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 NoteNote: 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 HistoryHistory: 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 NoteNote: See the table of Appellate Court Citations for Wisconsin appellate cases citing s. Ins 17.35. Ins 17.40Ins 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 HistoryHistory: CR 03-038: cr. Register October 2003 No. 574, eff. 11-1-03. Ins 17.50Ins 17.50 Self-insured plans for health care providers. 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(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. Ins 17.50(4)(i)(i) A description of the provider’s existing or proposed risk management program. Ins 17.50(4)(j)(j) The estimated number and the professions of natural persons that the self-insured plan will cover under sub. (3) (b). Ins 17.50(4)(k)(k) A description of the proposed contractual arrangements with administrators, claims adjusters and other persons that will be involved in the operation of the self-insured plan. Ins 17.50(4)(L)(L) The provider’s most recent audited annual financial statement prepared under generally accepted accounting principles that includes, if applicable, all affiliated health care providers covered under the self-insured plan on a consolidated basis. Ins 17.50(4)(m)(m) A proposed draft of a letter of credit, if the provider intends to use one as part of the initial funding, except for affiliated health care providers who are prohibited from using a letter of credit for initial funding. Ins 17.50(5)(a)(a) After reviewing a proposal submitted under sub. (4), the office may approve the proposal if all of the following conditions are met: Ins 17.50(5)(a)4.4. The proposal ensures the provider’s continuing ability to meet the financial responsibility requirements of s. 655.23, Stats. Ins 17.50(5)(a)5.5. The provider is sound, reliable and entitled to public confidence and may reasonably be expected to perform its obligations continuously in the future. Ins 17.50(5)(b)(b) If any of the conditions specified under par. (a) is not met, the office may request the provider to submit additional information in writing or may assist the provider in revising the proposal. Ins 17.50(5)(c)(c) A self-insured plan may not begin operation without the written approval of the office which specifies the earliest date operation may begin. Ins 17.50(6)(6) Funding requirements for providers: prohibitions. Ins 17.50(6)(a)(a) The minimum initial funding required for a self-insured plan is $2,000,000. Ins 17.50(6)(b)(b) Before a self-insured plan begins operation, the provider shall establish a trust with a Wisconsin-chartered or federally-chartered bank with trust powers which is located in this state. Ins 17.50(6)(c)(c) For self-insured plans except a self-insured plan for affiliated health care providers, the provider shall provide all of the following: Ins 17.50(6)(c)1.1. If the actuarial estimate under sub. (4) (d) is less than $2,000,000, the provider shall, before the self-insured plan begins operation, deposit in the trust cash equal to the first year’s estimated liabilities plus a letter of credit equal to the difference between the cash funding and $2,000,000 except as provided under sub. (4) (m). Ins 17.50(6)(c)2.2. In each of the next 3 years, the provider shall make quarterly cash payments to the trust in amounts sufficient to keep the estimated liabilities fully funded and shall keep in effect a letter of credit equal to the difference between the total estimated liabilities and $2,000,000. Ins 17.50(6)(c)3.3. If the total estimated liabilities for the 5th year of operation are less than $2,000,000, the provider shall, during that year, make quarterly cash payments to the trust in amounts sufficient to ensure that, by the end of that year, the trust’s cash assets equal $2,000,000, except that if the provider files a written request with the commissioner before the beginning of that year, the commissioner may permit the provider to continue using a letter of credit equal to the difference between the total estimated liabilities and $2,000,000. This permission may be renewed annually if the provider files a written request with the commissioner before the beginning of each subsequent fiscal year. Ins 17.50(6)(c)4.4. A letter of credit under this subsection shall meet all of the following conditions: Ins 17.50(6)(c)4.b.b. It shall be issued by a Wisconsin-chartered or federally-chartered bank located in this state. Ins 17.50(6)(c)4.c.c. It shall be issued solely for the purpose of satisfying the funding requirements of the trust. Ins 17.50(6)(d)(d) If the actuarial estimate under sub. (4) (d) is greater than $2,000,000, the provider shall, before the self-insured plan begins operation, deposit $2,000,000 cash in the trust. The provider shall make quarterly cash payments to the trust so that at the end of the first year of operation, the trust’s cash assets equal the first year’s estimated liabilities. Ins 17.50(6)(e)(e) In each subsequent year of the self-insured plan’s operation, the provider shall make quarterly cash payments to the trust in amounts sufficient to ensure that the total cash assets of the trust at the end of each year are not less than the estimated liabilities reported under sub. (8) (a) 1. Ins 17.50(6)(f)1.1. If the provider or any natural person covered under sub. (3) (b) had claims-made coverage before the self-insured plan was established and did not purchase an extended reporting endorsement from the previous carrier, the self-insured plan shall provide coverage for prior acts by means of cash payments to the trust in addition to the funding required for the occurrence coverage. Ins 17.50(6)(f)2.2. If the actuarial estimate under sub. (4) (e) is less than $500,000, the provider shall, before the self-insured plan begins operation, deposit in the trust the entire amount of the estimate in cash. Ins 17.50(6)(f)3.3. If the actuarial estimate under sub. (4) (e) is greater than $500,000, the provider shall, before the self-insured plan begins operation, deposit in the trust $500,000 or the first year’s estimated payments, whichever is greater. The provider shall make quarterly cash payments to the trust so that at the end of the first year, the trust’s assets include the total estimated liabilities for prior acts. Ins 17.50(6)(g)(g) Quarterly cash payments under this subsection shall be in equal amounts except that the amount of the last quarter’s payment shall be adjusted by the amounts of the trust’s investment income and actual expenses incurred, and except that the first quarter’s payment shall not be less than the amount of a quarterly payment for the previous year before adjustment for income and expenses. Ins 17.50(6)(h)1.1. A provider may not deposit in the trust, and the trustee may not pay from the trust, any funds other than those intended to meet the financial responsibility requirements of ch. 655, Stats., and to pay the administrative expenses of operating the self-insured plan and the trust. Ins 17.50(6)(h)2.2. The trustee may not invest any of the trust’s assets in securities or real property of the provider or any of its affiliates. Ins 17.50(6)(i)(i) If the assets of the trust at any time are insufficient to pay all claims against the self-insured plan, the liabilities are those of the provider without recourse against any employee, partner or shareholder covered by the self-insured plan. Ins 17.50(6m)(6m) Funding requirements for affiliated health care providers. The minimum initial funding required for a self-insured plan is the greater of $2,000,000 or the actuarial estimate under sub. (4) (d). Ins 17.50(7)(7) Filing prior to operation of self-insured plan. Before an approved self-insured plan begins operation, the provider shall file with the office all of the following: Ins 17.50(7)(a)(a) Certified copies of the executed self-insured plan document and trust agreement. Ins 17.50(7)(b)(b) If the provider is not a natural person, a certified copy of an executed resolution adopted by the provider’s governing body approving the self-insured plan and trust agreement. Ins 17.50(7)(c)(c) A certified copy of any trust investment policy adopted by the provider or the provider’s governing body. Ins 17.50(7)(d)(d) The trustee’s certification that the initial amount of cash required under sub. (6) has been deposited in the trust. Ins 17.50(7)(e)(e) A certified copy of any letter of credit held by the trustee. Ins 17.50(7)(f)(f) If any part of the operation of the self-insured plan is conducted by a person other than the provider or an employee, partner or shareholder of the provider, a certified copy of an executed contract with each such person.
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