ENROLLMENT

COMMITTEE SUBSTITUTE

FOR

H. B. 2122

(By Mr. Speaker, Mr. Kiss, and Delegate Trump)

[By Request of the Executive]

[Amended and Again Passed March 8, 2003, as a Result of the Objections

of the Governor; in Effect From Passage.]

AN ACT to amend and reenact section two, article eleven-a, chapter four

of the code of West Virginia, one thousand nine hundred thirty-one, as

amended; to amend chapter eleven of said code by adding thereto a new

article, designated article thirteen- t; to amend and reeenact section

five, article twelve, chapter twenty-nine of said code; to amend and

reenact sections six and fourteen, article twelve-b of said chapter; to

further amend said chapter by adding thereto a new article, designated

article twelve-c; to amend and reenact section fourteen, article three,

chapter thirty of said code; to amend and reenact section twelve-a,

article fourteen of said chapter; to amend article two, chapter

thirty-three of said code by adding thereto a new section, designated

section nine-a; to amend and reenact sections fourteen and fourteen-a of

article three of said chapter; to amend and reenact section fifteen-a,

article four of said chapter; to amend and reenact sections two and

three, article twenty-b of said chapter; to further amend said article

by adding thereto a new section, designated section three-a; to amend

and reenact sections two through eleven, inclusive, article twenty-f of

said chapter; to further amend said article by adding thereto a new

section, designated section one-a; to amend and reenact section

twenty-four, article twenty-five-a of said chapter; to amend and reenact

section twenty-six, article twenty-five-d of said chapter; to amend and

reenact section four, article ten, chapter thirty- eight of said code;

to amend and reenact sections one, two, three, six, seven, eight, nine

and ten, article seven-b, chapter fifty-five of said code; and to

further amend said article by adding thereto three new sections,

designated sections nine-a, nine-b and nine-c, all relating to medical

professional liability generally; transferring funds from board of risk

and insurance management and from tobacco settlement medical trust fund;

providing a health care provider tax credit for physicians based upon

payment of certain medical malpractice liability insurance premiums

paid; setting forth legislative findings and purpose; defining terms;

creating tax credit and providing eligibility; establishing amount and

time period for credit; allowing unused credit to carry forward;

providing for the application of the credit; providing for the

computation and application of credit; authorizing tax commissioner to

promulgate legislative rules relating to the credit; establishing burden

of proof relating to claiming the credit; allowing the board of risk and

insurance management to include critical access hospitals as charitable

or public service organizations eligible for receiving insurance

coverage; authorizing the board of risk and insurance management to

issue certain coverage to non-transferred health care providers;

terminating authority of board of risk and insurance management to issue

certain medical professional liability insurance upon transfer of assets

to the physicians' mutual insurance company; creating board to study the

feasibility of and propose a mechanism for funding the patient injury

compensation fund ; establishing term, authority and directives of the

board; granting certain duties and conditionally authorizing the board

of risk and insurance management to promulgate legislative and emergency

rules; requiring the board of medicine and the board of osteopathy to

take certain disciplinary actions against physicians in certain

circumstances; providing for a limited diversion of premium taxes on

certain insurance policies; providing a one-time assessment on all

insurance carriers; prohibiting predatory rates and reduced rates

designed to gain market share; requiring additional reporting

requirements for insurance carriers providing medical malpractice

coverage; providing for the creation of a physicians' mutual insurance

company and the concomitant novation of certain board of risk and

insurance management medical professional liability insurance programs;

setting forth additional legislative findings and purpose; providing

terms and conditions for transfer of specified assets and moneys to the

physicians' mutual; defining terms; prohibiting company from taking

certain actions; requiring certain premium taxes to be applied toward

restoring West Virginia tobacco medical trust fund; returning premium

taxes to originally allocated sources after moneys have been restored to

the tobacco settlement medical trust fund; waiver of taxes under certain

circumstances; providing for governance and organization of the company;

specifying composition of company's board of directors; creating a

special account to receive funds transferred from the tobacco settlement

medical trust fund; imposing a one time assessment on certain licensed

physicians for the privilege of practicing in West Virginia; exempting

certain physicians from assessment; requiring competitive bidding in

certain circumstances; exempting company from certain requirements

imposed on other mutual insurance companies by the insurance commission;

providing for additional reporting requirements and actuarial studies

for the company; authorizing transfer of funds from special account and

of certain assets, obligations and liabilities of the board of risk and

insurance management to the company on a certain date and establishing

other terms and conditions associated with the transfer; increasing

exemption available to certain physician and surgeon debtors in

bankruptcy proceedings; providing additional legislative findings and

purposes relating to medical professional liability; defining terms;

adding an element of proof in certain malpractice claims; altering

notice requirements for malpractice claims; modifying the qualifications

for experts who testify in medical professional liability actions;

limiting liability for certain noneconomic losses; providing a reversion

provision; creating conditional limitations and cap on certain damages;

providing for limited severability; eliminating joint, but not several,

liability among multiple defendants in medical professional liability

actions; prohibiting consideration of certain third parties in

malpractice cases; eliminating a cause of action based on ostensible

agency in certain circumstances; allowing for reduction in damage awards

for certain collateral source payments to plaintiffs; providing

mechanism for determining collateral source payments and damages

distribution; providing for calculation methodology for determining

award payments; altering collection of economic damages upon

implementation of patient compensation fund; barring actions against

health care providers for certain third party claims; limiting civil

liability for designated trauma center care; directing the office of

emergency medical services to designate hospitals as trauma centers and

provisional trauma centers; placing limitations on eligibility for

trauma care caps; requiring the office of emergency medical services to

develop a written protocol containing recognized and accepted standards

for triage and emergency health procedures; authorizing the secretary of

the department of health and human resources to promulgate legislative

and emergency rules; and establishing effective date, applicable to all

causes of action alleging medical professional liability.

Be it enacted by the Legislature of West Virginia:

That section two, article eleven-a, chapter four of the code of West

Virginia, one thousand nine hundred thirty-one, as amended, be amended

and reenacted; that chapter eleven of said code be amended by adding

thereto a new article, designated article thirteen-t; that section five,

article twelve, chapter twenty-nine of said code be amended and

reenacted; that sections six and fourteen, article twelve-b of said

chapter be amended and reenacted; that said chapter be further amended

by adding thereto a new article, designated article twelve-c; that

section fourteen, article three, chapter thirty of said code be amended

and reenacted; that section twelve-a, article fourteen of said chapter

be amended and reenacted; that article two, chapter thirty-three of said

code be amended by adding thereto a new section, designated section

nine-a; that sections fourteen and fourteen-a, article three of said

chapter be amended and reenacted; that section fifteen-a, article four

of said chapter be amended and reenacted; that section two, article

twenty-b of said chapter be amended and reenacted; that said article be

further amended by adding thereto a new section, designated section

three-a; that sections two through eleven, inclusive, of article

twenty-f of said chapter be amended and reenacted; that said article be

further amended by adding thereto a new section, designated section

one-a; that section twenty-four, article twenty-five-a of said chapter

be amended and reenacted; that section twenty-six, article twenty-

five-d of said chapter be amended and reenacted; that section four,

article ten, chapter thirty-eight of said code be amended and reenacted;

that sections one, two, three, six, seven, eight, nine, and ten, article

seven-b, chapter fifty-five of said code be amended and reenacted; and

that said article be further amended by adding thereto three new

sections, designated sections nine-a, nine-b and nine-c, all to read as

follows:

CHAPTER 4. THE LEGISLATURE.

ARTICLE 11A. LEGISLATIVE APPROPRIATION OF TOBACCO SETTLEMENT FUNDS.

§4-11A-2. Receipt of settlement funds and required deposit in West

Virginia tobacco settlement medical trust fund.

(a) The Legislature finds and declares that certain dedicated revenues

should be preserved in trust for the purpose of stabilizing the state's

health related programs and delivery systems. It further finds and

declares that these dedicated revenues should be preserved in trust for

the purpose of educating the public about the health risks associated

with tobacco usage and establishing a program designed to reduce and

stop the use of tobacco by the citizens of this state and in particular

by teenagers.

(b) There is hereby created a special account in the state treasury,

designated the "West Virginia Tobacco Settlement Medical Trust Fund,"

which shall be an interest-bearing account and may be invested in the

manner permitted by section nine, article six, chapter twelve of this

code, with the interest income a proper credit to the fund. Unless

contrary to federal law, fifty percent of all revenues received pursuant

to the master settlement agreement shall be deposited in this fund.

Funds paid into the account may also be derived from the following

sources:

(1) All interest or return on investment accruing to the fund;

(2) Any gifts, grants, bequests, transfers or donations which may be

received from any governmental entity or unit or any person, firm,

foundation or corporation;

(3) Any appropriations by the Legislature which may be made for this

purpose; and

(4) Any funds or accrued interest remaining in the board of risk and

insurance management physicians' mutual insurance company account

created pursuant to section seven, article twenty-f, chapter

thirty-three of this code on or after the first day of July, two

thousand four.

(c) The moneys from the principal in the trust fund may not be expended

for any purpose, except that on the first day of April, two thousand

three, the treasurer shall transfer to the board of risk and insurance

management physicians' mutual insurance company account created by

section seven, article twenty-f, chapter thirty- three of this code,

twenty-four million dollars from the West Virginia tobacco settlement

medical trust fund for use as the initial capital and surplus of the

physicians' mutual insurance company created pursuant to article

twenty-f, chapter thirty-three of this code. The remaining moneys in the

trust fund resulting from interest earned on the moneys in the fund and

the return on investments of the moneys in the fund shall be available

only upon appropriation by the Legislature as part of the state budget

and expended in accordance with the provisions of section three of this

article.

CHAPTER 11. TAXATION.

ARTICLE 13T. TAX CREDIT FOR COMBINED CLAIMS MADE MEDICAL MALPRACTICE

PREMIUMS AND MEDICAL MALPRACTICE LIABILITY TAIL INSURANCE PREMIUMS PAID.

§11-13T-1. Legislative finding and purpose.

The Legislature finds that the retention of physicians practicing in

this state is in the public interest and promotes the general welfare of

the people of this state. The Legislature further finds that the

promotion of stable and affordable medical malpractice liability

insurance premium rates and medical malpractice liability tail insurance

premium rates will induce retention of physicians practicing in this

state.

In order to effectively decrease the cost of medical malpractice

liability insurance premiums and medical malpractice liability tail

insurance premiums paid in this state on physicians' services, there is

hereby provided a tax credit for certain medical malpractice liability

insurance premiums and medical malpractice liability tail insurance

premiums paid.

§11-13T-2. Definitions.

(a) General. -- When used in this article, or in the administration of

this article, terms defined in subsection (b) of this section have the

meanings ascribed to them by this section, unless a different meaning is

clearly required by the context in which the term is used.

(b) Terms defined. -

(1) "Claims made malpractice insurance policy" means a medical

malpractice liability insurance policy that covers claims which:

(A) Are reported during the policy period,

(B) Meet the provisions specified by the policy, and

(C) Are for an incident which occurred during the policy period, or

occurred prior to the policy period, as is specified by the policy.

(2) "Combined annual medical liability insurance premiums" means the sum

of the actual amount of insurance premiums paid by or on behalf of the

taxpayer during the taxable year for medical malpractice insurance

coverage under a claims made malpractice insurance policy, plus the

actual amount of insurance premiums paid by or on behalf of the taxpayer

during the taxable year for tail insurance.

(3) "Eligible taxpayer" means any person subject to tax under section

sixteen, article twenty-seven of this chapter or a physician who is a

partner, member, shareholder or employee of an eligible taxpayer.

(4) "Eligible taxpayer organization" means a partnership, limited

liability company, or corporation that is an eligible taxpayer.

(5) "Payor" means a natural person who is a partner, member, shareholder

or owner, in whole or in part, of an eligible taxpayer organization and

who pays medical malpractice insurance premiums or tail insurance

premiums or both for or on behalf of the eligible taxpayer organization.

(6) "Person" means and includes any natural person, corporation, limited

liability company, trust or partnership.

(7) "Physicians' services" means health care provider services taxable

under section sixteen, article twenty-seven of this chapter, performed

in this state by physicians licensed by the state board of medicine or

the state board of osteopathic medicine.

(8) "Tail insurance" means insurance which covers an eligible taxpayer

insured once a claims made malpractice insurance policy is canceled, not

renewed or terminated and which covers claims made or asserted after

such cancellation or termination for acts relating to the provision of

physicians' services by the eligible taxpayer occurring during the

period the prior malpractice insurance was in effect.

(9) "Tail insurance premium" means insurance coverage premiums paid by

an eligible taxpayer or payor during the taxable year for tail

insurance.

(10) "Tail liability" means the medical malpractice liability of an

eligible taxpayer insured that results from a claim asserted subsequent

to cancellation, nonrenewal or termination of a claims made malpractice

insurance policy for acts relating to the provision of physicians'

services by the eligible taxpayer occurring during the period when the

prior malpractice insurance was in effect.

§11-13T-3. Eligibility for tax credits; creation of the credit.

There shall be allowed to every eligible taxpayer a credit against the

tax payable under section sixteen, article twenty-seven of this chapter.

The amount of this credit shall be determined and applied as provided in

this article.

§11-13T-4. Amount of credit allowed.

(a) Allowance. -

(1) The amount of annual credit allowable under this article to an

eligible taxpayer shall be:

(A) Ten percent of the combined annual medical liability insurance

premiums paid in excess of thirty thousand dollars, or

(B) Twenty percent of combined annual medical liability insurance

premiums paid in excess of seventy thousand dollars.

(2) This credit may be taken for combined annual medical liability

insurance premiums paid during any taxable year beginning on or after

the first day of January, two thousand two, and ending on or before the

thirty-first day of December, two thousand three.

(b) Exclusions. -- No credit shall be allowed for any combined annual

medical liability insurance premiums, or part or component thereof, paid

by or on behalf of an eligible taxpayer employed by this state, its

agencies or subdivisions. No credit shall be allowed for any combined

annual medical liability insurance premiums, or part or component

thereof, paid by or on behalf of an eligible taxpayer or an eligible

taxpayer organization or a payor pursuant to insurance coverage provided

under article twelve, chapter twenty-nine of this code. No credit shall

be allowed for any combined annual medical liability insurance premiums,

or part or component thereof, paid before the first day of January, two

thousand two, or paid after the thirty-first day of December, two

thousand three.

§11-13T-5. Unused credit; carryforward; credit forfeiture.

If any credit remains after application of the credit against tax for

any taxable year under this article, the amount thereof shall be carried

forward to each ensuing tax year until used or until the first day of

July, two thousand ten, whichever occurs first. If any unused credit

remains after the first day of July, two thousand ten, the amount

thereof is forfeited. No carryback to a prior taxable year is allowed

for the amount of any unused portion of this credit.

§11-13T-6. Application of credit against health care provider tax;

schedules; estimated taxes.

(a) The credit allowed under this article shall be applied against the

tax payable under section sixteen, article twenty-seven of this chapter,

for the taxable year in which the combined annual medical liability

insurance premiums are paid. To assert credit against the tax payable

under section sixteen, article twenty-seven of this chapter, the

eligible taxpayer shall prepare and file with the annual tax return

filed under article twenty-seven of this chapter, a schedule showing the

combined annual medical liability insurance premiums paid for the

taxable year, the amount of credit allowed under this article, the tax

against which the credit is being applied and other information that the

tax commissioner may require. This annual schedule shall set forth the

information and be in the form prescribed by the tax commissioner.

(b) An eligible taxpayer may consider the amount of credit allowed under

this article when determining the eligible taxpayer's liability for

periodic payments of estimated tax for the taxable year for the tax

payable under section sixteen, article twenty- seven of this chapter, in

accordance with the procedures and requirements prescribed by the tax

commissioner. The annual total tax liability and total tax credit

allowed under this article are subject to adjustment and reconciliation

pursuant to the filing of the annual schedule required by this section.

§11-13T-7. Computation and application of credit.

(a) Credit resulting from premiums directly paid by persons who pay the

tax imposed by section sixteen, article twenty-seven of this chapter. --

The annual credit allowable under this article for eligible taxpayers

other than payors described in subsection (b) of this section, shall be

applied as a credit to reduce the eligible taxpayer's annual tax

liability imposed under section sixteen, article twenty-seven of this

chapter, determined after application of the credit allowed under

article thirteen-p of this chapter, if any, and after application of all

other allowable credits, deductions and exemptions.

(b) Computation of credit for premiums directly paid by partners,

members or shareholders of partnerships, limited liability companies, or

corporations for or on behalf of such organizations; application of

credit.

(1) Qualification for credit.-- Combined annual medical liability

insurance premiums paid by a payor (as defined in this article) qualify

for tax credit under this article, provided that such payments are made

to insure against medical malpractice liabilities arising out of or

resulting from physicians' services provided by a physician while

practicing in service to or under the organizational identity of an

eligible taxpayer organization or as an employee of such eligible

taxpayer organization, and where such insurance covers the medical

malpractice liabilities or tail liabilities of:

(A) The eligible taxpayer organization; or

(B) One or more physicians practicing in service to or under the

organizational identity of the eligible taxpayer organization or as an

employee of the eligible taxpayer organization; or

(C) Any combination thereof.

(2) Application of credit by the payor against health care provider tax

on physician's services. -- The annual credit allowable under this

article shall be applied to reduce the tax liability directly payable by

the payor under section sixteen, article twenty-seven of this chapter,

determined after application of the credit allowed under article

thirteen-p of this chapter, if any, and after application of all other

allowable credits, deductions and exemptions.

(3) Application of credit by the eligible taxpayer organization against

health care provider tax on physician's services. -- After application

of this credit as provided in subdivision (2) of this subsection,

remaining annual credit shall then be applied to reduce the tax

liability directly payable by the eligible taxpayer organization under

section sixteen, article twenty-seven of this chapter, determined after

application of the credit allowed under article thirteen-p of this

chapter, if any, and after application of all other allowable credits,

deductions and exemptions.

(4) Apportionment among multiple eligible taxpayer organizations. --

Where a payor described in subdivision (1) of this subsection pays

combined annual medical liability insurance premiums for and provides

services to or under the organizational identity of two or more eligible

taxpayer organizations described in this section or as an employee of

two or more such eligible taxpayer organizations, the tax credit shall,

for purposes of subdivision (3) of this subsection, be allocated among

such eligible taxpayer organizations in proportion to the combined

annual medical liability insurance premiums paid directly by the payor

during the taxable year to cover physicians' services during such year

for, or on behalf of, each eligible taxpayer organization. In no event

may the total credit claimed by all payors, eligible taxpayers and

eligible taxpayer organizations exceed the credit which would be

allowable if the payor had paid all such combined annual medical

liability insurance premiums for or on behalf of one eligible taxpayer

organization, and if all physician's services had been performed for, or

under the organizational identity of, or by employees of, one eligible

taxpayer organization.

(c) Application of the credit allowed under this article in combination

with all other applicable tax credits, exemptions and deductions shall

in no event reduce the tax liability below zero, and shall in no

circumstances be applied as a refundable tax credit, or result in a

refundable tax credit.

§11-13T-8. Legislative rules.

The tax commissioner shall propose for promulgation rules pursuant to

the provisions of article three, chapter twenty-nine-a of this code, as

may be necessary to carry out the purposes of this article.

§11-13T-9. Burden of proof.

The burden of proof is on the person claiming the credit allowed by this

article to establish by clear and convincing evidence that the person is

entitled to the amount of credit asserted for the taxable year.

CHAPTER 29. MISCELLANEOUS BOARDS AND OFFICERS.

ARTICLE 12. STATE INSURANCE.

§29-12-5. Powers and duties of board.

(a) The board shall have general supervision and control over the

insurance of all state property, activities and responsibilities,

including the acquisition and cancellation thereof; determination of

amount and kind of coverage, including, but not limited to, deductible

forms of insurance coverage, inspections or examinations relating

thereto, reinsurance, and any and all matters, factors and

considerations entering into negotiations for advantageous rates on and

coverage of all such state property, activities and responsibilities.

The board shall have the authority to employ an executive director for

an annual salary of seventy thousand dollars and such other employees,

including legal counsel, as may be necessary to carry out its duties.

The legal counsel may represent the board before any judicial or

administrative tribunal and perform such other duties as may be

requested by the board. Any policy of insurance purchased or contracted

for by the board shall provide that the insurer shall be barred and

estopped from relying upon the constitutional immunity of the state of

West Virginia against claims or suits: Provided, That nothing herein

shall bar the insurer of political subdivisions from relying upon any

statutory immunity granted such political subdivisions against claims or

suits. The board may enter into any contracts necessary to the

execution of the powers granted to it by this article. It shall

endeavor to secure the maximum of protection against loss, damage or

liability to state property and on account of state activities and

responsibilities by proper and adequate insurance coverage through the

introduction and employment of sound and accepted methods of protection

and principles of insurance. It is empowered and directed to make a

complete survey of all presently owned and subsequently acquired state

property subject to insurance coverage by any form of insurance, which

survey shall include and reflect inspections, appraisals, exposures,

fire hazards, construction, and any other objectives or factors

affecting or which might affect the insurance protection and coverage

required. It shall keep itself currently informed on new and continuing

state activities and responsibilities within the insurance coverage

herein contemplated. The board shall work closely in cooperation with

the state fire marshal's office in applying the rules of that office

insofar as the appropriations and other factors peculiar to state

property will permit. The board is given power and authority to make

rules governing its functions and operations and the procurement of

state insurance.

The board is hereby authorized and empowered to negotiate and effect

settlement of any and all insurance claims arising on or incident to

losses of and damages to state properties, activities and

responsibilities hereunder and shall have authority to execute and

deliver proper releases of all such claims when settled. The board may

adopt rules and procedures for handling, negotiating and settlement of

all such claims. Any discussion or consideration of the financial or

personal information of an insured may be held by the board in executive

session closed to the public, notwithstanding the provisions of article

nine-a, chapter six of this code.

(b) If requested by a political subdivision, a charitable or public

service organization, or an emergency medical services agency, the board

is authorized to provide property and liability insurance to insure

their property, activities and responsibilities. The board is

authorized to enter into any necessary contract of insurance to further

the intent of this subsection.

The property insurance provided by the board, pursuant to this

subsection, may also include insurance on property leased to or loaned

to the political subdivision, a charitable or public service

organization or an emergency medical services agency which is required

to be insured under a written agreement.

The cost of this insurance, as determined by the board, shall be paid by

the political subdivision, the charitable or public service organization

or the emergency medical services agency and may include administrative

expenses. For purposes of this section: Provided, That if an emergency

medical services agency is a for- profit entity its claims history may

not adversely affect other participant's rates in the same class. All

funds received by the board (including, but not limited to, state agency

premiums, mine subsidence premiums, and political subdivision premiums)

shall be deposited with the West Virginia investment management board

with the interest income and returns on investment a proper credit to

such property insurance trust fund or liability insurance trust fund, as

applicable.

"Political subdivision" as used in this subsection shall have the same

meaning as in section three, article twelve-a of this chapter.

"Charitable" or public service organization as used in this subsection

means any hospital in this state which has been certified as a critical

access hospital by the federal centers for medicare and medicaid upon

the designation of the state office of rural health policy, the office

of community and rural health services, the bureau for public health, or

the department of health and human resources, and any bona fide,

not-for-profit, tax-exempt, benevolent, educational, philanthropic,

humane, patriotic, civic, religious, eleemosynary, incorporated or

unincorporated association or organization or a rescue unit or other

similar volunteer community service organization or association, but

does not include any nonprofit association or organization, whether

incorporated or not, which is organized primarily for the purposes of

influencing legislation or supporting or promoting the campaign of any

candidate for public office.

"Emergency medical service agency" as used in this subsection shall have

the same meaning as in section three, article four-c, chapter sixteen of

this code.

(c) (1) The board shall have general supervision and control over the

optional medical liability insurance programs providing coverage to

health care providers as authorized by the provisions of article

twelve-b of this chapter. The board is hereby granted and may exercise

all powers necessary or appropriate to carry out and effectuate the

purposes of this article.

(2) The board shall:

(A) Administer the preferred medical liability program and the high risk

medical liability program and exercise and perform other powers, duties

and functions specified in this article;

(B) Obtain and implement, at least annually, from an independent outside

source, such as a medical liability actuary or a rating organization

experienced with the medical liability line of insurance, written rating

plans for the preferred medical liability program and high risk medical

liability program on which premiums shall be based;

(C) Prepare and annually review written underwriting criteria for the

preferred medical liability program and the high risk medical liability

program. The board may utilize review panels, including, but not limited

to, the same specialty review panels to assist in establishing criteria;

(D) Prepare and publish, before each regular session of the Legislature,

separate summaries for the preferred medical liability program and high

risk medical liability program activity during the preceding fiscal

year, each summary to be included in the board of risk and insurance

management audited financial statements as "other financial

information", and which shall include a balance sheet, income statement

and cash flow statement, an actuarial opinion addressing adequacy of

reserves, the highest and lowest premiums assessed, the number of claims

filed with the program by provider type, the number of judgments and

amounts paid from the program, the number of settlements and amounts

paid from the program and the number of dismissals without payment;

(E) Determine and annually review the claims history debit or surcharge

for the high risk medical liability program;

(F) Determine and annually review the criteria for transfer from the

preferred medical liability program to the high risk medical liability

program;

(G) Determine and annually review the role of independent agents, the

amount of commission, if any, to be paid therefor, and agent appointment

criteria;

(H) Study and annually evaluate the operation of the preferred medical

liability program and the high risk medical liability program, and make

recommendations to the Legislature, as may be appropriate, to ensure

their viability, including, but not limited to, recommendations for

civil justice reform with an associated cost-benefit analysis,

recommendations on the feasibility and desirability of a plan which

would require all health care providers in the state to participate with

an associated cost- benefit analysis, recommendations on additional

funding of other state run insurance plans with an associated

cost-benefit analysis and recommendations on the desirability of ceasing

to offer a state plan with an associated analysis of a potential

transfer to the private sector with a cost-benefit analysis, including

impact on premiums;

(I) Establish a five-year financial plan to ensure an adequate premium

base to cover the long tail nature of the claims-made coverage provided

by the preferred medical liability program and the high risk medical

liability program. The plan shall be designed to meet the program's

estimated total financial requirements, taking into account all revenues

projected to be made available to the program, and apportioning

necessary costs equitably among participating classes of health care

providers. For these purposes, the board shall:

(i) Retain the services of an impartial, professional actuary, with

demonstrated experience in analysis of large group malpractice plans, to

estimate the total financial requirements of the program for each fiscal

year and to review and render written professional opinions as to

financial plans proposed by the board. The actuary shall also assist in

the development of alternative financing options and perform any other

services requested by the board or the executive director. All

reasonable fees and expenses for actuarial services shall be paid by the

board. Any financial plan or modifications to a financial plan approved

or proposed by the board pursuant to this section shall be submitted to

and reviewed by the actuary and may not be finally approved and

submitted to the governor and to the Legislature without the actuary's

written professional opinion that the plan may be reasonably expected to

generate sufficient revenues to meet all estimated program and

administrative costs, including incurred but not reported claims, for

the fiscal year for which the plan is proposed. The actuary's opinion

for any fiscal year shall include a requirement for establishment of a

reserve fund;

(ii) Submit its final, approved five-year financial plan, after

obtaining the necessary actuary's opinion, to the governor and to the

Legislature no later than the first day of January preceding the fiscal

year. The financial plan for a fiscal year becomes effective and shall

be implemented by the executive director on the first day of July of the

fiscal year. In addition to each final, approved financial plan

required under this section, the board shall also simultaneously submit

an audited financial statement based on generally accepted accounting

practices (GAAP) and which shall include allowances for incurred but not

reported claims: Provided, That the financial statement and the

accrual- based financial plan restatement shall not affect the approved

financial plan. The provisions of chapter twenty-nine-a of this code

shall not apply to the preparation, approval and implementation of the

financial plans required by this section;

(iii) Submit to the governor and the Legislature a prospective five-year

financial plan beginning on the first day of January, two thousand

three, and every year thereafter, for the programs established by the

provisions of article twelve-b of this chapter. Factors that the board

shall consider include, but shall not be limited to, the trends for the

program and the industry; claims history, number and category of

participants in each program; settlements and claims payments; and

judicial results;

(iv) Obtain annually, certification from participants that they have

made a diligent search for comparable coverage in the voluntary

insurance market and have been unable to obtain the same;

(J) Meet on at least a quarterly basis to review implementation of its

current financial plan in light of the actual experience of the medical

liability programs established in article twelve-b of this chapter. The

board shall review actual costs incurred, any revised cost estimates

provided by the actuary, expenditures and any other factors affecting

the fiscal stability of the plan and may make any additional

modifications to the plan necessary to ensure that the total financial

requirements of these programs for the current fiscal year are met;

(K) To analyze the benefit of and necessity for excess verdict liability

coverage;

(L) Consider purchasing reinsurance, in the amounts as it may from time

to time determine is appropriate, and the cost thereof shall be

considered to be an operating expense of the board;

(M) Make available to participants, optional extended reporting coverage

or tail coverage: Provided, That, at least five working days prior to

offering such coverage to a participant or participants, the board shall

notify the president of the Senate and the speaker of the House of

Delegates in writing of its intention to do so, and such notice shall

include the terms and conditions of the coverage proposed;

(N) Review and approve, reject or modify rules that are proposed by the

executive director to implement, clarify or explain administration of

the preferred medical liability program and the high risk medical

liability program. Notwithstanding any provisions in this code to the

contrary, rules promulgated pursuant to this paragraph are not subject

to the provisions of sections nine through sixteen, article three,

chapter twenty-nine-a of this code. The board shall comply with the

remaining provisions of article three and shall hold hearings or receive

public comments before promulgating any proposed rule filed with the

secretary of state: Provided, That the initial rules proposed by the

executive director and promulgated by the board shall become effective

upon approval by the board notwithstanding any provision of this code;

(O) Enter into settlements and structured settlement agreements whenever

appropriate. The policy may not require as a condition precedent to

settlement or compromise of any claim the consent or acquiescence of the

policy holder. The board may own or assign any annuity purchased by the

board to a company licensed to do business in the state;

(P) Refuse to provide insurance coverage for individual physicians whose

prior loss experience or current professional training and capability

are such that the physician represents an unacceptable risk of loss if

coverage is provided;

(Q) Terminate coverage for nonpayment of premiums upon written notice of

the termination forwarded to the health care provider not less than

thirty days prior to termination of coverage;

(R) Assign coverage or transfer insurance obligations and/or risks of

existing or in-force contracts of insurance to a third party medical

professional liability insurance carrier with the comparable coverage

conditions as determined by the board. Any transfer of obligation or

risk shall effect a novation of the transferred contract of insurance

and if the terms of the assumption reinsurance agreement extinguish all

liability of the board and the state of West Virginia such

extinguishment shall be absolute as to any and all parties; and

(S) Meet and consult with and consider recommendations from the medical

malpractice advisory panel established by the provisions of article

twelve-b of this chapter.

(d) If, after the first day of September, two thousand two, the board

has assigned coverages or transferred all insurance obligations and/or

risks of existing or in-force contracts of insurance to a third party

medical professional liability insurance carrier, and the board

otherwise has no covered participants, then the board shall not

thereafter offer or provide professional liability insurance to any

health care provider pursuant to the provisions of subsection (c) of

this section or the provisions of article twelve-b of this chapter

unless the Legislature adopts a concurrent resolution authorizing the

board to reestablish medical liability insurance programs.

ARTICLE 12B. WEST VIRGINIA HEALTH CARE PROVIDER PROFESSIONAL LIABILITY

INSURANCE AVAILABILITY ACT.

§29-12B-6. Health care provider professional liability insurance

programs.

(a) There is hereby established through the board of risk and insurance

management optional insurance for health care providers consisting of a

preferred professional liability insurance program and a high risk

professional liability insurance program.

(b) Each of the programs described in subsection (a) of this section

shall provide claims-made coverage for any covered act or omission

resulting in injury or death arising out of medical professional

liability as defined in subsection (d), section two, article seven-b,

chapter fifty-five of this code.

(c) Each of the programs described in subsection (a) of this section

shall offer optional prior acts coverage from and after a retroactive

date established by the policy declarations. The premium for prior acts

coverage may be based upon a five-year maturity schedule depending on

the years of prior acts exposure, as more specifically set forth in a

written rating manual approved by the board.

(d) Each of the programs described in subsection (a) of this section

shall further provide an option to purchase an extended reporting

endorsement or tail coverage.

(e) Each of the programs described in subsection (a) of this section

shall offer limits for each health care provider in the amount of one

million dollars per claim, including repeated exposure to the same event

or series of events, and all derivative claims, and three million

dollars in the annual aggregate. Health care providers have the option

to purchase higher limits of up to two million dollars per claim,

including repeated exposure to the same event or series of events, and

all derivative claims, and up to four million dollars in the annual

aggregate. In addition, hospitals covered by the plan shall have

available limits of three million dollars per claim, including repeated

exposure to the same event or series of events, and all derivative

claims, and five million dollars in the annual aggregate. Installment

payment plans as established in the rating manual shall be available to

all participants.

(f) Each of the programs described in subsection (a) of this section

shall cover any act or omission resulting in injury or death arising out

of medical professional liability as defined in subsection (d), section

two, article seven-b, chapter fifty-five of this code. The board shall

exclude from coverage sexual acts as defined in subdivision (e), section

three of this article, and shall have the authority to exclude other

acts or omission from coverage.

(g) Each of the programs described in subsection (a) of this section

shall apply to damages, except punitive damages, for medical

professional liability as defined in subsection (d), section two,

article seven-b, chapter fifty-five of this code.

(h) The board may, but is not required, to obtain excess verdict

liability coverage for the programs described in subsection (a) of this

section.

(i) Each of the programs shall be liable to the extent of the limits

purchased by the health care provider as set forth in subsection (e) of

this section. In the event that a claimant and a health care provider

are willing to settle within those limits purchased by the health care

provider, but the board refuses or declines to settle, and the ultimate

verdict is in excess of the purchased limits, the board shall not be

liable for the portion of the verdict in excess of the coverage provided

in subsection (e) of this section unless the board acts in bad faith,

with actual malice, in declining or refusing to settle: Provided, That

if the board has in effect applicable excess verdict liability

insurance, the health care provider shall not be required to prove that

the board acted with actual malice in declining or refusing to settle in

order to be indemnified for that portion of the verdict in excess of the

limits of the purchased policy and within the limits of the excess

liability coverage. Notwithstanding any provision of this code to the

contrary, the board shall not be liable for any verdict in excess of the

combined limit of the purchased policy and any applicable excess

liability coverage unless the board acts in bad faith with actual

malice.

(j) Rates for each of the programs described in subsection (a) of this

section may not be excessive, inadequate or unfairly discriminatory:

Provided, That the rates charged for the preferred professional

liability insurance program shall not be less than the highest approved

comparable base rate for a licensed carrier providing five percent of

the malpractice insurance coverage in this state for the previous

calendar year on file with the insurance commissioner: Provided,

however, That if there is only one licensed carrier providing five

percent or more of the malpractice insurance coverage in the state

offering comparable coverage, the board shall have discretion to

disregard the approved comparable base rate of the licensed carrier.

(k) The premiums for each of the programs described in subsection (a) of

this section are subject to premium taxes imposed by article three,

chapter thirty-three of this code.

(l) Nothing in this article shall be construed to preclude a health care

provider from obtaining professional liability insurance coverage for

claims in excess of the coverage made available by the provisions of

this article.

(m) General liability coverage that may be required by a health care

provider may be offered as determined by the board.

(n) The board may provide coverage for the run out of, and tail coverage

for, any active policy issued pursuant to this article which is not

transferred to the physician's mutual insurance company in accordance

with section nine, article twenty- f, chapter thirty-three of this code.

The board may permit such policy holders to finance, with interest, the

tail coverage premium payments therefore, up to a maximum finance period

of five years, on such terms as the board may set.

§29-12B-14. Effective date and termination of authority.

Policies written under this article may have an effective date

retroactive to the effective date of this article. Except as provided in

subsection (n), section six of this article, the authority of the board

of risk and insurance management to issue medical liability policies

under this article shall cease upon the board's transfer, in accordance

with section nine, article twenty- f, chapter thirty-three of this code,

of assets, obligations and liabilities to the physicians' mutual

insurance company created pursuant to said article, or upon the first

day of July, two- thousand four, whichever occurs first. The board shall

continue to administer any existing policy of insurance which was issued

pursuant to this article, but was not transferred to the physician's

mutual insurance company, until the policy expires. Upon the expiration

of the policy, the board shall make tail coverage available at an

appropriate premium rate to be determined by the board. The board shall

continue to administer any tail coverage so provided. On the thirtieth

day of January each year, the board shall report to the legislature's

joint committee on government and finance the amount of any unfunded

liability associated with the run out and tail coverage provided by this

section.

ARTICLE 12C. PATIENT INJURY COMPENSATION PLAN.

§29-12C-1. Patient injury compensation plan study board created;

purpose; study of creation and funding of patient injury compensation

fund; developing rules and establishing program; and report to the

Legislature.

(a) In recognition of the statewide concern over the rising cost of

medical malpractice insurance and the difficulty that health care

practitioners have in locating affordable medical malpractice insurance,

there is hereby created a patient injury compensation fund study board

to study the feasability of establishing a patient injury compensation

fund to reimburse claimants in medical malpractice actions for any

portion of economic damages awarded which are uncollectible due to

statutory limitations on damage awards for trauma care and/or the

elimination of joint and several liability of tortfeasor health care

providers and health care facilities.

(b) The patient injury compensation fund study board shall consist of

the director of the board of risk and insurance management, who shall

serve as chairperson, the insurance commissioner and an appointee of the

governor. The patient injury compensation fund study board shall utilize

the resources of the board of risk and insurance management and the

insurance commission to effectuate the study required by this article.

The patient injury compensation fund study board shall meet upon the

call of the chair. A simple majority of the patient injury compensation

fund study board members constitutes a quorum for the transaction of

business.

(c) The patient injury compensation fund study board is authorized to

hold hearings, conduct investigations and consider, without limitation,

all options for identifying funding methods and for the operation and

administration of a patient injury compensation fund within the

following guidelines:

(1) The board of risk and insurance management is responsible for

implementing, administering and operating any patient injury

compensation fund;

(2) The patient injury compensation fund must be actuarially sound and

fully funded in accordance with generally accepted accounting

principles;

(3) Eligibility for reimbursement from the patient injury compensation

fund is limited to claimants who have been awarded damages in a medical

malpractice action but have been certified by the board of risk and

insurance management to be unable, after exhausting all reasonable means

available by law of recovering the award, to collect all or part of the

economic damages awarded due to the limitations on awards established in

sections nine and nine- c, article seven-b chapter fifty-five of this

code; and

(4) The board of risk and insurance management may invest the moneys in

the patient injury compensation fund and use any interest or other

return from investments to pay administration expenses and claims

granted.

(d) The patient injury compensation fund study board's report and

recommendations shall be completed no later than the first day of

December, two thousand three, and shall be presented to the joint

committee of government and finance during the legislative interim

meetings to be held in December, two thousand three.

29-12C-2. Legislative rules.

(a) The Legislature hereby declares that an emergency exists

necessitating expeditious implementation of a patient injury

compensation fund, if economically feasible, and directs the patient

injury compensation fund study board to propose emergency legislative

rules relating to the establishment, implementation and operation of the

patient injury compensation fund in conjunction with its report and

recommendations to the Legislature under section one of this article.

The rules proposed by the patient injury compensation fund study board

shall:

(1) Provide the funding mechanism and the methodology for processing and

timely and accurately collect funds;

(2) Assure the actuarial soundness of the patient injury compensation

fund and sufficient moneys to satisfy all foreseeable claims against the

patient injury compensation fund, giving due consideration to relevant

loss or claim experience or trends and normal costs of operation;

(3) Provide a reasonable reserve fund for unexpected contingencies,

consistent with generally accepted accounting principles;

(4) Establish appropriate procedures for notification of payment

adjustments prior to any payment periods established in which a funding

adjustment will be in effect, consistent with generally accepted

accounting principles;

(5) Establish procedures for determining eligibility for and

distribution of funds to claimants seeking reimbursement;

(6) Establish the requirements and procedure for certifying that a

claimant has been unable to collect a portion of the economic damages

recovered;

(7) Establish the process for submitting a claim for payment from the

patient injury compensation fund; and

(8) Establish any additional requirements and criteria consistent with

and necessary to effectuate the provisions of this article.

(b) If the Legislature accepts, in whole or in part, the recommendations

of the patient injury compensation fund study board, enacts legislation

establishing a patient injury compensation fund and approves rules

governing the initial establishment, implementation and operation of the

patient injury compensation fund, those rules shall be filed with the

secretary of state as emergency rules.

CHAPTER 30. PROFESSIONS AND OCCUPATIONS.

ARTICLE 3. WEST VIRGINIA MEDICAL PRACTICE ACT.

§30-3-14. Professional discipline of physicians and podiatrists;

reporting of information to board pertaining to medical professional

liability and professional incompetence required; penalties; grounds for

license denial and discipline of physicians and podiatrists;

investigations; physical and mental examinations; hearings; sanctions;

summary sanctions; reporting by the board; reapplication; civil and

criminal immunity; voluntary limitation of license; probable cause

determinations.

(a) The board may independently initiate disciplinary proceedings as

well as initiate disciplinary proceedings based on information received

from medical peer review committees, physicians, podiatrists, hospital

administrators, professional societies and others.

The board may initiate investigations as to professional incompetence or

other reasons for which a licensed physician or podiatrist may be

adjudged unqualified based upon criminal convictions; complaints by

citizens, pharmacists, physicians, podiatrists, peer review committees,

hospital administrators, professional societies or others; or

unfavorable outcomes arising out of medical professional liability. The

board shall initiate an investigation if it receives notice that three

or more judgments, or any combination of judgments and settlements

resulting in five or more unfavorable outcomes arising from medical

professional liability have been rendered or made against the physician

or podiatrist within a five-year period. The board may not consider any

judgments or settlements as conclusive evidence of professional

incompetence or conclusive lack of qualification to practice.

(b) Upon request of the board, any medical peer review committee in this

state shall report any information that may relate to the practice or

performance of any physician or podiatrist known to that medical peer

review committee. Copies of the requests for information from a medical

peer review committee may be provided to the subject physician or

podiatrist if, in the discretion of the board, the provision of such

copies will not jeopardize the board's investigation. In the event that

copies are provided, the subject physician or podiatrist is allowed

fifteen days to comment on the requested information and such comments

must be considered by the board.

The chief executive officer of every hospital shall, within sixty days

after the completion of the hospital's formal disciplinary procedure and

also within sixty days after the commencement of and again after the

conclusion of any resulting legal action, report in writing to the board

the name of any member of the medical staff or any other physician or

podiatrist practicing in the hospital whose hospital privileges have

been revoked, restricted, reduced or terminated for any cause, including

resignation, together with all pertinent information relating to such

action. The chief executive officer shall also report any other formal

disciplinary action taken against any physician or podiatrist by the

hospital upon the recommendation of its medical staff relating to

professional ethics, medical incompetence, medical professional

liability, moral turpitude or drug or alcohol abuse. Temporary

suspension for failure to maintain records on a timely basis or failure

to attend staff or section meetings need not be reported. Voluntary

cessation of hospital privileges for reasons unrelated to professional

competence or ethics need not be reported.

Any managed care organization operating in this state which provides a

formal peer review process shall report in writing to the board, within

sixty days after the completion of any formal peer review process and

also within sixty days after the commencement of and again after the

conclusion of any resulting legal action, the name of any physician or

podiatrist whose credentialing has been revoked or not renewed by the

managed care organization. The managed care organization shall also

report in writing to the board any other disciplinary action taken

against a physician or podiatrist relating to professional ethics,

professional liability, moral turpitude or drug or alcohol abuse within

sixty days after completion of a formal peer review process which

results in the action taken by the managed care organization. For

purposes of this subsection, "managed care organization" means a plan

that establishes, operates or maintains a network of health care

providers who have entered into agreements with and been credentialed by

the plan to provide health care services to enrollees or insureds to

whom the plan has the ultimate obligation to arrange for the provision

of or payment for health care services through organizational

arrangements for ongoing quality assurance, utilization review programs

or dispute resolutions.

Any professional society in this state comprised primarily of physicians

or podiatrists which takes formal disciplinary action against a member

relating to professional ethics, professional incompetence, medical

professional liability, moral turpitude or drug or alcohol abuse shall

report in writing to the board within sixty days of a final decision the

name of the member, together with all pertinent information relating to

the action.

Every person, partnership, corporation, association, insurance company,

professional society or other organization providing professional

liability insurance to a physician or podiatrist in this state,

including the state board of risk and insurance management, shall submit

to the board the following information within thirty days from any

judgment or settlement of a civil or medical professional liability

action excepting product liability actions: The name of the insured; the

date of any judgment or settlement; whether any appeal has been taken on

the judgment and, if so, by which party; the amount of any settlement or

judgment against the insured; and other information required by the

board.

Within thirty days from the entry of an order by a court in a medical

professional liability action or other civil action in which a physician

or podiatrist licensed by the board is determined to have rendered

health care services below the applicable standard of care, the clerk of

the court in which the order was entered shall forward a certified copy

of the order to the board.

Within thirty days after a person known to be a physician or podiatrist

licensed or otherwise lawfully practicing medicine and surgery or

podiatry in this state or applying to be licensed is convicted of a

felony under the laws of this state or of any crime under the laws of

this state involving alcohol or drugs in any way, including any

controlled substance under state or federal law, the clerk of the court

of record in which the conviction was entered shall forward to the board

a certified true and correct abstract of record of the convicting court.

The abstract shall include the name and address of the physician or

podiatrist or applicant, the nature of the offense committed and the

final judgment and sentence of the court.

Upon a determination of the board that there is probable cause to

believe that any person, partnership, corporation, association,

insurance company, professional society or other organization has failed

or refused to make a report required by this subsection, the board shall

provide written notice to the alleged violator stating the nature of the

alleged violation and the time and place at which the alleged violator

shall appear to show good cause why a civil penalty should not be

imposed. The hearing shall be conducted in accordance with the

provisions of article five, chapter twenty-nine-a of this code. After

reviewing the record of the hearing, if the board determines that a

violation of this subsection has occurred, the board shall assess a

civil penalty of not less than one thousand dollars nor more than ten

thousand dollars against the violator. The board shall notify any person

so assessed of the assessment in writing and the notice shall specify

the reasons for the assessment. If the violator fails to pay the amount

of the assessment to the board within thirty days, the attorney general

may institute a civil action in the circuit court of Kanawha County to

recover the amount of the assessment. In any civil action, the court's

review of the board's action shall be conducted in accordance with the

provisions of section four, article five, chapter twenty-nine-a of this

code. Notwithstanding any other provision of this article to the

contrary, when there are conflicting views by recognized experts as to

whether any alleged conduct breaches an applicable standard of care, the

evidence must be clear and convincing before the board may find that the

physician or podiatrist has demonstrated a lack of professional

competence to practice with a reasonable degree of skill and safety for

patients.

Any person may report to the board relevant facts about the conduct of

any physician or podiatrist in this state which in the opinion of that

person amounts to medical professional liability or professional

incompetence.

The board shall provide forms for filing reports pursuant to this

section. Reports submitted in other forms shall be accepted by the

board.

The filing of a report with the board pursuant to any provision of this

article, any investigation by the board or any disposition of a case by

the board does not preclude any action by a hospital, other health care

facility or professional society comprised primarily of physicians or

podiatrists to suspend, restrict or revoke the privileges or membership

of the physician or podiatrist.

(c) The board may deny an application for license or other authorization

to practice medicine and surgery or podiatry in this state and may

discipline a physician or podiatrist licensed or otherwise lawfully

practicing in this state who, after a hearing, has been adjudged by the

board as unqualified due to any of the following reasons:

(1) Attempting to obtain, obtaining, renewing or attempting to renew a

license to practice medicine and surgery or podiatry by bribery,

fraudulent misrepresentation or through known error of the board;

(2) Being found guilty of a crime in any jurisdiction, which offense is

a felony, involves moral turpitude or directly relates to the practice

of medicine. Any plea of nolo contendere is a conviction for the

purposes of this subdivision;

(3) False or deceptive advertising;

(4) Aiding, assisting, procuring or advising any unauthorized person to

practice medicine and surgery or podiatry contrary to law;

(5) Making or filing a report that the person knows to be false;

intentionally or negligently failing to file a report or record required

by state or federal law; willfully impeding or obstructing the filing of

a report or record required by state or federal law; or inducing another

person to do any of the foregoing. The reports and records covered in

this subdivision mean only those that are signed in the capacity as a

licensed physician or podiatrist;

(6) Requesting, receiving or paying directly or indirectly a payment,

rebate, refund, commission, credit or other form of profit or valuable

consideration for the referral of patients to any person or entity in

connection with providing medical or other health care services or

clinical laboratory services, supplies of any kind, drugs, medication or

any other medical goods, services or devices used in connection with

medical or other health care services;

(7) Unprofessional conduct by any physician or podiatrist in referring a

patient to any clinical laboratory or pharmacy in which the physician or

podiatrist has a proprietary interest unless the physician or podiatrist

discloses in writing such interest to the patient. The written

disclosure shall indicate that the patient may choose any clinical

laboratory for purposes of having any laboratory work or assignment

performed or any pharmacy for purposes of purchasing any prescribed drug

or any other medical goods or devices used in connection with medical or

other health care services.

As used in this subdivision, "proprietary interest" does not include an

ownership interest in a building in which space is leased to a clinical

laboratory or pharmacy at the prevailing rate under a lease arrangement

that is not conditional upon the income or gross receipts of the

clinical laboratory or pharmacy;

(8) Exercising influence within a patient-physician relationship for the

purpose of engaging a patient in sexual activity;

(9) Making a deceptive, untrue or fraudulent representation in the

practice of medicine and surgery or podiatry;

(10) Soliciting patients, either personally or by an agent, through the

use of fraud, intimidation or undue influence;

(11) Failing to keep written records justifying the course of treatment

of a patient, including, but not limited to, patient histories,

examination and test results and treatment rendered, if any;

(12) Exercising influence on a patient in such a way as to exploit the

patient for financial gain of the physician or podiatrist or of a third

party. Any influence includes, but is not limited to, the promotion or

sale of services, goods, appliances or drugs;

(13) Prescribing, dispensing, administering, mixing or otherwise

preparing a prescription drug, including any controlled substance under

state or federal law, other than in good faith and in a therapeutic

manner in accordance with accepted medical standards and in the course

of the physician's or podiatrist's professional practice: Provided, That

a physician who discharges his or her professional obligation to relieve

the pain and suffering and promote the dignity and autonomy of dying

patients in his or her care and, in so doing, exceeds the average dosage

of a pain relieving controlled substance, as defined in Schedules II and

III of the Uniform Controlled Substance Act, does not violate this

article;

(14) Performing any procedure or prescribing any therapy that, by the

accepted standards of medical practice in the community, would

constitute experimentation on human subjects without first obtaining

full, informed and written consent;

(15) Practicing or offering to practice beyond the scope permitted by

law or accepting and performing professional responsibilities that the

person knows or has reason to know he or she is not competent to

perform;

(16) Delegating professional responsibilities to a person when the

physician or podiatrist delegating the responsibilities knows or has

reason to know that the person is not qualified by training, experience

or licensure to perform them;

(17) Violating any provision of this article or a rule or order of the

board or failing to comply with a subpoena or subpoena duces tecum

issued by the board;

(18) Conspiring with any other person to commit an act or committing an

act that would tend to coerce, intimidate or preclude another physician

or podiatrist from lawfully advertising his or her services;

(19) Gross negligence in the use and control of prescription forms;

(20) Professional incompetence; or

(21) The inability to practice medicine and surgery or podiatry with

reasonable skill and safety due to physical or mental impairment,

including deterioration through the aging process, loss of motor skill

or abuse of drugs or alcohol. A physician or podiatrist adversely

affected under this subdivision shall be afforded an opportunity at

reasonable intervals to demonstrate that he or she may resume the

competent practice of medicine and surgery or podiatry with reasonable

skill and safety to patients. In any proceeding under this subdivision,

neither the record of proceedings nor any orders entered by the board

shall be used against the physician or podiatrist in any other

proceeding.

(d) The board shall deny any application for a license or other

authorization to practice medicine and surgery or podiatry in this state

to any applicant who, and shall revoke the license of any physician or

podiatrist licensed or otherwise lawfully practicing within this state

who, is found guilty by any court of competent jurisdiction of any

felony involving prescribing, selling, administering, dispensing, mixing

or otherwise preparing any prescription drug, including any controlled

substance under state or federal law, for other than generally accepted

therapeutic purposes. Presentation to the board of a certified copy of

the guilty verdict or plea rendered in the court is sufficient proof

thereof for the purposes of this article. A plea of nolo contendere has

the same effect as a verdict or plea of guilt.

(e) The board may refer any cases coming to its attention to an

appropriate committee of an appropriate professional organization for

investigation and report. Except for complaints related to obtaining

initial licensure to practice medicine and surgery or podiatry in this

state by bribery or fraudulent misrepresentation, any complaint filed

more than two years after the complainant knew, or in the exercise of

reasonable diligence should have known, of the existence of grounds for

the complaint shall be dismissed: Provided, That in cases of conduct

alleged to be part of a pattern of similar misconduct or professional

incapacity that, if continued, would pose risks of a serious or

substantial nature to the physician's or podiatrist's current patients,

the investigating body may conduct a limited investigation related to

the physician's or podiatrist's current capacity and qualification to

practice and may recommend conditions, restrictions or limitations on

the physician's or podiatrist's license to practice that it considers

necessary for the protection of the public. Any report shall contain

recommendations for any necessary disciplinary measures and shall be

filed with the board within ninety days of any referral. The

recommendations shall be considered by the board and the case may be

further investigated by the board. The board after full investigation

shall take whatever action it considers appropriate, as provided in this

section.

(f) The investigating body, as provided for in subsection (e) of this

section, may request and the board under any circumstances may require a

physician or podiatrist or person applying for licensure or other

authorization to practice medicine and surgery or podiatry in this state

to submit to a physical or mental examination by a physician or

physicians approved by the board. A physician or podiatrist submitting

to an examination has the right, at his or her expense, to designate

another physician to be present at the examination and make an

independent report to the investigating body or the board. The expense

of the examination shall be paid by the board. Any individual who

applies for or accepts the privilege of practicing medicine and surgery

or podiatry in this state is considered to have given his or her consent

to submit to all examinations when requested to do so in writing by the

board and to have waived all objections to the admissibility of the

testimony or examination report of any examining physician on the ground

that the testimony or report is privileged communication. If a person

fails or refuses to submit to an examination under circumstances which

the board finds are not beyond his or her control, failure or refusal is

prima facie evidence of his or her inability to practice medicine and

surgery or podiatry competently and in compliance with the standards of

acceptable and prevailing medical practice.

(g) In addition to any other investigators it employs, the board may

appoint one or more licensed physicians to act for it in investigating

the conduct or competence of a physician.

(h) In every disciplinary or licensure denial action, the board shall

furnish the physician or podiatrist or applicant with written notice

setting out with particularity the reasons for its action. Disciplinary

and licensure denial hearings shall be conducted in accordance with the

provisions of article five, chapter twenty-nine-a of this code. However,

hearings shall be heard upon sworn testimony and the rules of evidence

for trial courts of record in this state shall apply to all hearings. A

transcript of all hearings under this section shall be made, and the

respondent may obtain a copy of the transcript at his or her expense.

The physician or podiatrist has the right to defend against any charge

by the introduction of evidence, the right to be represented by counsel,

the right to present and cross-examine witnesses and the right to have

subpoenas and subpoenas duces tecum issued on his or her behalf for the

attendance of witnesses and the production of documents. The board shall

make all its final actions public. The order shall contain the terms of

all action taken by the board.

(i) In disciplinary actions in which probable cause has been found by

the board, the board shall, within twenty days of the date of service of

the written notice of charges or sixty days prior to the date of the

scheduled hearing, whichever is sooner, provide the respondent with the

complete identity, address and telephone number of any person known to

the board with knowledge about the facts of any of the charges; provide

a copy of any statements in the possession of or under the control of

the board; provide a list of proposed witnesses with addresses and

telephone numbers, with a brief summary of his or her anticipated

testimony; provide disclosure of any trial expert pursuant to the

requirements of rule 26(b)(4) of the West Virginia rules of civil

procedure; provide inspection and copying of the results of any reports

of physical and mental examinations or scientific tests or experiments;

and provide a list and copy of any proposed exhibit to be used at the

hearing: Provided, That the board shall not be required to furnish or

produce any materials which contain opinion work product information or

would be a violation of the attorney-client privilege. Within twenty

days of the date of service of the written notice of charges, the board

shall disclose any exculpatory evidence with a continuing duty to do so

throughout the disciplinary process. Within thirty days of receipt of

the board's mandatory discovery, the respondent shall provide the board

with the complete identity, address and telephone number of any person

known to the respondent with knowledge about the facts of any of the

charges; provide a list of proposed witnesses with addresses and

telephone numbers, to be called at hearing, with a brief summary of his

or her anticipated testimony; provide disclosure of any trial expert

pursuant to the requirements of rule 26(b)(4) of the West Virginia rules

of civil procedure; provide inspection and copying of the results of any

reports of physical and mental examinations or scientific tests or

experiments; and provide a list and copy of any proposed exhibit to be

used at the hearing.

(j) Whenever it finds any person unqualified because of any of the

grounds set forth in subsection (c) of this section, the board may enter

an order imposing one or more of the following:

(1) Deny his or her application for a license or other authorization to

practice medicine and surgery or podiatry;

(2) Administer a public reprimand;

(3) Suspend, limit or restrict his or her license or other authorization

to practice medicine and surgery or podiatry for not more than five

years, including limiting the practice of that person to, or by the

exclusion of, one or more areas of practice, including limitations on

practice privileges;

(4) Revoke his or her license or other authorization to practice

medicine and surgery or podiatry or to prescribe or dispense controlled

substances for a period not to exceed ten years;

(5) Require him or her to submit to care, counseling or treatment

designated by the board as a condition for initial or continued

licensure or renewal of licensure or other authorization to practice

medicine and surgery or podiatry;

(6) Require him or her to participate in a program of education

prescribed by the board;

(7) Require him or her to practice under the direction of a physician or

podiatrist designated by the board for a specified period of time; and

(8) Assess a civil fine of not less than one thousand dollars nor more

than ten thousand dollars.

(k) Notwithstanding the provisions of section eight, article one,

chapter thirty of this code, if the board determines the evidence in its

possession indicates that a physician's or podiatrist's continuation in

practice or unrestricted practice constitutes an immediate danger to the

public, the board may take any of the actions provided for in subsection

(j) of this section on a temporary basis and without a hearing if

institution of proceedings for a hearing before the board are initiated

simultaneously with the temporary action and begin within fifteen days

of the action. The board shall render its decision within five days of

the conclusion of a hearing under this subsection.

(l) Any person against whom disciplinary action is taken pursuant to the

provisions of this article has the right to judicial review as provided

in articles five and six, chapter twenty-nine-a of this code: Provided,

That a circuit judge may also remand the matter to the board if it

appears from competent evidence presented to it in support of a motion

for remand that there is newly discovered evidence of such a character

as ought to produce an opposite result at a second hearing on the merits

before the board and:

(1) The evidence appears to have been discovered since the board

hearing; and

(2) The physician or podiatrist exercised due diligence in asserting his

or her evidence and that due diligence would not have secured the newly

discovered evidence prior to the appeal.

A person may not practice medicine and surgery or podiatry or deliver

health care services in violation of any disciplinary order revoking,

suspending or limiting his or her license while any appeal is pending.

Within sixty days, the board shall report its final action regarding

restriction, limitation, suspension or revocation of the license of a

physician or podiatrist, limitation on practice privileges or other

disciplinary action against any physician or podiatrist to all

appropriate state agencies, appropriate licensed health facilities and

hospitals, insurance companies or associations writing medical

malpractice insurance in this state, the American medical association,

the American podiatry association, professional societies of physicians

or podiatrists in the state and any entity responsible for the fiscal

administration of medicare and medicaid.

(m) Any person against whom disciplinary action has been taken under the

provisions of this article shall, at reasonable intervals, be afforded

an opportunity to demonstrate that he or she can resume the practice of

medicine and surgery or podiatry on a general or limited basis. At the

conclusion of a suspension, limitation or restriction period the

physician or podiatrist may resume practice if the board has so ordered.

(n) Any entity, organization or person, including the board, any member

of the board, its agents or employees and any entity or organization or

its members referred to in this article, any insurer, its agents or

employees, a medical peer review committee and a hospital governing

board, its members or any committee appointed by it acting without

malice and without gross negligence in making any report or other

information available to the board or a medical peer review committee

pursuant to law and any person acting without malice and without gross

negligence who assists in the organization, investigation or preparation

of any such report or information or assists the board or a hospital

governing body or any committee in carrying out any of its duties or

functions provided by law is immune from civil or criminal liability,

except that the unlawful disclosure of confidential information

possessed by the board is a misdemeanor as provided for in this article.

(o) A physician or podiatrist may request in writing to the board a

limitation on or the surrendering of his or her license to practice

medicine and surgery or podiatry or other appropriate sanction as

provided in this section. The board may grant the request and, if it

considers it appropriate, may waive the commencement or continuation of

other proceedings under this section. A physician or podiatrist whose

license is limited or surrendered or against whom other action is taken

under this subsection may, at reasonable intervals, petition for removal

of any restriction or limitation on or for reinstatement of his or her

license to practice medicine and surgery or podiatry.

(p) In every case considered by the board under this article regarding

discipline or licensure, whether initiated by the board or upon

complaint or information from any person or organization, the board

shall make a preliminary determination as to whether probable cause

exists to substantiate charges of disqualification due to any reason set

forth in subsection (c) of this section. If probable cause is found to

exist, all proceedings on the charges shall be open to the public who

are entitled to all reports, records and nondeliberative materials

introduced at the hearing, including the record of the final action

taken: Provided, That any medical records, which were introduced at the

hearing and which pertain to a person who has not expressly waived his

or her right to the confidentiality of the records, may not be open to

the public nor is the public entitled to the records.

(q) If the board receives notice that a physician or podiatrist has been

subjected to disciplinary action or has had his or her credentials

suspended or revoked by the board, a hospital or a professional society,

as defined in subsection (b) of this section, for three or more

incidents during a five-year period, the board shall require the

physician or podiatrist to practice under the direction of a physician

or podiatrist designated by the board for a specified period of time to

be established by the board.

(r) Notwithstanding any other provisions of this article, the board may,

at any time, on its own motion, or upon motion by the complainant, or

upon motion by the physician or podiatrist, or by stipulation of the

parties, refer the matter to mediation. The board shall obtain a list

from the West Virginia state bar's mediator referral service of

certified mediators with expertise in professional disciplinary matters.

The board and the physician or podiatrist may choose a mediator from

that list. If the board and the physician or podiatrist are unable to

agree on a mediator, the board shall designate a mediator the list by

neutral rotation. The mediation shall not be considered a proceeding

open to the public and any reports and records introduced at the

mediation shall not become part of the public record. The mediator and

all participants in the mediation shall maintain and preserve the

confidentiality of all mediation proceedings and records. The mediator

may not be subpoenaed or called to testify or otherwise be subject to

process requiring disclosure of confidential information in any

proceeding relating to or arising out of the disciplinary or licensure

matter mediated: Provided, That any confidentiality agreement and any

written agreement made and signed by the parties as a result of

mediation may be used in any proceedings subsequently instituted to

enforce the written agreement. The agreements may be used in other

proceedings if the parties agree in writing.

ARTICLE 14. OSTEOPATHIC PHYSICIANS AND SURGEONS.

§30-14-12a. Initiation of suspension or revocation proceedings allowed

and required; reporting of information to board pertaining to

professional malpractice and professional incompetence required;

penalties; probable cause determinations.

(a) The board may independently initiate suspension or revocation

proceedings as well as initiate suspension or revocation proceedings

based on information received from any person.

The board shall initiate investigations as to professional incompetence

or other reasons for which a licensed osteopathic physician and surgeon

may be adjudged unqualified if the board receives notice that three or

more judgments or any combination of judgments and settlements resulting

in five or more unfavorable outcomes arising from medical professional

liability have been rendered or made against such osteopathic physician

within a five- year period.

(b) Upon request of the board, any medical peer review committee in this

state shall report any information that may relate to the practice or

performance of any osteopathic physician known to that medical peer

review committee. Copies of such requests for information from a medical

peer review committee may be provided to the subject osteopathic

physician if, in the discretion of the board, the provision of such

copies will not jeopardize the board's investigation. In the event that

copies are provided, the subject osteopathic physician has fifteen days

to comment on the requested information and such comments must be

considered by the board.

After the completion of a hospital's formal disciplinary procedure and

after any resulting legal action, the chief executive officer of such

hospital shall report in writing to the board within sixty days the name

of any member of the medical staff or any other osteopathic physician

practicing in the hospital whose hospital privileges have been revoked,

restricted, reduced or terminated for any cause, including resignation,

together with all pertinent information relating to such action. The

chief executive officer shall also report any other formal disciplinary

action taken against any osteopathic physician by the hospital upon the

recommendation of its medical staff relating to professional ethics,

medical incompetence, medical malpractice, moral turpitude or drug or

alcohol abuse. Temporary suspension for failure to maintain records on a

timely basis or failure to attend staff or section meetings need not be

reported.

Any professional society in this state comprised primarily of

osteopathic physicians or physicians and surgeons of other schools of

medicine which takes formal disciplinary action against a member

relating to professional ethics, professional incompetence, professional

malpractice, moral turpitude or drug or alcohol abuse, shall report in

writing to the board within sixty days of a final decision the name of

such member, together with all pertinent information relating to such

action.

Every person, partnership, corporation, association, insurance company,

professional society or other organization providing professional

liability insurance to an osteopathic physician in this state shall

submit to the board the following information within thirty days from

any judgment, dismissal or settlement of a civil action or of any claim

involving the insured: The date of any judgment, dismissal or

settlement; whether any appeal has been taken on the judgment, and, if

so, by which party; the amount of any settlement or judgment against the

insured; and such other information required by the board.

Within thirty days after a person known to be an osteopathic physician

licensed or otherwise lawfully practicing medicine and surgery in this

state or applying to be licensed is convicted of a felony under the laws

of this state, or of any crime under the laws of this state involving

alcohol or drugs in any way, including any controlled substance under

state or federal law, the clerk of the court of record in which the

conviction was entered shall forward to the board a certified true and

correct abstract of record of the convicting court. The abstract shall

include the name and address of such osteopathic physician or applicant,

the nature of the offense committed and the final judgment and sentence

of the court.

Upon a determination of the board that there is probable cause to

believe that any person, partnership, corporation, association,

insurance company, professional society or other organization has failed

or refused to make a report required by this subsection, the board shall

provide written notice to the alleged violator stating the nature of the

alleged violation and the time and place at which the alleged violator

shall appear to show good cause why a civil penalty should not be

imposed. The hearing shall be conducted in accordance with the

provisions of article five, chapter twenty- nine-a of this code. After

reviewing the record of such hearing, if the board determines that a

violation of this subsection has occurred, the board shall assess a

civil penalty of not less than one thousand dollars nor more than ten

thousand dollars against such violator. The board shall notify anyone

assessed of the assessment in writing and the notice shall specify the

reasons for the assessment. If the violator fails to pay the amount of

the assessment to the board within thirty days, the attorney general may

institute a civil action in the circuit court of Kanawha County to

recover the amount of the assessment. In any such civil action, the

court's review of the board's action shall be conducted in accordance

with the provisions of section four, article five, chapter twenty-nine-a

of this code.

Any person may report to the board relevant facts about the conduct of

any osteopathic physician in this state which in the opinion of such

person amounts to professional malpractice or professional incompetence.

The board shall provide forms for filing reports pursuant to this

section. Reports submitted in other forms shall be accepted by the

board.

The filing of a report with the board pursuant to any provision of this

article, any investigation by the board or any disposition of a case by

the board does not preclude any action by a hospital, other health care

facility or professional society comprised primarily of osteopathic

physicians or physicians and surgeons of other schools of medicine to

suspend, restrict or revoke the privileges or membership of such

osteopathic physician.

(c) In every case considered by the board under this article regarding

suspension, revocation or issuance of a license whether initiated by the

board or upon complaint or information from any person or organization,

the board shall make a preliminary determination as to whether probable

cause exists to substantiate charges of cause to suspend, revoke or

refuse to issue a license as set forth in subsection (a), section eleven

of this article. If such probable cause is found to exist, all

proceedings on such charges shall be open to the public who are entitled

to all reports, records, and nondeliberative materials introduced at

such hearing, including the record of the final action taken: Provided,

That any medical records, which were introduced at such hearing and

which pertain to a person who has not expressly waived his right to the

confidentiality of such records, shall not be open to the public nor is

the public entitled to such records. If a finding is made that probable

cause does not exist, the public has a right of access to the complaint

or other document setting forth the charges, the findings of fact and

conclusions supporting such finding that probable cause does not exist,

if the subject osteopathic physician consents to such access.

(d) If the board receives notice that an osteopathic physician has been

subjected to disciplinary action or has had his or her credentials

suspended or revoked by the board, a medical peer review committee, a

hospital or professional society, as defined in subsection (b) of this

section, for three or more incidents in a five-year period, the board

shall require the osteopathic physician to practice under the direction

of another osteopathic physician for a specified period to be

established by the board.

CHAPTER 33. INSURANCE.

ARTICLE 2. INSURANCE COMMISSIONER.

§33-2-9a. Imposing a one-time assessment on all insurance carriers.

For the purpose of completely novating the physician liability currently

borne by the state under the West Virginia health care provider

professional liability insurance availability act found in article

twelve-b, chapter twenty-nine of this code, and to help capitalize the

physicians' mutual insurance company created pursuant to article

twenty-f of this chapter, and for all the reasons set forth in section

two of said article, the insurance commissioner shall impose a special

one-time assessment of two thousand five hundred dollars on all insurers

licensed under this chapter for the privilege of writing insurance in

the state of West Virginia, except risk retention groups defined in

subsection (f), section four, article thirty-two of this chapter and

risk purchasing groups defined in subsection (e), section seventeen of

said article. The assessment is due and payable on the first day of

July, two thousand three. The commissioner shall transfer funds

collected pursuant to this section to the physicians' mutual insurance

company.

ARTICLE 3. LICENSING, FEES AND TAXATION OF INSURERS.

§33-3-14. Annual financial statement and premium tax return; remittance

by insurer of premium tax, less certain deductions; special revenue fund

created.

(a) Every insurer transacting insurance in West Virginia shall file with

the commissioner, on or before the first day of March, each year, a

financial statement made under oath of its president or secretary and on

a form prescribed by the commissioner. The insurer shall also, on or

before the first day of March of each year subject to the provisions of

section fourteen-c of this article, under the oath of its president or

secretary, make a premium tax return for the previous calendar year, on

a form prescribed by the commissioner showing the gross amount of direct

premiums, whether designated as a premium or by some other name,

collected and received by it during the previous calendar year on

policies covering risks resident, located or to be performed in this

state and compute the amount of premium tax chargeable to it in

accordance with the provisions of this article, deducting the amount of

quarterly payments as required to be made pursuant to the provisions of

section fourteen-c of this article, if any, less any adjustments to the

gross amount of the direct premiums made during the calendar year, if

any, and transmit with the return to the commissioner a remittance in

full for the tax due. The tax is the sum equal to two percent of the

taxable premium, and also includes any additional tax due under section

fourteen-a of this article. All taxes received by the commissioner shall

be paid into the insurance tax fund created in subsection (b) of this

section: Provided, That each year, the first one million six hundred

sixty- seven thousand dollars of the portion of taxes received by the

commissioner from insurance policies for medical liability insurance as

defined in section three, article twenty-f of this chapter and from any

insurer on its medical malpractice line, shall be temporarily dedicated

to replenishing moneys appropriated from the tobacco settlement account

pursuant to subsection (c), section two, article eleven-a, chapter four

of this code. Upon determination by the commissioner that these moneys

have been fully replenished to the tobacco settlement account, the

commissioner shall resume depositing taxes received from medical

malpractice premiums as provided in subsection (b) of this section.

(b) There is created in the state treasury a special revenue fund,

administered by the treasurer, designated the "insurance tax fund." This

fund is not part of the general revenue fund of the state. It consists

of all amounts deposited in the fund pursuant to subsection (a) of this

section, sections fifteen and seventeen of this article, any

appropriations to the fund, all interest earned from investment of the

fund and any gifts, grants or contributions received by the fund.

(c) The treasurer shall dedicate and transfer from the insurance tax

fund to the regional jail and correctional facility investment fund

created under the provisions of section twenty-one, article six, chapter

twelve of this code, on or before the tenth day of each month, an amount

equal to one twelfth of the projected annual investment earnings to be

paid and the capital invested to be returned, as certified to the

treasurer by the investment management board: Provided, That the amount

dedicated and transferred may not exceed twenty million dollars in any

fiscal year. In the event there are insufficient funds available in any

month to transfer the amount required pursuant to this subsection to the

regional jail and correctional facility investment fund, the deficiency

shall be added to the amount transferred in the next succeeding month in

which revenues are available to transfer the deficiency. Each month a

lien on the revenues generated from the insurance premium tax, the

annuity tax and the minimum tax, provided in this section and sections

fifteen and seventeen of this article, up to a maximum amount equal to

one twelfth of the projected annual principal and return is granted to

the investment management board to secure the investment made with the

regional jail and correctional facility authority pursuant to section

twenty, article six, chapter twelve of this code. The treasurer shall,

no later than the last business day of each month, transfer amounts the

treasurer determines are not necessary for making refunds under this

article to meet the requirements of subsection (d), section twenty-one,

article six, chapter twelve of this code, to the credit of the general

revenue fund. Commencing on the first day of the month following the

month in which the investment created under the provisions of section

twenty-one, article six, chapter twelve of this code, is returned to the

investment management board, the treasurer shall transfer all amounts

deposited in the insurance tax fund as appropriated by the Legislature.

§ 33-3-14a. Additional premium tax.

For the purpose of providing additional revenue for the state general

revenue fund, there is hereby levied and imposed, in addition to the

taxes imposed by section fourteen of this article, an additional premium

tax equal to one percent of taxable premiums. Except as otherwise

provided in this section, all provisions of this article relating to the

levy, imposition and collection of the regular premium tax shall be

applicable to the levy, imposition and collection of the additional tax.

All moneys received from the additional tax imposed by this section,

less deductions allowed by this article for refunds and for costs of

administration, shall be received by the commissioner and shall be paid

by him or her into the state treasury for the benefit of the state fund:

Provided, That each year, the first eight hundred thirty-three thousand

dollars of the portion of taxes received by the commissioner from

insurance policies for medical liability insurance as defined in section

three, article twenty-f of this chapter and from any insurer on its

medical malpractice line, shall be temporarily dedicated to replenishing

moneys appropriated from the tobacco settlement account pursuant to

subsection (c), section two, article eleven-a of chapter four of this

code. Upon determination by the commissioner that these moneys have been

fully replenished to the tobacco settlement account, the commissioner

shall resume depositing taxes received from medical malpractice premiums

as provided herein.

ARTICLE 4. GENERAL PROVISIONS.

§33-4-15a. Credit for reinsurance; definitions; requirements; trust

accounts; reductions from liability; security; effective date.

(a) For purposes of this section, an "accredited reinsurer" is one

which:

(1) Has filed an application for accreditation and received a letter of

accreditation from the commissioner;

(2) Is licensed to transact insurance or reinsurance in at least one of

the fifty states of the United States or the District of Columbia or, in

the case of a United States branch of an alien assuming insurer, is

entered through and licensed to transact insurance or reinsurance in at

least one of the fifty states of the United States or the District of

Columbia;

(3) Has filed with the application a certified statement that the

company submits to this state's jurisdiction and that the company will

comply with the laws and rules of the state of West Virginia;

(4) Has filed with the application a certified statement that the

company submits to the examination authority granted the commissioner by

section nine, article two of this chapter and will pay all examination

costs and fees as required by that section, and the one-time assessment

on insurers imposed under section nine-a, article two of this chapter;

(5) Has filed with the application a copy of its most recent annual

statement in a form consistent with the requirements of subdivision (8)

of this subsection and a copy of its last audited financial statement;

(6) Has filed any other information the commissioner requests to

determine that the company qualifies for accreditation under this

section;

(7) Has remitted the applicable processing fee with its application for

accreditation;

(8) Files with the commissioner after initial accreditation on or before

the first day of March of each year a true statement of its financial

condition, transactions and affairs as of the preceding thirty-first day

of December. The statement shall be on the appropriate national

association of insurance commissioners annual statement blank; shall be

prepared in accordance with the national association of insurance

commissioners annual statement instructions; and shall follow the

accounting practices and procedures prescribed by the national

association of insurance commissioners accounting practices and

procedures manual as amended. The statement shall be accompanied by the

applicable annual statement filing fee. The commissioner may grant

extensions of time for filing of this annual statement upon application

by the accredited reinsurer; and

(9) Files with the commissioner after initial accreditation by the first

day of June of each year a copy of its audited financial statement for

the period ending the preceding thirty-first day of December.

(b) If the commissioner determines that the assuming insurer has failed

to continue to meet any of these qualifications, he or she may upon

written notice and hearing, as prescribed by section thirteen, article

two of this chapter, revoke an assuming insurer's accreditation. Credit

shall not be allowed to a ceding insurer if the assuming insurer's

accreditation has been revoked by the commissioner after notice and

hearing.

(c) Credit for reinsurance shall be allowed a domestic ceding insurer or

any foreign or alien insurer transacting insurance in West Virginia that

is domiciled in a jurisdiction that employs standards regarding credit

for reinsurance that are not substantially similar to those applicable

under this article as either an asset or a deduction from liability on

account of reinsurance ceded only when the reinsurer meets one of the

following requirements:

(1) Credit shall be allowed when the reinsurance is ceded to an assuming

insurer which is licensed to transact insurance or reinsurance in this

state.

(2) Credit shall be allowed when the reinsurance is ceded to an assuming

insurer which is accredited as a reinsurer in this state prior to the

effective date of the reinsurance contract.

(3) Credit shall be allowed when the reinsurance is ceded to an assuming

insurer which is domiciled and licensed in, or in the case of a United

States branch of an alien assuming insurer, is entered through one of

the fifty states of the United States or the District of Columbia and

which employs standards regarding credit for reinsurance substantially

similar to those applicable under this statute, and the ceding insurer

provides evidence suitable to the commissioner that the assuming

insurer:

(A) Maintains a surplus as regards policyholders in an amount not less

than twenty million dollars: Provided, That the requirements of this

paragraph do not apply to reinsurance ceded and assumed pursuant to

pooling arrangements among insurers in the same holding company system;

(B) The ceding insurer provides the commissioner with a certified

statement from the assuming insurer that the assuming insurer submits to

the authority of this state to examine its books and records granted the

commissioner by section nine, article two of this chapter and will pay

all examination costs and fees as required by that section; and

(C) The reinsurer complies with the provisions of subdivision (6),

subsection (c) herein.

(4) Credit shall be allowed when the reinsurance is ceded to an assuming

insurer which maintains a trust fund as required by subsection (d)

herein in a qualified United States financial institution, as defined by

this section, for the payment of the valid claims of its United States

policyholders and ceding insurers, their assigns and successors in

interest, and complies with the provisions of subdivision (6) herein.

(5) Credit shall be allowed when the reinsurance is ceded to an assuming

insurer not meeting the requirements of subdivisions (1) through (4),

inclusive, subsection (c) of this section, but only with respect to the

insurance of risks located in jurisdictions where such reinsurance is

required by applicable law or regulation of that jurisdiction.

(6) If the assuming insurer is not licensed or accredited to transact

insurance or reinsurance in this state, the credit permitted by

subdivisions (3) and (4) of this subsection shall not be allowed unless

the assuming insurer agrees in the reinsurance agreements:

(A) That in the event of the failure of the assuming insurer to perform

its obligations under the terms of the reinsurance agreement, the

assuming insurer, at the request of the ceding insurer, shall submit to

the jurisdiction of any court of competent jurisdiction in any state of

the United States, shall comply with all requirements necessary to give

such court jurisdiction and shall abide by the final decision of such

court or of any appellate court in the event of an appeal; and

(B) To designate the secretary of state as its true and lawful attorney

upon whom may be served any lawful process in any action, suit or

proceeding instituted by or on behalf of the ceding company. Process

shall be served upon the secretary of state, or accepted by him or her,

in the same manner as provided for service of process upon unlicensed

insurers under section thirteen of this article: Provided, That this

provision is not intended to conflict with or override the obligation of

the parties to a reinsurance agreement to arbitrate their disputes, if

such an obligation is created in the agreement.

(d) Whenever an assuming insurer establishes a trust fund for the

payment of claims pursuant to the provisions of this section, the

following requirements shall apply:

(1) The assuming insurer shall report annually to the commissioner

information substantially the same as that required to be reported on

the national association of insurance commissioners annual statement

form by licensed insurers to enable the commissioner to determine the

sufficiency of the trust fund. In the case of a single assuming insurer,

the trust shall consist of a trusteed account representing the assuming

insurer's liabilities attributable to business written in the United

States and, in addition, the assuming insurer shall maintain a trusteed

surplus of not less than twenty million dollars. In the case of a group,

including incorporated and individual unincorporated underwriters, the

trust shall consist of a trusteed account representing the group's

liabilities attributable to business written in the United States and,

in addition, the group shall maintain a trusteed surplus of which one

hundred million dollars shall be held jointly for the benefit of United

States ceding insurers of any member of the group. The incorporated

members of the group shall not be engaged in any business other than

underwriting as a member of the group and shall be subject to the same

level of solvency regulation and control by the group's domiciliary

regulator as are the unincorporated members. The group shall make

available to the commissioner an annual certification of the solvency of

each underwriter by the group's domiciliary regulator and its

independent public accountants.

(2) In the case of a group of incorporated insurers under common

administration which complies with the filing requirements contained in

the previous paragraph; which has continuously transacted an insurance

business outside the United States for at least three years immediately

prior to making application for accreditation; which submits to this

state's authority to examine its books and records and bears the expense

of the examination; and which has aggregate policyholders' surplus of

ten billion dollars, the trust shall be in an amount equal to the

group's several liabilities attributable to business ceded by United

States ceding insurers to any member of the group pursuant to

reinsurance contracts issued in the name of the group. The group shall

also maintain a joint trusteed surplus of which one hundred million

dollars shall be held jointly for the benefit of United States ceding

insurers of any member of the group as additional security for any such

liabilities. Each member of the group shall make available to the

commissioner an annual certification of the member's solvency by the

member's domiciliary regulator and its independent public accountants.

(3) Any trust that is subject to the provisions of this section shall be

established in a form approved by the commissioner. The trust instrument

shall provide that contested claims shall be valid and enforceable upon

the final order of any court of competent jurisdiction in the United

States. The trust shall vest legal title to its assets in the trustees

of the trust for its United States policyholders and ceding insurers,

their assigns and successors in interest. The trust and the assuming

insurer shall be subject to examination as determined by the

commissioner. The trust described herein shall remain in effect for as

long as the assuming insurer shall have outstanding obligations due

under the reinsurance agreements subject to the trust.

(4) No later than the twenty-eighth day of February of each year the

trustees of the trust shall report to the commissioner in writing

setting forth the balance of the trust and listing the trust's

investments at the preceding year's end. The trustees shall certify the

date of termination of the trust, if so planned, or certify that the

trust shall not expire prior to the next following December

thirty-first.

(e) A reduction from liability for the reinsurance ceded by a ceding

insurer subject to the requirements of this article to an assuming

insurer not meeting the requirements of subsection (c) of this section

shall be allowed in an amount not exceeding the liabilities carried by

the ceding insurer. The reduction shall be in the amount of funds held

by or on behalf of the ceding insurer, including funds held in trust for

the ceding insurer, under a reinsurance contract with the assuming

insurer as security for the payment of obligations thereunder: Provided,

That the security is held in the United States subject to withdrawal

solely by, and under the exclusive control of, the ceding insurer; or,

in the case of a trust, held in a qualified United States financial

institution, as defined by this section. The security may be in the form

of:

(1) Cash;

(2) Securities listed by the securities valuation office of the national

association of insurance commissioners and qualifying as admitted

assets; or

(3) Clean, irrevocable, unconditional letters of credit, issued or

confirmed by a qualified United States financial institution, as defined

by this section, no later than the thirty- first day of December of the

year for which filing is being made, and in the possession of the ceding

company on or before the filing date of its annual statement: Provided,

That letters of credit meeting applicable standards of issuer

acceptability as of the dates of their issuance or confirmation shall,

notwithstanding the issuing or confirming institution's subsequent

failure to meet applicable standards of issuer acceptability, continue

to be acceptable as security until their expiration, extension, renewal,

modification or amendment, whichever first occurs.

(f) For purposes of this section, a "qualified United States financial

institution" means an institution that:

(1) Is organized or licensed under the laws of the United States or any

state thereof;

(2) Is regulated, supervised and examined by United States federal or

state authorities having regulatory authority over banks and trust

companies; and

(3) Has been determined by either the commissioner, or the securities

valuation office of the national association of insurance commissioners,

to meet the standards of financial condition and standing as are

considered necessary and appropr