Requires physicians licensed to practice medicine in the state to have medical malpractice insurance coverage from an insurer authorized to do business in the state

Title of bill

An act to amend the insurance law and the education law, in relation to medical malpractice insurance requirements for physicians licensed to practice medicine in this state

Purpose

Requires physicians licensed or permitted to practice medicine in the state who choose to buy medical malpractice insurance to have the primary layer of such insurance coverage from an insurer authorized to do business in the state.

Summary of provisions

Section one describes the legislative intent of the bill. As a matter of patient safety and the larger public's safety, it is in the state's interest to encourage licensed medical practitioners to purchase insurance which provides the highest degree of financial security. To that end, the state considers it important to not just encourage physicians to acquire medical malpractice professional liability insurance, but to require them to do so from companies admitted to write insurance in New York.

Section two amends subsection (a) of section 3436 of the insurance law requires licensed physicians, unless exempt due to membership in a voluntary attending physician ("Channeling") program, to obtain the first layer, or $ 1.3 million, of professional liability insurance from an admitted insurer if they were to chose to acquire any form of professional liability coverage.

Section three amends section 6524 of the education law to require that those who intend to engage in the practice of medicine in the state and intend to purchase professional liability coverage must purchase the first layer of such coverage through an admitted insurer.

Section four amends section 6525 of the education law makes the same requirement as section 3 of the bill upon any applicant for or holder of a permit to practice medicine.

Section five provides for an effective date.

Justification

Patient safety is not just a clinical concern, but a financial one as well. Nothing assures the financial soundness of an insurer better than compulsory adherence to the strongest standards in the country enforced by a regulator who is in the state, no matter how secure a carrier may appear to be. And nothing assures the financial security backstopping a physician's activities than such an insurer. Therefore, it is important to regulate the purchasing behavior of such physicians by compelling their acquisition of professional liability insurance when they choose to buy such coverage.

By the amendment to his legislation, the requirement to buy from an authorized insurer is limited to the first layer of coverage, recognized in statute as $1.3 million. Physicians are able to procure reinsurance, excess insurance and other financial protections from other sources thereafter.

New York already, and has for thirty years, directed purchasing activities of physicians by requiring them to purchase admitted carrier professional liability coverage if they wanted to participate in the excess medical malpractice program, which provides a second layer of coverage for no cost to physicians.

Legislative history

New bill

Fiscal implications

None

Effective date

Immediately, provided that for the policies in force on the effective date and written by an insurer not authorized to do business in this state, the provisions shall apply on or after the anniversary date of such policy.