2007 Minnesota Statutes

CHAPTER 62F. MEDICAL PRACTICE INSURANCE

62F.01 CITATION.
    Subdivision 1. Name of act. Sections 62F.01 to 62F.14 may be cited as the "Joint
Underwriting Association Act."
    Subd. 2.[Repealed by amendment, 1986 c 455 s 15]
History: 1976 c 242 s 2; 1978 c 571 s 1; 1980 c 596 s 8; 1982 c 374 s 1; 1986 c 455 s 15

62F.02 JOINT UNDERWRITING ASSOCIATION.
    Subdivision 1. Creation. There is created a Joint Underwriting Association to provide
medical malpractice insurance coverage to any licensed health care provider unable to obtain
this insurance through ordinary methods, who practices or provides professional services within
the state of Minnesota and obtains at least 60 percent of gross revenues from patients who are
residents of the state of Minnesota. Every insurer authorized to write and writing personal injury
liability insurance in this state shall be a member of the association as a condition to obtaining and
retaining a license to write insurance in this state.
    Subd. 2. Directors. The association shall have a board of directors composed of 11 persons
chosen for a term of four years as follows: five persons elected by members of the association at
a meeting called by the commissioner; three members who are health care providers appointed
by the commissioner prior to the election by the association; and three public members, as
defined in section 214.02, appointed by the governor prior to the election by the association. If
the commissioner determines that it is no longer cost-effective or efficient to operate a separate
board of directors to administer the Medical Malpractice Joint Underwriting Association, the
commissioner shall deactivate the board and assign all of the board's authority and responsibilities
under this chapter to the Minnesota Joint Underwriting Association Board of Directors established
under section 62I.02.
History: 1976 c 242 s 3; 1986 c 455 s 16; 1994 c 425 s 13; 1995 c 258 s 42; 1996 c 446
art 1 s 42

62F.03 DEFINITIONS.
    Subdivision 1. Scope. As used in sections 62F.01 to 62F.14, the following words shall
have the meanings given.
    Subd. 2. Association. "Association" means the Joint Underwriting Association.
    Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce.
    Subd. 4. Medical malpractice insurance. "Medical malpractice insurance" means insurance
against loss, damage or expense incident to a claim arising out of the death or injury of any
person as the result of negligence or malpractice in rendering professional service by any licensed
health care provider.
    Subd. 5. Member. "Member" means every insurer authorized to write and writing personal
injury liability insurance in this state.
    Subd. 6. Net direct premiums. "Net direct premiums" means gross direct premiums written
on personal injury liability insurance, including the liability component of multiple peril package
policies as computed by the commissioner, less return premiums for the unused or unabsorbed
portions of premium deposits. Net direct premiums do not include policyholder dividends.
    Subd. 7. Personal injury liability insurance. "Personal injury liability insurance" means
insurance described in section 60A.06, subdivision 1, clause (13).
    Subd. 8. Professional services. "Professional services" means services performed by a
licensed health care provider which are undertaken with the objective of: providing prevention
care, rehabilitative care, treatment of specific diseases, injuries, or conditions, or care rendered
with the intent of stabilizing the patient's condition and to prevent further deterioration or injury.
Professional services does not include services provided by licensed health care providers who
rely solely on spiritual or divine intervention as the only means of care or treatment.
History: 1976 c 242 s 4; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 455 s
17; 1994 c 425 s 14; 1996 c 446 art 1 s 43

62F.04 AUTHORIZATION TO ISSUE INSURANCE.
    Subdivision 1. Commissioner's determination. If the commissioner determines after a
hearing that medical malpractice insurance cannot be made available for either physicians,
hospitals or other specific types of health care providers in the voluntary market, the commissioner
shall authorize the association to issue medical malpractice insurance on a primary basis for
physicians, hospitals or other health care providers. If the commissioner determines after a
hearing that insurance issued by the association can be made available in the voluntary market,
the commissioner shall revoke the association's authorization to issue that insurance which can be
made available.
    Subd. 1a.[Repealed, 2002 c 307 art 1 s 2]
    Subd. 2. Association's duty. If the association is authorized by the commissioner to issue
insurance, it shall:
(a) issue or cause to be issued insurance policies to applicants, including incidental
coverages, subject to limits as specified in the plan of operation but not to exceed $1,000,000 for
each claimant under one policy and $3,000,000 for all claimants under one policy in any one year;
(b) underwrite the insurance and adjust and pay losses with respect thereto, or appoint
service companies to perform those functions;
(c) assume reinsurance from its members; and
(d) cede reinsurance.
    Subd. 2a. Higher limits for long-term care providers. In addition to the policies described
in subdivision 2, the association may issue policies to long-term care providers who are members
of an activated class with limits not to exceed $2,000,000 for each claimant under one policy and
$4,000,000 for all claimants under one policy in any one year, provided that the association
finds that the applicant needs the higher limits in order to conduct its business. Prudent business
practice or mere desire to have higher limits is not a sufficient standard for the association to
issue such policies.
    Subd. 3. Avoidance of grave risk. Because the activities of certain persons or entities
present a risk that is so great, the association shall not offer insurance coverage to any person
or entity the board of directors of the association determines is outside the intended scope and
purpose of the association because of the gravity of the risk of offering insurance coverage.
History: 1976 c 242 s 5; 1986 c 444; 1986 c 455 s 18; 1996 c 446 art 1 s 44; 2002 c 307 art
1 s 1; 2004 c 212 s 1

62F.041 [Expired, 1986 c 313 s 4; 1987 c 337 s 72]

62F.05 PLAN OF OPERATION.
    Subdivision 1. Submission; provisions. Within 45 days following April 14, 1976, the
directors of the association shall submit to the commissioner for review, a proposed plan of
operation, consistent with the provisions of sections 62F.01 to 62F.14.
The plan of operation shall provide for economic, fair and nondiscriminatory administration
and for prompt and efficient providing of medical malpractice insurance. It may contain other
provisions, including but not limited to preliminary assessment of all members for initial expenses
necessary to commence operations, establishment of necessary facilities, management of the
association, assessment of members to defray losses and expenses, commission arrangements,
reasonable and objective underwriting standards, acceptance and cession of reinsurance,
appointment of servicing carriers or other servicing arrangements and procedures for determining
amounts of insurance to be provided by the association.
    Subd. 2. Approval. The plan of operation shall be subject to approval by the commissioner
after consultation with the members of the association, representatives of the public and other
affected individuals and organizations. If the commissioner disapproves all or any part of the
proposed plan of operation, the directors shall within 15 days submit for review an appropriate
revised plan of operation or part thereof. If a revised plan is not submitted within 15 days, the
commissioner shall promulgate a plan of operation or part thereof, as the case may be. The
plan of operation approved or promulgated by the commissioner shall become effective and
operational upon order of the commissioner.
    Subd. 3. Amendments. Amendments to the plan of operation may be made by the
commissioner or by the directors of the association, subject to the approval of the commissioner.
History: 1976 c 242 s 6; 1986 c 444

62F.06 POLICY FORMS AND RATES.
    Subdivision 1. Policy regulation; filing. A policy issued by the association may not extend
beyond a period of one year from the date on which the authorization under section 62F.04 ends.
The policy shall be issued subject to the group retrospective rating plan and the stabilization
reserve fund authorized by section 62F.09. The policy shall be written to apply to claims first
made against the insured and reported to the association during the policy period. No policy
form shall be used by the association unless it has been filed with the commissioner, and the
commissioner may disapprove the form within 30 days if the commissioner determines it is
misleading or violates public policy.
    Subd. 2. Cancellation; insured failure to pay stabilization reserve fund. If an insured
fails to pay a stabilization reserve fund charge the association may cancel a policy by mailing
or delivering to the insured at the address shown on the policy at least ten days' written notice
stating the date the cancellation is effective.
    Subd. 3. Rate regulation. The rates, rating plans, rating rules, rating classifications and
territories applicable to the insurance written by the association and statistics relating thereto shall
be subject to chapter 70A. Rates shall be on an actuarially sound basis, giving consideration to the
group retrospective rating plan and the stabilization reserve fund. The commissioner shall take all
appropriate steps to make available to the association the loss and expense experience of insurers
previously writing medical malpractice insurance in this state.
    Subd. 4. Retrospective rating plan. All policies issued by the association are subject to a
nonprofit group retrospective rating plan approved by the commissioner under which the final
premium for the insureds of the association, as a group, will be equal to the administrative
expenses, loss and loss adjustment expenses and taxes, plus a reasonable allowance for
contingencies and servicing. Policyholders shall be given full credit for all investment income,
net of expenses and a reasonable management fee, on policyholder supplied funds. The standard
premium, before retrospective adjustment, for each policy issued by the association shall be
established for portions of the policy period coinciding with the association's fiscal year on the
basis of the association's rates, rating plans, rating rules, rating classifications and territories then
in effect. The maximum premium for all policyholders of the association, as a group, shall be
limited as provided in sections 62F.01 to 62F.14.
    Subd. 5. Commissioner's power to examine. The commissioner shall examine the business
of the association as often as the commissioner deems appropriate to insure that the group
retrospective rating plan is operating in a manner consistent with sections 62F.01 to 62F.14. If the
commissioner finds that the operation is deficient or inconsistent with sections 62F.01 to 62F.14,
the commissioner may order the association to take corrective action.
    Subd. 6. Deficit recovery procedures. The association shall certify to the commissioner the
estimated amount of any deficit remaining after the stabilization reserve fund has been exhausted
in payment of the maximum final premium for all policyholders of the association. Within 60 days
after such certification, the commissioner shall authorize the association to recover the members'
respective shares of the deficit by one of the following procedures:
(a) applying a surcharge determined by the association at a rate not to exceed two percent of
the annual premiums on future policies affording those kinds of insurance which form the basis
for their participation in the association; or
(b) deducting the members' share of the deficit from past or future premium taxes due the
state.
If the commissioner fails to authorize a procedure in 60 days, the association may recover
its deficit pursuant to clause (b). The association shall submit an amended certification and shall
adjust the recovery procedure as its incurred losses become finalized.
    Subd. 7. Temporary member contributions. If sufficient funds are not available for the
sound financial operation of the association, pending recovery as provided in subdivision 6, all
members shall, on a temporary basis contribute to the association in the manner provided in
section 62F.07. The contribution shall be reimbursed to the members by the recovery procedure
authorized in subdivision 6.
History: 1976 c 242 s 7; 1980 c 596 s 9; 1982 c 374 s 2; 1986 c 313 s 5; 1986 c 444;
1987 c 337 s 73

62F.07 PARTICIPATION.
A member of the association shall participate in its writings, expenses, servicing allowance,
management fees and losses in the proportion that the net direct premiums of the member,
excluding that portion of premiums attributable to the operation of the association, written during
the preceding calendar year bears to the aggregate net direct premiums written in this state by
all members. The member's participation in the association shall be determined annually on the
basis of net direct premiums written during the preceding calendar year, as reported in the annual
statements and other reports filed by the member with the commissioner.
History: 1976 c 242 s 8

62F.08 PROCEDURES.
    Subdivision 1. Application. Beginning on the effective date of the plan of operation, a
licensed health care provider may apply to the association for medical malpractice insurance. An
application may be made by an authorized agent of the health care provider.
    Subd. 2. Policy issuance. If the association determines that the applicant meets the
underwriting standards of the association as described in the plan of operation and there is no
unpaid, uncontested premium due from the applicant for prior insurance, including failure to make
written objection to premium charges within 30 days after billing, the association, upon receipt
of the premium or portion thereof as is prescribed in the plan of operation, shall issue a policy
of medical malpractice insurance.
History: 1976 c 242 s 9

62F.09 STABILIZATION RESERVE FUND.
    Subdivision 1. Creation. There is created a stabilization reserve fund administered by the
association or its designee.
    Subd. 2. Policyholder charge. Each policyholder shall pay to the association a stabilization
reserve fund charge of 33 percent of each premium payment due for insurance through the
association. This charge shall be separately stated in the policy. The association shall cancel the
policy of any policyholder who fails to pay the stabilization reserve fund charge.
    Subd. 3. Association payments. The association shall promptly pay into the stabilization
reserve fund charges which it collects from its policyholders and any retrospective premium
refunds payable under the group retrospective rating plan.
    Subd. 4. Handling of fund assets. All money paid into the fund shall be held in trust by
a corporate trustee selected by the directors. The corporate trustee may invest the money held
in trust, subject to the approval of the association. All gains or losses from the investment of
stabilization reserve fund money shall be credited to the fund. All expenses of administration
of the fund shall be charged against the fund. Stabilization reserve fund money shall be used
solely for the purpose of discharging when due any retrospective premium charges payable
by policyholders of the association under the group retrospective rating plan. Payment of
retrospective premium charges shall be made upon certification by the association of the amount
due. If all moneys accruing to the fund are exhausted in payment of retrospective premium
charges, all liability and obligations of the association's policyholders with respect to the payment
of retrospective premium charges shall terminate and shall be conclusively presumed to have been
discharged. Any money remaining in the fund after all retrospective premium charges have been
paid shall be returned to policyholders under procedures authorized by the association.
History: 1976 c 242 s 10; 1986 c 313 s 6

62F.10 INVESTIGATION.
The commissioner shall investigate the association at least annually. The investigation shall
be conducted and a report filed in the manner prescribed in section 60A.031. The expenses of
the examination shall be paid by the association in the manner prescribed by section 60A.03,
subdivision 5 .
History: 1976 c 242 s 11

62F.11 PRIVILEGED COMMUNICATIONS.
No cause of action of any nature shall arise against the association, the commissioner or the
commissioner's authorized representatives or any other person or organization, for any statements
made in good faith by them during any proceedings or concerning any matters within the scope of
sections 62F.01 to 62F.14.
History: 1976 c 242 s 12; 1986 c 444

62F.12 APPEALS; JUDICIAL REVIEW.
Any applicant to the association, any person insured pursuant to sections 62F.01 to 62F.14,
or their representatives, or any affected insurer, may appeal to the commissioner within 30 days
after any ruling, action or decision by or on behalf of the association, with respect to those items
the plan of operation defines as appealable matters.
History: 1976 c 242 s 13

62F.13 PUBLIC OFFICERS OR EMPLOYEES.
No director of the stabilization reserve fund who is otherwise a public officer or employee
shall forfeit that person's office or employment or lose the rights and privileges pertaining thereto,
by reason of membership on the board of directors of the stabilization reserve fund.
History: 1976 c 242 s 14; 1986 c 444

62F.14 ANNUAL STATEMENTS.
On March 1 of each year the association shall file with the commissioner, a report of its
transactions, financial condition, and operations during the preceding year. The report shall be in a
form approved by the commissioner. The commissioner may at any time require the association
to furnish additional information to assist in evaluating the scope, operation and experience of
the association.
History: 1976 c 242 s 15