Senate Bill 0282
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    By Senators Silver, Kurth, Mitchell, Campbell, Dawson and
    Klein
    38-305-00
  1                      A bill to be entitled
  2         An act relating to health care; providing for
  3         liability of managed care entities to
  4         subscribers in a health care plan for damages
  5         for harm proximately caused by a failure to
  6         exercise ordinary care; providing defenses;
  7         providing conditions; providing definitions;
  8         prohibiting certain activities; providing
  9         nonapplicability to workers' compensation
10         insurance coverage; providing a limitation on
11         cause of action; providing for appeal of a
12         subscriber's claim to an independent review
13         organization; providing for tolling of statute
14         of limitations; providing for immediate appeals
15         under certain conditions; requiring the Agency
16         for Health Care Administration to establish and
17         certify independent review organizations;
18         providing for notice to subscribers of their
19         right to appeal an adverse determination to an
20         independent review organization; providing
21         responsibilities of the agency to provide
22         certain information to independent review
23         organizations; authorizing the agency to adopt
24         rules; prescribing information to be included
25         in an application for certification as an
26         independent review organization; prohibiting an
27         independent review organization from being a
28         subsidiary of a managed care entity or a trade
29         or professional association of managed care
30         entities; providing for immunity from liability
31         for damages for review organizations; repealing
                                  1
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         s. 408.7056, F.S., relating to the Statewide
  2         Provider and Subscriber Assistance Program;
  3         providing an effective date.
  4
  5  Be It Enacted by the Legislature of the State of Florida:
  6
  7         Section 1.  Definitions.--As used in this act:
  8         (1)  "Adverse determination" means determination by a
  9  managed care entity that the health care services furnished or
10  proposed to be furnished to a subscriber are not medically
11  necessary.
12         (2)  "Appropriate and medically necessary treatment"
13  means treatment that meets the standard for health care
14  services as determined by providers in accordance with the
15  prevailing practices and standards of the medical profession
16  and community.
17         (3)  "Health care plan" means any plan whereby a person
18  undertakes to provide, arrange for, pay for, or reimburse any
19  part of the cost of any health care services.
20         (4)  "Health care provider" means a provider as defined
21  in chapter 636 or chapter 641, Florida Statutes.
22         (5)  "Health care treatment decision" means a
23  determination made when medical services are actually provided
24  by the health care plan which affects the quality of the
25  diagnosis, care, or treatment provided to the plan's
26  enrollees.
27         (6)  "Health maintenance organization" means an
28  organization as defined in section 641.19, Florida Statutes.
29         (7)  "Independent review organization" means an
30  organization certified by the Agency for Health Care
31  Administration.
                                  2
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         (8)  "Life-threatening condition" means a disease or
  2  other medical condition with respect to which death is
  3  probable unless the course of the disease or condition is
  4  interrupted.
  5         (9)  "Managed care entity" means a health maintenance
  6  organization or a prepaid health clinic certified under
  7  chapter 641, Florida Statutes, a prepaid health plan
  8  authorized under section 409.912, Florida Statutes, or an
  9  exclusive provider organization certified under section
10  627.6472, Florida Statutes.
11         (10)  "Ordinary care" means, in the case of a managed
12  care entity, that degree of care which a managed care entity
13  of ordinary prudence would use under the same or similar
14  circumstances. In the case of a person who is an employee,
15  agent, ostensible agent, or representative of a managed care
16  entity, "ordinary care" means that degree of care which a
17  person of ordinary prudence in the same profession, specialty,
18  or area of practice would use in the same or similar
19  circumstances.
20         (11)  "Physician" means:
21         (a)  An individual licensed to practice medicine in
22  this state; or
23         (b)  A professional limited liability company organized
24  under the laws of this state to provide physician services.
25         (12)  "Subscriber" means an individual who is enrolled
26  in a health care plan, including his or her covered
27  dependents.
28         Section 2.  Application.--
29         (1)  A managed care entity has the duty to exercise
30  ordinary care when making health care treatment decisions and
31
                                  3
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1  is liable for damages for harm to a subscriber proximately
  2  caused by its failure to exercise such ordinary care.
  3         (2)  A managed care entity plan is also liable for
  4  damages for harm to a subscriber proximately caused by the
  5  health care treatment decisions made by its employees, agents,
  6  ostensible agents, or representatives who are acting on its
  7  behalf and over whom it has the right to exercise influence or
  8  control or has actually exercised influence or control which
  9  decisions result in the failure to exercise ordinary care.
10         (3)  It is a defense to any action asserted against a
11  managed care entity that:
12         (a)  Neither the managed care entity, nor any employee,
13  agent, ostensible agent, or representative for whose conduct
14  such managed care entity is liable under subsection (2),
15  controlled, influenced, or participated in the health care
16  treatment decision; and
17         (b)  The managed care entity did not deny or delay
18  payment of any treatment prescribed or recommended by a health
19  care provider to the subscriber.
20         (4)  The standards in subsections (1) and (2) create no
21  obligation on the part of the managed care entity to provide
22  to a subscriber treatment that is not covered by the health
23  care plan of the entity.
24         (5)  This act does not create any liability on the part
25  of an employer, an employer group purchasing organization, or
26  a licensed pharmacy that purchases coverage or assumes risk on
27  behalf of its employees.
28         (6)  A managed care entity may not remove a health care
29  provider from its plan or refuse to renew the physician or
30  health care provider with its plan for advocating on behalf of
31
                                  4
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1  a subscriber for appropriate and medically necessary health
  2  care for the subscriber.
  3         (7)  A managed care entity may not enter into a
  4  contract with another health care provider or pharmaceutical
  5  company which includes an indemnification or hold-harmless
  6  clause for the acts or conduct of the managed care entity. Any
  7  such indemnification or hold-harmless clause in an existing
  8  contract is void.
  9         (8)  Nothing in any law of this state prohibiting a
10  managed care entity from practicing medicine or being licensed
11  to practice medicine may be asserted as a defense by such
12  managed care entity in an action brought against it under this
13  act or any other law.
14         (9)  In an action against a managed care entity, a
15  finding that a health care provider is an employee, agent,
16  ostensible agent, or representative of such managed care
17  entity may not be based solely on proof that such person's
18  name appears in a listing of approved health care providers
19  made available to a subscriber under a health care plan.
20         (10)  This act does not apply to workers' compensation
21  insurance coverage.
22         (11)  A subscriber who files an action under this act
23  shall comply with the requirements of cost bonds, deposits,
24  and expert reports.
25         Section 3.  Limitations on causes of action.--
26         (1)  A subscriber may not maintain a cause of action
27  under this act against a managed care entity that is required
28  to comply with grievance resolution procedures until the
29  subscriber has:
30         (a)  Exhausted any applicable appeals and review
31  procedures; or
                                  5
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         (b)  Before instituting the action:
  2         1.  Gives written notice of the claim as provided by
  3  subsection (2); and
  4         2.  Agrees to submit the claim to a review by an
  5  independent review organization as provided in subsection (3).
  6         (2)  Notice must be delivered or mailed to the managed
  7  care entity against whom the action is made not later than the
  8  30th day before the date the claim is filed.
  9         (3)  The subscriber or the subscriber's representative
10  must submit the claim to a review by an independent review
11  organization if the managed care entity against whom the claim
12  is made requests the review not later than the 14th day after
13  the date notice is received by the managed care entity. If the
14  managed care entity does not request the review within the
15  specified period, the subscriber or the subscriber's
16  representative is not required to submit the claim to review
17  by an independent review organization before maintaining the
18  action.
19         (4)  Subject to subsection (5), if the subscriber has
20  not complied with subsection (1), an action may not be
21  dismissed by the court, but the court may, in its discretion,
22  order the parties to submit to an independent review or
23  mediation or other nonbinding alternative dispute resolution
24  and may abate the action for such purposes for a period not to
25  exceed 30 days. Such orders of the court shall be the sole
26  remedy available to a party complaining of a subscriber's
27  failure to comply with subsection (1).
28         (5)  The subscriber is not required to comply with
29  subsection (3), and no abatement or other court order pursuant
30  to subsection (4) for failure to comply may be imposed, if the
31  subscriber has filed a pleading alleging in substance that:
                                  6
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         (a)  Harm to the subscriber has already occurred
  2  because of the conduct of the managed care entity or because
  3  of an act or omission of an employee, agent, ostensible agent,
  4  or representative of such entity for whose conduct the entity
  5  is liable; and
  6         (b)  The review would not be beneficial to the
  7  subscriber, unless the court, upon motion by a defendant
  8  entity, finds after hearing that such pleading was not made in
  9  good faith, in which case the court may enter an order
10  pursuant to subsection (4).
11         (6)  If the subscriber or the subscriber's
12  representative seeks to exhaust the appeals and review process
13  as provided under the managed care entity's grievance
14  resolution procedures or provides notice before the statute of
15  limitations applicable to a claim against a managed care
16  entity has expired, the limitations period is tolled until the
17  later of:
18         (a)  The 30th day after the date the subscriber or the
19  subscriber's representative has exhausted the process for
20  appeals and review; or
21         (b)  The 40th day after the date the subscriber or the
22  subscriber's representative gives notice.
23         (7)  This section does not prohibit a subscriber from
24  pursuing other appropriate remedies, including injunctive
25  relief, a declaratory judgment, or relief available under law,
26  if the requirement of exhausting the process for appeal and
27  review places the subscriber's health in serious jeopardy.
28         Section 4.  Immediate appeal.--Notwithstanding any
29  other law, in a circumstance involving a subscriber's
30  life-threatening condition, the subscriber is entitled to an
31  immediate appeal to an independent review organization and is
                                  7
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1  not required to comply with a managed care entity's grievance
  2  procedures and review process. For purposes of this section,
  3  "life-threatening condition" means a disease or other medical
  4  condition with respect to which death is probable unless the
  5  course of the disease or condition is interrupted.
  6         Section 5.  Independent review of adverse
  7  determinations.--
  8         (1)  The Agency for Health Care Administration shall,
  9  by rule, provide for the establishment of independent review
10  organizations and prescribe procedures for hearing appeals
11  from a managed care entity's adverse determination of a
12  subscriber's claim.
13         (2)  A managed care entity must notify any subscriber
14  who receives an adverse determination under the managed care
15  entity's grievance procedure of the subscriber's right to seek
16  review of the adverse determination by an independent review
17  organization assigned by the Agency for Health Care
18  Administration.
19         (3)  A managed care entity shall, when requested,
20  provide the following information to the appropriate
21  independent review organization not later than the third
22  business day after the date of receipt of the request:
23         (a)  Any medical records of the subscriber which are
24  relevant to the review;
25         (b)  Any documents used in making the determination to
26  be reviewed by the organization;
27         (c)  The written notification described in this act;
28         (d)  Any documentation or written information submitted
29  to the agency or department in support of the appeal;
30
31
                                  8
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         (e)  A list of each physician or health care provider
  2  who has provided care to the subscriber and who may have
  3  medical records relevant to the appeal; and
  4         (f)  Confidential information in its custody.
  5         (4)  A managed care entity must comply with the
  6  independent review organization's determination with respect
  7  to the medical necessity or appropriateness of health care
  8  items and services for a subscriber.
  9         (5)  A managed care entity must pay for the independent
10  review.
11         Section 6.  Notification to subscriber.--The grievance
12  and review procedures of a managed care entity must include:
13         (1)  Notification by a managed care entity to the
14  subscriber of the subscriber's right to appeal an adverse
15  determination to an independent review organization;
16         (2)  Notification by a managed care entity to a
17  subscriber of the procedures for appealing an adverse
18  determination to an independent review organization; and
19         (3)  Notification by a managed care entity to a
20  subscriber who has a life-threatening condition of the
21  subscriber's right to immediate review by an independent
22  review organization and the procedures for obtaining that
23  review.
24         Section 7.  Certification and designation of
25  independent review organizations.--
26         (1)  The Agency for Health Care Administration shall:
27         (a)  Adopt rules for:
28         1.  The certification, selection, and operation of
29  independent review organizations; and
30         2.  The suspension and revocation of the certification.
31
                                  9
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         (b)  Designate annually each organization that meets
  2  the standards required of an independent review organization.
  3         (c)  Charge fees to fund the operations of independent
  4  review organizations.
  5         (d)  Provide ongoing oversight of the independent
  6  review organizations to ensure continued compliance with the
  7  rules adopted by the agency.
  8         (2)  The rules must ensure:
  9         (a)  The timely response of an independent review
10  organization;
11         (b)  The confidentiality of medical records transmitted
12  to an independent review organization for use in independent
13  reviews;
14         (c)  The qualifications and independence of each health
15  care provider or physician making review determinations for an
16  independent review organization;
17         (d)  The fairness of the procedures used by an
18  independent review organization in making the determinations;
19  and
20         (e)  Timely notice to subscribers of the results of the
21  independent review, including the clinical basis for the
22  determination.
23         (3)  The rules adopted must include standards that
24  require each independent review organization to make its
25  determination:
26         (a)  No later than the earlier of:
27         1.  The 15th day after the date the independent review
28  organization receives the information necessary to make the
29  determination; or
30
31
                                  10
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         2.  The 20th day after the date the independent review
  2  organization receives the request that the determination be
  3  made; and
  4         (b)  In the case of a life-threatening condition, no
  5  later than the earlier of:
  6         1.  The 5th day after the date the independent review
  7  organization receives the information necessary to make the
  8  determination; or
  9         2.  The 8th day after the date the independent review
10  organization receives the request that the determination be
11  made.
12         Section 8.  Independent review organizations.--
13         (1)  To be certified as an independent review
14  organization, an organization must submit to the Agency for
15  Health Care Administration an application in the form required
16  by the agency. The application must include:
17         (a)  For an applicant that is publicly held, the name
18  of each stockholder or owner of more than 5 percent of any
19  stock or options;
20         (b)  The name of any holder of bonds or notes of the
21  applicant that exceed $100,000;
22         (c)  The name and type of business of each corporation
23  or other organization that the applicant controls or is
24  affiliated with and the nature and extent of the affiliation
25  or control;
26         (d)  The name and a biographical sketch of each
27  director, officer, and executive of the applicant and any
28  entity the applicant controls and a description of any
29  relationship the named individual has with:
30         1.  A health benefit plan;
31         2.  A health maintenance organization;
                                  11
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1         3.  An insurer;
  2         4.  A health care provider; or
  3         5.  A group representing any of the entities described
  4  by subparagraphs 1. through 4.;
  5         (e)  A description of the areas of expertise of the
  6  health care professionals making review determinations for the
  7  applicant; and
  8         (f)  The procedures to be used by the independent
  9  review organization in making review determinations.
10         (2)  The independent review organization must annually
11  submit the information required by section 7. If at any time
12  there is a material change in the information included in the
13  application, the independent review organization must submit
14  updated information to the Agency for Health Care
15  Administration.
16         (3)  An independent review organization may not be a
17  subsidiary of, or in any way owned or controlled by, a managed
18  care entity or a trade or professional association of managed
19  care entities.
20         (4)  An independent review organization conducting a
21  review is not liable for damages arising from the
22  determination made by the organization. This subsection does
23  not apply to an act or omission of the independent review
24  organization which is made in bad faith or which involves
25  gross negligence.
26         Section 9.  Section 408.7056, Florida Statutes, is
27  repealed.
28         Section 10.  This act shall take effect October 1,
29  2000.
30
31
                                  12
CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2000                                   SB 282
    38-305-00
  1            *****************************************
  2                          SENATE SUMMARY
  3    Provides a cause of action for damages for harm to a
      subscriber in a health care plan as a result of a managed
  4    care entity's failure to exercise ordinary care. Provides
      definitions. Provides conditions and procedures. Provides
  5    nonapplicability to specified entities. Provides a
      limitation on bringing a cause of action. Requires a
  6    subscriber to comply with specified grievance procedures
      and to agree to submit the claim to an independent review
  7    organization under certain circumstances. Requires notice
      to subscribers of their rights. Provides for
  8    certification, designation, and operation of independent
      review organizations and for suspension and revocation of
  9    certification. Authorizes the Agency for Health Care
      Administration to adopt rules to accomplish these
10    purposes. Provides guidelines for rules. Provides for
      application procedures and forms for certification.
11    Requires an independent review organization to provide
      annual updates of certain information to the agency.
12    Provides that an independent review organization may not
      be a subsidiary of a managed care entity. Provides
13    limited immunity from damages for such organizations.
      Repeals s. 408.7056, F.S., relating to the Statewide
14    Provider and Subscriber Assistance Program.
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
                                  13