HSB 160 (LSB 2138YC (3) 90)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON HEALTH AND HUMAN SERVICES BILL BY CHAIRPERSON MEYER)

A BILL FOR

An Act relating to compensation discussions regarding adverse health care incidents.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  135P.5  Demand for policy limits —— prima facie evidence of bad faith.
   1.  If a health care provider or health facility makes an offer of compensation under section 135P.3, subsection 3, paragraph “d”, subparagraph (2), the health care provider or health facility shall provide the patient with the contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in any civil action or to indemnify or reimburse for payments made to satisfy any judgment entered in any civil action filed by the patient against the health care provider or health facility, including a copy of any insurance declaration page showing the limits of insurance that may be available to the patient to satisfy any settlement or judgment relating to the patient’s injuries and damages. The health care provider or health facility shall also include a copy of any declarations page providing primary professional liability coverage as well as any applicable umbrella coverages.
   2.  If, at the end of the compensation discussion, the patient has made a demand for an amount that is less than or equal to the applicable policy limits, and the health care provider or health facility consents in writing to the payment by the insurance carrier of the demand, then the insurance carrier identified in any insurance agreement or declarations page produced under subsection 1 shall respond in writing to the patient’s demand within thirty days of receipt. If the insurance carrier refuses to pay the demand and the patient subsequently receives a verdict or judgment against the health care provider or health facility in an amount exceeding the applicable policy limits, then notwithstanding section 135P.2, the patient’s demand for an amount that was less than or equal to the applicable policy limits, the health care provider or health facility’s consent, and the insurance carrier’s refusal to pay shall be discoverable and admissible in any subsequent action against the insurance carrier for bad faith. 
   3.  If the requirements of subsections 1 and 2 have been met and if a bad-faith action is filed against an insurance carrier for failure to pay a demand under subsection 2, then there shall be a rebuttable presumption of bad faith against the insurance carrier and in favor of the health care provider or health facility. Any subsequent verdict amount entered against an insurance carrier for bad faith under this subsection shall not be used by the insurance carrier to increase premiums charged to the insured health care provider, the insured health facility, or the health care industry as a whole.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to compensation discussions regarding adverse health care incidents. 
   Under Code chapter 135P, a health care provider, a health facility, or a health care provider jointly with a health facility, may engage in an open, confidential discussion with a patient related to an adverse health care incident.
   The bill provides that if a health care provider or health facility makes an offer of compensation, the health care provider or health facility shall provide the patient with the contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy a judgment. If at the end of the discussion, the patient and health care provider or health facility have reached an agreement for an amount equal to or less than that of the insurance policy limits, then the insurance carrier has 30 days to respond in writing to the agreed-upon demand. If the insurance carrier refuses to pay and the patient receives a subsequent verdict or judgment against the health care provider or health facility that exceeds the policy limits, then the health care provider or health facility’s consent and insurance carrier’s refusal is discoverable and admissible in any subsequent action against the insurance carrier for bad faith. 
   The bill provides that if the discussion contents become discoverable, there shall be a rebuttable presumption of bad faith against the insurance carrier and in favor of the health care provider or health facility. Any subsequent verdict amount against the insurance carrier for bad faith cannot be used to increase the premium charged to the health care provider, health facility, or health care industry as a whole.