§ 5502 — Medical malpractice insurance association

§ 5502. Medical malpractice insurance association. (a) The medical\nmalpractice insurance association is continued consisting of all\ninsurers authorized to write and engaged in writing, within this state,\non a direct basis, personal injury liability insurance but excluding\nassessment cooperative fire insurance companies transacting business\npursuant to article sixty-six of this chapter. Every such insurer shall\nbe and remain a member of the association as a condition of its\nauthority to continue to transact personal injury liability insurance in\nthis state.\n (b) The association shall be a non-profit unincorporated association\nconstituting a legal entity separate and distinct from its members. All\nfunds and reserves of the association shall be separately held and\ninvested. It shall maintain complete accounts of all monies received and\nall losses and expenses incurred in connection with its operations,\nincluding investment income on policyholder-supplied funds. For the\npurpose of any contributions required by insurers to the\nproperty/casualty insurance security fund pursuant to article\nseventy-six of this chapter, and for the purpose of the protection\nafforded policyholders by such fund, the association is an authorized\ninsurer. The association shall include in the premiums charged for\nmedical malpractice insurance an amount sufficient to offset any such\ncontributions.\n (c) (1) The purpose of the association is to provide, for the period\nJuly first, nineteen hundred seventy-five through June thirtieth, two\nthousand one, a market for medical malpractice insurance pursuant to\nthis article and subject to regulation pursuant to section two thousand\nthree hundred seventeen of this chapter. If, after June thirtieth, two\nthousand one, the surcharges on premiums imposed pursuant to section\nforty, as amended, of chapter two hundred sixty-six of the laws of\nnineteen hundred eighty-six, by the superintendent to satisfy any\nactuarially projected deficiency that is attributable to the premium\nlevels for policies providing coverage for physicians and surgeons\nmedical malpractice for the periods commencing July first, nineteen\nhundred eighty-five and ending June thirtieth, two thousand one, are\nstill in effect or may still be reasonably imposed, the association\nshall continue in existence until June thirtieth next following such\ntime as such surcharges are no longer imposed or may no longer be\nreasonably imposed.\n ** (2) (A) The association shall, no later than December thirtieth,\nnineteen hundred ninety-nine, submit to the superintendent for approval\na plan for the final dissolution of the association, including a\ntransfer or extinguishment of all liabilities of the association and a\nplan for the servicing of existing policies of the association. The\ndissolution of the association and cessation of its activities shall be\nfully accomplished and the association shall be deemed dissolved at such\ntime and under such conditions as the superintendent deems proper;\nprovided, however, that all policies of insurance written by the\nassociation shall expire or be transferred prior to such dissolution.\n (B) In the preparation of a plan for the final dissolution of the\nassociation, the board of directors of the association shall: (i)\nsolicit proposed plans for the dissolution of the association from at\nleast three outside entities; (ii) arrange for an independent actuarial\nreview of the association, its operations, assets and liabilities; and\n(iii) recommend, by a majority vote of its board of directors, that\nproposal which maximizes the value of the association to the state. The\nassociation shall thereafter file all proposed plans, along with the\nplan recommended by the board, to the superintendent for approval.\n (C) (i) The superintendent shall, by April thirtieth, two thousand,\nreview all proposed plans, along with the recommended plan, filed by the\nboard of directors of the association with the superintendent and may\napprove a plan of dissolution. The superintendent may determine to add\nprovisions which may vary from those submitted by the association or\ndelete others as proposed by the association or adopt an alternate plan.\nAny plan of dissolution of the association which provides for the sale\nor transfer of its operations, assets and/or liabilities to a private\nentity shall do so net of any appropriated and encumbered amounts\nrequired by subsection (c) of section five thousand five hundred\nsixteen, subsection (c) of section five thousand five hundred sixteen-a,\nsubsection (c) of section five thousand five hundred sixteen-b,\nsubsection (c) of section five thousand five hundred sixteen-c and\nsubsection (c) of section five thousand five hundred sixteen-e of this\narticle and, in the event such plan is approved and implemented, such\nsections five thousand five hundred sixteen, five thousand five hundred\nsixteen-a, five thousand five hundred sixteen-b, five thousand five\nhundred sixteen-c, and five thousand five hundred sixteen-e are hereby\ndeemed repealed. A public hearing shall be held to examine the proposed\nplan of dissolution, the plans reviewed, and the superintendent's\nrecommended plan of approval. Such public hearing shall be held not\nlater than thirty days prior to the superintendent's approval of that\nplan which maximizes the value of the association to the state while not\nimpairing or impeding the operation of the voluntary medical malpractice\ninsurance market or limiting the access to medical malpractice coverage\nfor health care practitioners or facilities insured by the association.\nUpon approval, the superintendent shall certify the estimated amount of\nfunds to be transferred pursuant to subsection (b) of section five\nthousand five hundred sixteen-f of this article and shall transmit such\ncertification to the director of the division of the budget.\n To assist in making such determination, the superintendent may appoint\none or more qualified disinterested persons or institutions as\nconsultants to advise on any matters related to the dissolution. The\nappointment of a consultant shall be in writing and shall set forth the\nduties and responsibilities of the consultant. The association shall\nprovide access to the superintendent, and any consultants appointed by\nthe superintendent, to its books and records and any information in its\npossession necessary to make valuations and determinations required by\nthis section. For the purposes of this section, all expenses and costs\nassociated with such appointment shall be deemed and considered expenses\npursuant to section three hundred thirteen of this chapter.\n (ii) (I) Any action challenging the validity of or arising out of acts\ntaken or proposed to be taken under this paragraph two of this\nsubsection must be commenced within two months after a copy of the plan\nof final dissolution of the association, with the superintendent's\napproval endorsed thereon, has been filed in the office of the\nsuperintendent.\n (II) In any action arising out of acts taken or proposed to be taken\nunder this paragraph two of this subsection, the superintendent shall be\nentitled to, at any stage of the proceedings before final judgment,\npetition the court to give security for the costs and charges which may\nbe incurred by the superintendent in connection with such action and by\nany other parties defendant in connection therewith or for which the\nsuperintendent or the association may become liable under this chapter,\nunder any contract or otherwise by law, to which security the\nsuperintendent shall have recourse in such amount as the court having\njurisdiction of such action shall determine upon termination of such\naction. The amount of security may thereafter from time to time be\nincreased or decreased in the discretion of the court having\njurisdiction of such action upon showing that the security provided has\nor may become inadequate or excessive.\n (III) Any person aggrieved by any act taken or order, regulation, or\nrule issued pursuant to this paragraph two of this subsection may\npetition for judicial review of such acts taken or orders, regulations\nor rules, pursuant to the limitations period prescribed in clause (I) of\nitem (ii) of this subparagraph. The petition shall be brought in the\nappellate division of the supreme court in the third judicial\ndepartment. The jurisdiction of the appellate division of the supreme\ncourt in the third judicial department shall be exclusive and its\njudgment and order shall be final subject to review by the court of\nappeals in the same manner and form and with the same effect as provided\nfor appeals in a special proceeding. All such proceedings shall be heard\nand determined by the appellate division and by the court of appeals as\nexpeditiously as possible and with lawful precedence over other matters.\nActs taken or orders, regulations or rules issued pursuant to this\nsection shall not be stayed or enjoined except upon application to the\nappellate division of the supreme court in the third judicial department\nafter notice to the superintendent and to the attorney general and upon\na showing that the petitioner has a substantial likelihood of success\nand will suffer irreparable harm if the stay or injunction is not\ngranted.\n (IV) Provided, however, that if a determination by a judicial\nproceeding prevents the final consummation of the determination by the\nsuperintendent that the association be dissolved, and if the amounts\nrequired to be transferred and deposited from the association to the\nmiscellaneous special revenue fund pursuant to the requirements of\nsection five thousand five hundred sixteen-f of this article are not in\nfact so transferred and deposited in the miscellaneous special revenue\nfund, then the provisions of subsections (a) through (f) of section nine\nthousand one hundred eleven-c of this chapter shall become operative and\nthe tax imposed by subsections (a) through (e) of such section shall be\nimposed. Provided, further, however, that if there is thereafter a final\njudicial determination that the final consummation of the dissolution of\nthe association may be effectuated, and the full transfer and deposit\nshall be made to the miscellaneous special revenue fund, then in such\nevent the amount of the tax imposed and paid pursuant to the provisions\nof subsections (a) through (e) of section nine thousand one hundred\neleven-c of this chapter shall be returned to the companies that paid\nsuch assessment on a pro rata basis, in a manner consistent with the\nprocedures set forth in subsections (f) and (g) of section nine thousand\none hundred eleven-c of this chapter.\n * (D) Prior to July first, two thousand, the superintendent shall,\nafter a public hearing to be held not less than thirty days before such\npromulgation, promulgate regulations prescribing a plan for the\nequitable distribution to authorized medical malpractice insurers\nwriting such coverage in the state the insureds of the association and\nhealth care practitioners and facilities which are otherwise unable to\nsecure coverage in the voluntary market following the dissolution of the\nassociation. Such plan shall provide that upon initial distribution to\nthe voluntary market the insureds of the association receive policies in\nthe voluntary market with provisions and at a rate which are at least as\nfavorable to the insured as those which they would have received if they\nwere issued a renewal policy by the association, provided, however, that\nsubsequent to the initial distribution, the plan shall not be required\nto make available a second layer of excess medical malpractice insurance\nto insureds. Such plan shall also ensure that all health care\npractitioners or facilities have access to medical malpractice insurance\nfrom an authorized insurer pursuant to the provisions of this chapter.\nSuch plan may also provide for, and the superintendent may designate, in\nlieu of the plan for the equitable distribution of policies from the\nassociation and the availability of coverages to health care\npractitioners and facilities, a single entity or entities to provide\nsuch coverages consistent with such a plan if the superintendent\ndetermines that such entity or entities can provide the coverages\nnecessary to meet the purposes and objectives of an equitable plan of\ndistribution were it to have been effectuated. Notice of the hearing\nrequired by this subparagraph shall be no less than thirty days before\nthe date of the hearing and shall include a summary of the plan proposed\nby the superintendent.\n * NB Effective until July 1, 2028\n * (D) Prior to July first, two thousand, the superintendent shall,\nafter a public hearing to be held not less than thirty days before such\npromulgation, promulgate regulations prescribing a plan for the\nequitable distribution to authorized medical malpractice insurers\nwriting such coverage in the state the insureds of the association and\nhealth care practitioners and facilities which are otherwise unable to\nsecure coverage in the voluntary market following the dissolution of the\nassociation. Such plan shall provide that upon initial distribution to\nthe voluntary market the insureds of the association receive policies in\nthe voluntary market with provisions and at a rate which are at least as\nfavorable to the insured as those which they would have received if they\nwere issued a renewal policy by the association. Such plan shall also\nensure that all health care practitioners or facilities have access to\nmedical malpractice insurance from an authorized insurer pursuant to the\nprovisions of this chapter. Such plan may also provide for, and the\nsuperintendent may designate, in lieu of the plan for the equitable\ndistribution of policies from the association and the availability of\ncoverages to health care practitioners and facilities, a single entity\nor entities to provide such coverages consistent with such a plan if the\nsuperintendent determines that such entity or entities can provide the\ncoverages necessary to meet the purposes and objectives of an equitable\nplan of distribution were it to have been effectuated. Notice of the\nhearing required by this clause shall be no less than thirty days before\nthe date of the hearing and shall include a summary of the plan proposed\nby the superintendent.\n * NB Effective July 1, 2028\n ** NB The plan referred to herein is Title 11 NYCRR, Chapter XX, Part\n430\n (d) Upon dissolution, the association shall not resume underwriting\noperations for physicians, dentists, podiatrists, certified\nnurse-midwives, certified registered nurse anesthetists or for hospitals\nrespectively, until the superintendent, after consultation with the\ncommissioner of health, has determined that medical malpractice\ninsurance is not readily available for physicians, dentists,\npodiatrists, certified nurse-midwives, certified registered nurse\nanesthetists or for hospitals, as the case may be, in the voluntary\nmarket and has approved or promulgated a new plan of operation. If the\nsuperintendent determines during such period that insurance is readily\navailable for physicians, dentists, podiatrists, certified\nnurse-midwives, certified registered nurse anesthetists or for\nhospitals, as the case may be, in the voluntary market, the\nsuperintendent shall not authorize its underwriting operations for the\nrespective categories.\n (e) The association shall, pursuant to the provisions of this article\nand the plan of operation with respect to medical malpractice insurance,\nhave the power:\n (1) To issue, or to cause to be issued, policies of insurance to\nphysician, dentist and podiatrist applicants subject to primary limits\nspecified in the plan of operation not in excess of one million dollars\nfor each claimant under one policy and three million dollars for all\nclaimants under one policy in any one year, and excess coverage as\nprovided in this paragraph. Each applicant shall be entitled to\npurchase a policy providing primary limits not to exceed one million\ndollars for each claimant and three million dollars for all claimants in\nany one year. In addition, any applicant insured by the association in\nan amount equal to or greater than one million dollars for each\nclaimant and three million dollars for all claimants in any one year, or\nany other applicant covered under a policy or policies providing such\nprimary levels of insurance against liability for medical, dental or\npodiatric malpractice that is issued by an authorized insurer, shall be\nentitled to purchase a policy from the association providing excess\ncoverage of at least one million dollars per claimant and three million\ndollars for all claimants in any one year. The association shall,\nsubject to the approval of the superintendent, make available, and if\nrequested by the applicant, provide additional excess coverage in an\namount requested by such applicant. With respect to the coverage\nrequired to be made available on and after July first, nineteen hundred\neighty-five by this paragraph, the superintendent shall establish and\npromulgate rates to be charged for such excess coverage and additional\nexcess coverage and shall require that the association accept payment\nfor such coverage from the hospital excess liability pool pursuant to a\npayment schedule that is consistent with the receipt of funds by such\npool from the hospital reimbursement system. Rates for excess coverage\nand additional excess coverage shall not be subject to the\nstabilization reserve fund charge established by section five thousand\nfive hundred nine of this article.\n (2) To issue, or cause to be issued, policies of insurance, including\nincidental liability coverages, to hospital applicants subject to limits\nspecified in the plan of operation with limits not in excess of one\nmillion dollars for each claimant and ten million dollars for all\nclaimants in any one year; provided that policies for coverage in excess\nof one million dollars for each claimant and three million dollars for\nall claimants in any one year shall be issued only upon the obtaining of\nreinsurance for such excess coverage for the term of the policy and the\nexcess coverage shall remain in effect only so long as reinsurance is in\neffect. The association shall obtain such reinsurance, if available, for\ncoverage in excess of one million dollars for each claimant and three\nmillion dollars for all claimants in any one year. If the association\nfails to obtain such reinsurance, the superintendent may order it to do\nso for the term of the policy from sources found by him to be available.\nThe rates charged by the association for coverage in excess of three\nmillion dollars shall not be subject to prior approval by the\nsuperintendent, and shall equal the charges to the association for such\nreinsurance.\n (3) To underwrite such insurance and to adjust and pay losses or to\nappoint service companies to perform those functions.\n (4) To assume reinsurance from its members.\n (5) To cede reinsurance.\n (6) To make the lump sum payments provided for in subdivision (b) of\nsection five thousand thirty-six of the civil practice law and rules\nand receive the periodic payments due under the annuity contract\nprovided for therein.\n