On May 19, 2021, Governor Kelly approved and signed S.B. 78, a lengthy insurance bill, into law. This law relates to various aspects of insurance requirements. Most importantly, however, this law amends the Healthcare Stabilization Fund (the “Fund”) minimum professional liability insurance coverage requirements for all health care providers. Considering the legislature has not addressed the “basic coverage” and the Fund’s “excess coverage” limits for over thirty years ago, the passage of S.B. 78 involves a significant updating of the relationship between these coverage limits.
Currently, under K.S.A. § 40-3402, healthcare providers must maintain professional liability insurance with a limit of at least $200,000 per claim, subject to not less than a $600,000 annual aggregate for all claims made during the policy period, as a condition of active licensure or other statutory authorization to render professional service as a healthcare provider. S.B. 78 amends this section by raising the primary Kansas coverage limits and Healthcare Stabilization Fund participation level. Specifically, for all policies that renew after January 1, 2022, healthcare providers must maintain minimum coverage of at least $500,000 per claim, subject to not less than a $1,500,000 annual aggregate for all claims made during the policy period. This requirement does not apply to optometrists, pharmacists, physical therapists, or health maintenance organizations. This bill also increases the minimum amount of liability on the Fund from $300,000 to $500,000.
In addition to the increased coverage requirements, S.B. 78 decreases the Fund coverage options from three to two. After January 1, 2022, every healthcare provider must choose one of these options, in addition to their basic coverage, which limits the liability of the Fund with respect to judgments or settlements on or after January 1, 2022. A summary of the two options is as follows: (1) the Fund cannot be liable to pay in excess of $500,000 pursuant to any one judgment or settlement for any party against the healthcare provider, subject to an aggregate limitation for all judgments or settlements arising from all claims made in the fiscal year in an amount of $1,500,000 for the healthcare provider; and (2) the Fund cannot be liable to pay in excess of $1,500,000 pursuant to any one judgment or settlement for any party against the healthcare provider, subject to an aggregate limitation in the amount of $4,500,000 for the healthcare provider. In other words, each health care provider can elect to have additional statutory coverage through the Fund in either $500,000 or $1,500,000 (which is in addition to the $500,000 in primary coverage discussed above).
Although these new requirements apply to most healthcare providers, facilities that qualify as self-insurers via their coverage by a captive insurance company are exempt from this coverage limit, so long as the facilities are in substantial compliance with the minimum statutory coverage requirements of the act.
S.B. 78 was received favorably overall, with nearly unanimous “yes” votes from legislators. Furthermore, several parties spoke out in support of the bill leading up to its passage, and no opponents to the bill provided written or oral testimony.
In light of this legislation, healthcare providers seeking new policies and whose policies renew after January 1, 2022 should ensure their policies meet these new requirements. If you have questions on this topic or other legal medical matters, contact Gregory S. Young or Mark R. Maloney at 316.267.2000.