House Panel Gives ODI Power to Form Medical Liability Company

 Legislation intended to establish "a safety net for Ohio health care providers and their patients" by authorizing a state-created medical malpractice insurance company in the event private insurers fail cleared a House panel in December without opposition. The House Insurance Committee, acting at the request of Director Ann Womer Benjamin of the Department of Insurance, recommended a measure on which the full House is expected to vote January.

If enacted, the bill (HB 282) would authorize the director to establish a Medical Liability Underwriting Association (MLUA) if liability coverage becomes unavailable in the state. The legislation would capture $12 million from a now-defunct 1975 Joint Underwriting Association to help finance the new company or for other initiatives related to medical malpractice insurance problems.

Director Womer Benjamin said three of the five major medical malpractice insurers in Ohio have had some financial problems in the last six months, and two in the last month alone. She is concerned that aside from the question of affordability-the topic that has driven debate for more than a year-availability of policies also could become an issue.

In her proposal to the House Insurance Committee Womer Benjamin presented a two-fold request. She asked that for legislature to grant her the authority to create a Medical Liability Underwriting Association (MLUA) allowing the Director to respond quickly to any change in the marketplace to help Ohio physicians, hospitals and other healthcare providers obtain medical malpractice coverage and to transfer $12 million from the now defunct Ohio Joint Underwriting Authority to help fund a new joint underwriting authority. HB 282 was voted out of the House Insurance Committee. Language authorizing the MLUA and transferring $12 million from JUA was incorporated into it. Additional amendments included:

• The Superintendent of the Ohio Department of Insurance should be able to reestablish the MLUA by rule and can only amend the plan of operation through the rule-making process.
• The MLUA applicants will only be physicians (MDs and DOs) and hospitals.
• The trigger for the MLUA will be: a substantial number of applicants for such class or classes of medical malpractice insurance have not been placed with insurers authorized to write medial malpractice insurance in Ohio and are insurable risks and availability of health care is threatened for any group of individuals in Ohio.
• To issue or renew coverage, the MLUA will require that the applicant have been declined for insurance by two insurers authorized to write medical malpractice insurance in Ohio.
• The terms of office for MLUA board members will be three years and the terms will initially be staggered so not all members are up at once.
• Do not consider the balance in the Stabilization Reserve Fund when considering setting rates. Each policyholder of the MLUA is to pay to the MLUA annually a stabilization reserve fund charge to be determined.
• Recreate the Medical and Hospital Advisory Committees.

HB 282 goes to the House floor in January.

Director Womer Benjamin said that under the substitute, the insurance industry would not be liable for assessments or contributions and, as a result, the company would not be a joint underwriting association but a medical liability underwriting association financed with "actuarially sound" premiums from physicians and hospitals that buy coverage

The substitute would create a stabilization reserve fund in the event premiums were insufficient to generate the revenue needed to operate. Money for the fund would come from additional assessments on the doctors and hospitals that held MLUA policies. "The potential assesses in this stabilization fund are limited to those who are policyholders," the director said.

In the event a reassessment did not generate enough money, Ms. Womer Benjamin said options theoretically could include asking the General Assembly to extend the fee to other individuals, or liquidating the company. "If it is run the way it should be run, the premiums charged should be sufficient."

The committee accepted the substitute bill without opposition. Approved on a 15-1 vote was an amendment specifying that the General Assembly could use the $12 million for related medical malpractice purposes in addition to the proposed underwriting company, such as recommendations from the study commission.