling and | ||||||
28 | commencing hearings, and procedures to prevent delays in | ||||||
29 | commencing or continuing hearings without good cause. | ||||||
30 | (b) The sole remedy for failure by the Director of | ||||||
31 | Insurance to adopt the rules required by subdivision (a) within | ||||||
32 | the prescribed period or to abide by those rules once adopted | ||||||
33 | shall be a writ of mandate by any aggrieved party in a court of | ||||||
34 | competent jurisdiction to compel the Director of Insurance to | ||||||
35 | adopt those rules, or commence or resume hearings. |
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1 | (c) Nothing in this Section shall preclude the Director of | ||||||
2 | Insurance from commencing hearings required by subdivision (c) | ||||||
3 | of Section 30 prior to adopting the rules required by this | ||||||
4 | Section. | ||||||
5 | (d) The Director of Insurance (or administrative law judge | ||||||
6 | or judges) shall render a decision within 30 days of the | ||||||
7 | closing of the record in the proceeding | ||||||
8 | Section 40. Public Notice of Hearings. Public notice | ||||||
9 | required by this Act shall be made through distribution to the | ||||||
10 | news media and to any member of the public who requests | ||||||
11 | placement on a mailing list for that purpose. | ||||||
12 | Section 45. Public Records. All information provided to the | ||||||
13 | Director of Insurance pursuant to this Act shall be available | ||||||
14 | for public inspection. | ||||||
15 | Section 50. Manner of Hearings. | ||||||
16 | (a) Hearings shall be conducted by the Director of | ||||||
17 | Insurance or at his or her discretion, administrative law | ||||||
18 | judges appointed by the Director of Insurance | ||||||
19 | (b) Hearings are commenced by a filing of a Notice. | ||||||
20 | (c) If the hearing is conducted by an administrative law | ||||||
21 | judge or judges, the Director of Insurance shall adopt, amend | ||||||
22 | or reject the decision of the judge or judges. | ||||||
23 | (d) Discovery shall be liberally construed and disputes | ||||||
24 | determined by the Director of Insurance or the administrative | ||||||
25 | law judge or judges. | ||||||
26 | (e) Hearings shall be open to the public. | ||||||
27 | Section 55. Initiation of Proceeding. | ||||||
28 | (a) Any person may initiate or intervene in any proceeding | ||||||
29 | permitted or established pursuant to this Act, challenge any | ||||||
30 | action of the Director of Insurance under this Act, and enforce | ||||||
31 | any provision of this Act | ||||||
32 | (b) The Director of Insurance or a court shall award |
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1 | reasonable advocacy and witness fees and expenses to any person | ||||||
2 | who demonstrates that (1) the person represents the interests | ||||||
3 | of healthcare providers or consumers, and (2) he or she has | ||||||
4 | made a substantial contribution to the adoption of any order, | ||||||
5 | regulation or decision by the Director of Insurance or a court. | ||||||
6 | Where such advocacy occurs in response to a rate application, | ||||||
7 | the award shall be paid by the applicant. | ||||||
8 | Section 60. Emergency Authority. In the event that the | ||||||
9 | Director of Insurance finds that (a) insurers have | ||||||
10 | substantially withdrawn from any insurance market covered by | ||||||
11 | this Act and (b) a market assistance plan would not be | ||||||
12 | sufficient to make insurance available, the Director of | ||||||
13 | Insurance shall establish a joint underwriting authority, | ||||||
14 | without the prior creation of a market assistance plan. | ||||||
15 | Section 65. Group Insurance Plans. Any insurer may issue | ||||||
16 | any insurance coverage on a group plan, without restriction as | ||||||
17 | to the purpose of the group, occupation or type of group. Group | ||||||
18 | insurance rates shall not be considered to be unfairly | ||||||
19 | discriminatory, if they are averaged broadly among persons | ||||||
20 | insured under the group plan. | ||||||
21 | Section 70. Application. This Act shall apply to all | ||||||
22 | liability insurance policies for healthcare providers in this | ||||||
23 | State. | ||||||
24 | Section 75. Enforcement and Penalties. Violations of this | ||||||
25 | Act shall be subject to the penalties provided for in the | ||||||
26 | Illinois Insurance Code. In addition to those penalties, the | ||||||
27 | Director of Insurance may suspend or revoke, in whole or in | ||||||
28 | part, the certificate of authority of any insurer which fails | ||||||
29 | to comply with the provisions of this Act. | ||||||
30 | Section 80. Insurance Company Filing Fees. The Director of | ||||||
31 | Insurance shall establish a schedule of filing fees to be paid |
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1 | by each healthcare liability insurer, in proportion to its | ||||||
2 | share of the market, to cover any administrative or operational | ||||||
3 | costs arising from the provisions of this Act. | ||||||
4 | Section 85. Interpretation of this Act. | ||||||
5 | (a) This Act shall be liberally construed and applied in | ||||||
6 | order to fully promote its underlying purposes. | ||||||
7 | (b) If any provision of this Act or the application thereof | ||||||
8 | to any person or circumstances is held invalid, that invalidity | ||||||
9 | shall not affect other provisions or applications of this Act | ||||||
10 | which can be given effect without the invalid provision or | ||||||
11 | application, and to this end the provisions of this Act are | ||||||
12 | severable.
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13 | Section 999. Effective date. This Act takes effect upon | ||||||
14 | becoming law.
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