17:30D-19 "Medical Malpractice Liability Insurance Purchasing Alliance;" definitions.

14. Physicians may join together, by means of a joint contract under the procedures established by this section, to form a "Medical Malpractice Liability Insurance Purchasing Alliance" for the purpose of negotiating a reduced premium for its members in the purchase of medical malpractice liability insurance. The joint contract shall be executed by all members of the purchasing alliance.

a. As used in this section:

"Board" means a medical malpractice liability insurance purchasing alliance board of directors provided for in this section.

"Commissioner" means the Commissioner of Banking and Insurance.

"Medical Malpractice Liability Insurance Purchasing Alliance," "purchasing alliance" or "alliance" means a purchasing alliance established pursuant to this section.

"Member" means a physician who is a member of a medical malpractice liability insurance purchasing alliance as provided for in this section.

b. The purchasing alliance, which may be a corporation, shall be governed by a board of directors, elected by the members of the purchasing alliance. No person may serve as an officer or director of an alliance who has a prior record of administrative, civil or criminal violations within the financial services industry. The directors shall serve for terms of three years, and shall serve until their successors are elected and qualified. Each director shall serve without compensation, except for reimbursement for actual expenses incurred by that director.

c. The board shall adopt bylaws for the operation of the purchasing alliance, which shall be effective upon ratification by a two-thirds majority of the members. The bylaws shall include, but not be limited to:

(1) the establishment of procedures for the organization and administration of the alliance; and

(2) procedures for the qualifications and admission of the members of the alliance.

The bases for denial of membership shall include, but not be limited to:

(a) performance of an act or practice that constitutes fraud or intentional misrepresentation of material fact;

(b) previous denial of membership in the alliance; or

(c) previous expulsion from the alliance;

(3) procedures for the withdrawal of members from the alliance;

(4) procedures for the expulsion of members from the alliance.

The bases for expulsion shall include, but not be limited to:

(a) failure to pay membership or other fees required by the purchasing alliance;

(b) failure to pay premiums in accordance with the terms of the medical malpractice liability insurance policy or the terms of the joint contract; or

(c) performance of an act or practice that constitutes fraud or intentional misrepresentation of material fact; and

(5) procedures for the termination of the alliance.

d. In addition to the other powers authorized under this section, a purchasing alliance shall have the authority to:

(1) set reasonable fees for membership in the alliance that will finance reasonable and necessary costs incurred in administering the purchasing alliance;

(2) negotiate premium rates for medical malpractice liability insurance with insurers on behalf of the members of the alliance, provided that negotiations are conducted by a person other than a member of the alliance or an employee of a member of the alliance;

(3) provide premium collection services for insurance purchased through the alliance for members;

(4) contract with third parties for any services necessary to carry out the powers and duties authorized or required pursuant to this section; and

(5) establish procedures for keeping confidential all communications between the members of the purchasing alliance and for prohibiting the dissemination and discussion of pricing information and other business-related information between and among members of the alliance.

e. A purchasing alliance established pursuant to the provisions of this section shall not:

(1) assume risk for the cost or provision of medical malpractice liability insurance;

(2) exclude a member who agrees to pay fees for membership and the premium for medical malpractice liability insurance coverage and who abides by the bylaws of the alliance;

(3) engage in any trade practice or activity prohibited pursuant to P.L.1947, c.379 (C.17:29B-1 et seq.);

(4) represent more than 35% of the physicians in a county or other relevant geographic service area; or

(5) require a member to purchase medical malpractice liability insurance only through the alliance.

f. Within 30 days after its organization, the purchasing alliance board shall file with the commissioner a certificate that shall list: the members of the alliance; the names of the directors, chairman, treasurer and secretary of the alliance; the address at which communications for the alliance are to be received; a copy of the certificate of incorporation of the alliance, if any; and a copy of the joint contract executed by all of the members. Any change in the information required by the provisions of this section shall be filed with the commissioner within 30 days of the change.

g. The commissioner, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations necessary to effectuate the provisions of this section.

L.2004,c.17,s.14.