Chapter Ins 17

Ins 17.35(2) (2) Required coverage. To qualify for approval under s. 631.20, Stats., a policy shall at a minimum provide all of the following:

Ins 17.35(2)(a) (a) Coverage for providing or failing to provide health care services to a patient.

Ins 17.35(2)(b) (b) Coverage for peer review, accreditation and similar professional activities in conjunction with and incidental to the provision of health care services, when conducted in good faith by an insured.

Ins 17.35(2)(c) (c) Coverage for utilization review, quality assurance and similar professional activities in conjunction with and incidental to the provision of health care services, when conducted in good faith by an insured.

Ins 17.35(2)(d) (d) Indemnity limits of not less than the amounts specified in s. 655.23 (4), Stats.

Ins 17.35(2)(e) (e) Coverage for supplemental payments in addition to the indemnity limits, including attorney fees, litigation expenses, costs and interest.

Ins 17.35(2)(f) (f) That the insurer will provide a defense of the insured and the fund until there has been a determination that coverage does not exist under the policy or unless otherwise agreed to by the insurer and the fund.

Ins 17.35(2)(g) (g) If the policy is a claims-made policy:

Ins 17.35(2)(g)1. 1. A guarantee that the insured can purchase an unlimited extended reporting endorsement upon cancellation or nonrenewal of the policy.

Ins 17.35(2)(g)2. 2. If the policy is a group policy, a provision that any health care provider, as defined under s. 655.001 (8), Stats., whose participation in the group terminates has the right to purchase an individual unlimited extended reporting endorsement.

Ins 17.35(2)(g)3. 3. A prominent notice that the insured has the obligation under s. 655.23 (3) (a), Stats., to purchase the extended reporting endorsement unless other insurance is available to ensure continuing coverage for the liability of all insureds under the policy for the term the claims-made policy was in effect.

Ins 17.35(2)(g)4. 4. A prominent notice that the insurer will notify the commissioner if the insured does not purchase the extended reporting endorsement and that the insured, if a natural person, may be subject to administrative action by his or her licensing board.

Ins 17.35(2b) (2b) Aggregate limits; unlimited extended reporting endorsements.

Ins 17.35(2b)(a) (a) This subsection interprets and implements s. 655.23 (4), Stats.

Ins 17.35(2b)(b) (b) Highest aggregate limit applies.

Ins 17.35(2b)(b)1. 1. ‘Claims-made coverage.’ The aggregate limit applicable to all claims reported during a reporting year of a claims-made policy shall be the highest limit specified in s. 655.23 (4) (b), Stats., that applies during the reporting year.

Ins 17.35(2b)(b)2. 2. ‘Occurrence coverage.’ The limit applicable to all occurrences during an occurrence year of an occurrence policy shall be the highest limit specified in s. 655.23 (4), Stats., that applies during the occurrence year.

Ins 17.35(2b)(c) (c) Unlimited extended reporting endorsements issued before January 1, 1999. Before January 1, 1999, the aggregate limit applicable to an unlimited extended reporting endorsement shall be one of the following:

Ins 17.35(2b)(c)1. 1. The total amount of the annual aggregate limit specified in s. 655.23 (4), Stats., as it applied on the date of the occurrence, shall be available for each occurrence year, less amounts previously paid under any policy for that occurrence year.

Ins 17.35(2b)(c)2. 2. The following minimum percentage of the annual aggregate limit specified in s. 655.23 (4), Stats., as it applied to the last reporting year of the canceled or nonrenewed claims-made policy shall be available for all claims reported under the extended reporting endorsement: 100% when the policy was in effect for 1 year or less, including any retroactive coverage period; 130% when the policy was in effect for more than 1 year, but less than or equal to 2 years, including any retroactive coverage period; 150% when the policy was in effect for more than 2 years, but less than or equal to 3 years, including any retroactive coverage period; 160% when the policy was in effect for more than 3 years, including any retroactive coverage period.

Ins 17.35(2b)(d) (d) Unlimited extended reporting endorsements issued on and after January 1, 1999. On and after January 1, 1999 the minimum aggregate limit applicable to an unlimited extended reporting endorsement shall be that specified in par. (c) 2.

Ins 17.35(2e) (2e) Requirements for group coverage.

Ins 17.35(2e)(a) (a) In this section, “provider” means a health care provider, as defined in s. 655.001 (8), Stats.

Ins 17.35(2e)(b) (b) An insurer or self-insured provider that provides primary coverage under a group policy or self-insured plan shall do all of the following:

Ins 17.35(2e)(b)1. 1. At the time of original issuance of the policy or when the self-insured plan takes effect, and each time coverage for an individual provider is added:

Ins 17.35(2e)(b)1.a. a. Furnish each covered provider with a copy of the policy or a certificate of coverage specifying the coverage provided and whether the coverage is limited to a specific practice location, to services performed for a specific employer or in any other way.

Ins 17.35(2e)(b)1.b. b. Include on the first page of the policy or the certificate of coverage, or in the form of a sticker, letter or other form included with the policy or certificate of coverage, that it is the responsibility of the individual provider to ensure that he or she has health care liability insurance coverage meeting the requirements of ch. 655, Stats., in effect for all of his or her practice in this state, unless the provider is exempt from the requirements of that chapter.

Ins 17.35(2e)(b)2. 2. For a policy or self-insured plan in effect on October 1, 1993, furnish the documents specified in subd. 1. a. and b. to each individual covered provider before the next renewal date or anniversary date of the policy or self-insured plan.

Ins 17.35(2e)(b)3. 3. Notify each covered provider individually when the policy or self-insured plan is cancelled, nonrenewed or otherwise terminated, or amended to affect the coverage provisions.

Ins 17.35(2e)(b)4. 4. On the certificate of insurance filed with the fund under s. 655.23 (3) (b) or (c), Stats., and s. Ins 17.28 (5), specify whether the coverage is limited to a specific practice location, to services performed for a specific employer or in any other way.

Ins 17.35(2m) (2m) Risk retention groups. If the policy is issued by a risk retention group, as defined under s. 600.03 (41e), Stats., each new and renewal application form shall include the following notice in 10-point type:

NOTICE

Under the federal liability risk retention act of 1986 (15 USC 3901 to 3906) the Wisconsin insurance security fund is not available for payment of claims if this risk retention group becomes insolvent. In that event, you will be personally liable for payment of claims up to your limit of liability under s. 655.23 (4), Wis. Stat.

Ins 17.35 Note Note: Subsection (2m) first applies to applications taken on October 1, 1991.

Ins 17.35(3) (3) Permissible exclusions. A policy may exclude coverage, or permit subrogation against or recovery from the insured, for any of the following:

Ins 17.35(3)(a) (a) Criminal acts.

Ins 17.35(3)(b) (b) Intentional sexual acts and other intentional torts.

Ins 17.35(3)(c) (c) Restraint of trade, anti-trust violations and racketeering.

Ins 17.35(3)(d) (d) Defamation.

Ins 17.35(3)(e) (e) Employment, religious, racial, sexual, age and other unlawful discrimination.

Ins 17.35(3)(f) (f) Pollution resulting in injury to a 3rd party.

Ins 17.35(3)(g) (g) Acts that occurred before the effective date of the policy of which the insured was aware or should have been aware.

Ins 17.35(3)(h) (h) Incidents occurring while a provider’s license to practice is suspended, revoked, surrendered or otherwise terminated.

Ins 17.35(3)(i) (i) Criminal and civil fines, forfeitures and other penalties.

Ins 17.35(3)(j) (j) Punitive and exemplary damages.

Ins 17.35(3)(k) (k) Liability of the insured covered by other insurance, such as worker’s compensation, automobile, fire or general liability.

Ins 17.35(3)(L) (L) Liability arising out of the ownership, operation or supervision by the insured of a hospital, nursing home or other health care facility or business enterprise.

Ins 17.35(3)(m) (m) Liability of others assumed by the insured under a contract or agreement.

Ins 17.35(3)(n) (n) Any other exclusion which the commissioner determines is not inconsistent with the coverage required under sub. (2).

Ins 17.35(4) (4) Deductibles. If a policy includes a deductible or coinsurance clause, the insurer is responsible for payment of the total amount of indemnity up to the limits under s. 655.23 (4), Stats., but may recoup the amount of the deductible or coinsurance from the insured after the insurer’s payment obligation is satisfied.

Ins 17.35 Note Note: Subsection (2b) applies to all claims made health care liability insurance policies for which certificates have been filed with the patients compensation fund, whether issued before, on or after July 1, 1994.

Ins 17.35 History History: Cr. Register, June, 1990, No. 414, eff. 7-1-90; emerg. cr. (2m), eff. 7-1-91; cr. (2m), Register, July, 1991, No. 427, eff. 8-1-91; cr. (2e), Register, September, 1993, No. 453, eff. 10-1-93; cr. (2b), Register, June, 1994, No. 462, eff. 7-1-94; emerg. r. and recr. (2b) (b) and cr. (2b) (c) and (d), eff. 6-1-98; r. and recr. (2b) (b) and cr. (2b) (c) and (d), Register, August, 1998, No. 512, eff. 9-1-98.

Ins 17.35 Note Note: See the table of Appellate Court Citations for Wisconsin appellate cases citing s. Ins 17.35.

Ins 17.40 Ins 17.40 Notice to fund of filing of action outside this state.

Ins 17.40(1) (1) Purpose. This section implements s. 655.27 (5) (a) and (b), Stats., relating to the requirement that the fund be notified of an action filed outside this state within 60 days of service of process on the health care provider or the employee of the health care provider and relating to the duty of the insurer or self-insurer of the provider to provide an adequate defense of the fund and act in good faith and in a fiduciary relationship with respect to any claim affecting the fund.

Ins 17.40(2) (2) Primary insurer or self-insurer to give notice to fund. A primary insurer or self-insurer for a health care provider or employee of a health care provider shall notify the fund in writing within 60 days of the insurer or self-insurer’s first notice of the filing of an action outside this state alleging medical malpractice against its insured health care provider or the employee of its insured health care provider or within 60 days of service of process on the insured health care provider or employee thereof, whichever is later. The notice shall provide at a minimum the names and addresses of the parties plaintiff and defendant, the court in which the action is filed, the case number, and copies, if available, of the complaint in the action and answer filed on behalf of the defendant provider.

Ins 17.40(3) (3) Failure to give notice. If the primary insurer or self-insurer fails to give notice to the fund as required in sub. (2), the board shall deny fund coverage for the action filed outside this state unless the primary insurer demonstrates, and the board finds, all of the following:

Ins 17.40(3)(a) (a) The fund was not prejudiced by the failure to give notice as required, and

Ins 17.40(3)(b) (b) It was not reasonably possible to give notice within the time limit.

Ins 17.40(4) (4) Failure to act in good faith. If the board denies coverage pursuant to sub. (3), then failure to give notice to the fund of the filing of an action outside this state as required in sub. (2) constitutes a failure to act in good faith on the part of the insurer or self-insurer in violation of s. 655.27 (5) (b), Stats.

Ins 17.40 History History: CR 03-038: cr. Register October 2003 No. 574, eff. 11-1-03.

Ins 17.50 Ins 17.50 Self-insured plans for health care providers.

Ins 17.50(1) (1) Purpose. This section implements s. 655.23 (3) (a), Stats.

Ins 17.50(2) (2) Definitions. In this section:

Ins 17.50(2)(a) (a) “Actuarial” means prepared by an actuary meeting the requirements of s. Ins 6.12 who has experience in the field of medical malpractice liability insurance.

Ins 17.50(2)(am) (am) “Affiliated health care providers” means two or more health care providers delivering services as described in s. 655.002 (1), Stats., and who satisfy all of the following:

Ins 17.50(2)(am)1. 1. The health care providers are either legal entities or are employed by one or more separate legal entities over which operating control is exercised by a common controlling legal entity. The controlling legal entity need not be a health care provider.

Ins 17.50(2)(am)2. 2. The incomes of the health care providers are consolidated with the controlling legal entity in audited financial statements prepared under generally accepted accounting principles.

Ins 17.50(2)(b) (b) “Level of confidence” means a percentage describing the probability that a certain funding level will be adequate to cover actual losses.

Ins 17.50(2)(c) (c) “Occurrence coverage” means coverage for acts or omissions occurring during the period in which a self-insured plan is in effect.

Ins 17.50(2)(d) (d) “Office” means the office of the commissioner of insurance.

Ins 17.50(2)(e) (e) “Provider,” when used without modification, means a health care provider as defined in s. 655.001 (8), Stats., or affiliated health care providers as defined in par. (am), responsible for the establishment and operation of a self-insured plan.

Ins 17.50(2)(f) (f) “Risk margin” means the amount that must be added to estimated liabilities to achieve a specified confidence level.

Ins 17.50(2)(g) (g) “Self-insured plan” means a method, other than through the purchase of insurance, by which a provider may furnish professional liability coverage which meets the requirements of ch. 655, Stats.

Ins 17.50(2)(h) (h) “Year” means the self-insured plan’s fiscal year.

Ins 17.50(3) (3) Coverage.

Ins 17.50(3)(a) (a) A self-insured plan shall provide professional liability occurrence coverage with limits of liability in the amounts specified in s. 655.23 (4), Stats., for the provider, the provider’s employees, other than employees who are natural persons defined as health care providers under s. 655.001 (8), Stats., and any other person for whom the provider is legally responsible while the employee or other person is acting within the scope of his or her duties for the provider.

Ins 17.50(3)(b) (b) A self-insured plan may also provide occurrence coverage for any natural person who is a health care provider, as defined in s. 655.001 (8), Stats., and who is an employee, partner or shareholder of the provider. The self-insured plan shall provide separate limits of liability in the amounts specified in s. 655.23 (4), Stats., for each such natural person covered.

Ins 17.50(3)(c) (c) A self-insured plan shall also provide for supplemental expenses in addition to the limits of liability in s. 655.23 (4), Stats., including attorney fees, litigation expenses, costs and interest incurred in connection with the settlement or defense of claims.

Ins 17.50(3)(d) (d) A self-insured plan may not provide coverage for anything other than the professional liability coverage required under ch. 655, Stats., or for any other person than those specified in pars. (a) and (b).

Ins 17.50(4) (4) Initial filing. A provider that intends to establish a self-insured plan shall file with the office a proposal which shall include all of the following:

Ins 17.50(4)(a) (a) If the provider is not a natural person, the history and organization of the provider.

Ins 17.50(4)(b) (b) If the provider is not a natural person, a resolution adopted by the provider’s governing body approving the establishment and operation of a self-insured plan.

Ins 17.50(4)(c) (c) A description of the proposed method of establishing and operating the self-insured plan.

Ins 17.50(4)(d) (d) An actuarial estimate of the liabilities that will be incurred by the self-insured plan in the first year of operation, an actuarial review of the cost of the first year’s funding and a description of how the self-insured plan will be funded.

Ins 17.50(4)(e) (e) If prior acts coverage is required under sub. (6) (f) 1., an actuarial estimate of the liabilities of the provider and any natural person covered under sub. (3) (b) for prior acts, an actuarial review of the cost of funding the coverage and a description of how the coverage will be funded.

Ins 17.50(4)(f) (f) An actuarial feasibility study which includes a 5-year projection of expected results.

Ins 17.50(4)(g) (g) The identity of the bank that will act as trustee for the self-insured plan and a proposed trust agreement between the provider and the bank.

Ins 17.50(4)(h) (h) Any proposed investment policy that will be applicable to the investment of the trust’s assets.