69O-203.060. Insurance - General Liability and Medical Malpractice

(1) Each PLHSO, in order to obtain its Certificate of Authority, shall furnish evidence of adequate insurance coverage or an adequate plan of self-insurance to respond to claims for injuries arising out of the furnishing of limited health services. Once the PLHSO obtains its Certificate of Authority, it shall maintain on file with the Office continued evidence of adequate insurance coverage or evidence of the continuation of the self-insurance plan. Any reduction in the insurance coverage for the PLHSO shall be submitted to and approved by the Office prior to the time at which the reduction takes place. Evidence of the existence of the approved insurance plan shall also be submitted with each annual report. The medical malpractice or professional liability insurance shall insure coverage for the PLHSO, and also the professional personnel, if applicable.

(2) The Office of Insurance Regulation shall be listed on General Liability and Medical Malpractice or Professional Liability insurance policies such that the Office shall receive written notification of any reduction of coverage, cancellation, non-renewal, or termination of any insurance policy required by Florida Statutes or these rules. Except for non-payment of premium, each agreement shall remain in full force and effect until replaced or for at least 30 days following written notification to the Office by registered mail of cancellation, termination, or any substantial change in the policy by either party. If coverage is cancelled or terminated due to non-payment of premium, coverage shall remain in full force and effect for at least ten days following written notification to the Office by registered mail.

(3) Medical Malpractice or Professional Liability. Adequate insurance coverage is defined as follows:

Entity	Minimum Limits
	Occurrence/Aggregate
Dental Care Service	$500,000/$500,000
Vision Care Service	$500,000/$500,000
Pharmaceutical Service	$500,000/$500,000
All Other Services	$1,000,000/$1,000,000

 

If the level of insurance required above exceeds what is available in the insurance market, the required level of coverage will be the maximum available under market conditions. Maximum coverage available under market conditions is subject to Office verification and approval.

(4) General Liability. Adequate insurance coverage is defined as follows:

Entity	Minimum Limits
	Occurrence/Aggregate
All Services	$500,000/$1,000,000

 

If the level of insurance required above exceeds what is available in the insurance market, the required level of coverage will be the maximum available under market conditions. Maximum coverage available under market conditions is subject to Office verification and approval.

(5) Self-Insurance.

(a) Any PLHSO choosing to implement a self-insurance plan shall support its proposed plan for self-insurance by filing with the Office an actuarial study prepared by a qualified actuary as defined in Section 636.003(11), F.S., or supervised by an actuary who is a member of the Casualty Actuarial Society.

1. The actuarial study shall establish a funding level based on the following factors:

a. Past and prospective loss and expense experience of other PLHSOs and other health care providers with similar exposure;

b. The prior claims experience of the PLHSO;

c. A risk loading sufficient to reduce the probability of the need for additional funding of the self-insurance plan for any policy year to 10% or less;

d. Administrative expenses necessary to administer the self-insured plan.

2. The actuarial study shall state the reserves needed for:

a. The expected amount of unpaid losses including losses that are incurred but not reported;

b. The expected amount of unpaid loss adjustment expense, including expenses associated with losses that are incurred but not reported;

c. The expected amount of administrative expense. The study shall include funding levels for past periods with outstanding liabilities and the current year.

3. The PLHSO shall also submit an updated actuarial study to the Office with each annual report.

(b) Each PLHSO shall purchase insurance or establish a self-insurance plan or a combination thereof to adequately fund for medical malpractice or professional liability claims pursuant to the annual actuarial study.

(c) If the PLHSO uses a self-insurance plan to meet these requirements, periodic payments shall be made by the PLHSO to an escrow account in the amount and frequency required by the actuarial study.

(d) The investment medium used shall be capable of producing the income rate assumed actuarially.

(e) Self-insurance plans shall comply with Section 627.4147, F.S.

(f) Escrow Account.

1. An escrow account shall be established to reserve against professional liability claims and general liability claims, including all patient injuries which may be asserted against the PLHSO.

2. The escrow account shall be established in a Florida Bank, Florida Savings and Loan Association, or Florida Trust Company which participates in the Security for Public Deposits Act under Chapter 280, F.S., or on deposit with the Department; and the funds deposited therein shall be kept and maintained in an account separate and apart from the PLHSO’s business accounts. An escrow agent shall be named and shall be independent of the PLHSO.

3. An escrow agreement shall be entered into between the bank, savings and loan association, or trust company and the PLHSO under which the PLHSO obligates itself to periodic payments in the amount required by the actuarial study. A copy of the escrow agreement shall be submitted to and approved by the Office prior to execution of the agreement.

4. The escrow account shall be used only to pay, contest, or settle claims, to release in whole or in part, any claim filed against the trust to the extent the claim is uncollectible, and to pay expenses reasonably incurred in connection with the payment, contested claims, settlement, or release of any claim.

5. The Office shall be listed as a third party beneficiary of the escrow agreement with power to enforce same.

6. The escrow agreement shall state that the trust is irrevocable and that no termination, modification, or amendment of the escrow agreement or appointment of successor escrow agent may occur without the prior approval of the Office.

7. The escrow account must be structured to survive the insolvency of the PLHSO.

8. At the request of either the PLHSO or the Office, the escrow agent shall issue a statement indicating the status of the escrow account.

9. All books and records relating to the self-insurance plan and the escrow account shall be available for inspection by the Office at all times within normal business hours.

10. Contingency Reserves and Release of Excess Funds. Excess funds, as defined below, shall be used as a contingency reserve or may be released to the PLHSO under the conditions listed below.

a. Excess funds are defined as:

i. The total assets of the trust, minus;

ii. Loss and reserve liabilities as determined by the current actuarial study required by subparagraph (5)(a)2.; and

iii. All other liabilities, including the contingency reserve.

b. Assets shall consist of cash or assets eligible for deposit in accordance with Section 625.52, F.S.

c. A contingency reserve shall be maintained in an amount equal to the excess funds as determined above not to exceed the total of items a.ii. and a.iii. above. The contingency reserve shall be shown as a liability for financial reporting purposes to the Office.

d. Release to the PLHSO of excess funds not needed to fund the contingency reserve shall be made subject to prior approval of the Office. No releases shall be approved until the trust has been in operation for five years. The Office may request an updated actuarial study if it deems the last actuarial study to be out of date. The Office shall review a request for approval of any release based on a current actuarial study of the fund.

11. Deficit Funding. If the assets of the trust do not equal the liabilities of the trust, as determined under sub-subparagraph (5)(f)10.a., the escrow agent shall notify the Office within 10 working days after the occurrence of the deficiency, and the PLHSO shall submit to the Office a status report prepared by the escrow agent showing the status of the escrow account.

Specific Authority 636.067 FS. Law Implemented 636.003, 636.009 FS. History–New 11-15-94, Formerly 4-203.060.