2026 -- H 8401

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LC006268

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2026

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A N   A C T

RELATING TO INSURANCE -- UNAUTHORIZED INSURANCE BUSINESS -- MEDICAL

MALPRACTICE INSURANCE

     Introduced By: Representatives Spears, Cotter, Boylan, Fogarty, Donovan, Speakman,
and McEntee

     Date Introduced: April 03, 2026

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 27-16-2.6 of the General Laws in Chapter 27-16 entitled

"Unauthorized Insurance Business" is hereby amended to read as follows:

     27-16-2.6. Hospitals affiliated with accredited medical schools — Indemnification of

personnel Self-insurance for hospitals affiliated with accredited medical schools.

     Nothing in §§ 27-16-1.2 — 27-16-2.2 shall be construed to limit or prevent hospitals

affiliated with an accredited medical school from agreeing to indemnify hospital employees, and

physicians, including physicians’ incorporated or unincorporated practices and employees, and

medical, nursing, or allied health students affiliated with the hospital, collectively “covered

persons”, for the legal liability of those covered persons for loss, damage, or expense incident to

claims of bodily injury or death arising out of medical malpractice or professional error or mistake,

“malpractice coverage”, whether the hospital charges the covered persons for malpractice coverage

or not. The hospitals making the agreements shall be required to establish and maintain a reserve

fund with which the malpractice coverage will be provided, which may be either part of or separate

from a self-insurance fund maintained by or on behalf of the hospital. Any self-insurance fund shall

annually provide a certified financial statement with actuarial projections as to the soundness of its

reserving to the director of the department of health and the director of the department of business

regulation. The malpractice coverage provided by the agreements shall be in amounts that meet the

minimum insurance coverage limits required by any regulation promulgated by the director of

business regulation pursuant to § 42-14.1-2.

     (a) Notwithstanding any provision of law, rule or regulation to the contrary, any hospital

affiliated with a Rhode Island accredited medical school may establish a self-insurance program

for medical malpractice liability; provided, however, that such program shall be subject to the full

regulatory authority, review, and approval of the department of business regulation.

     (b) No such self-insurance program shall be established, maintained, or operated without

prior approval of the department of business regulation.

     (c) The department of business regulation shall require demonstration of:

     (1) Establishment of an entity, such as a captive insurance company, that is regulated as an

insurance entity;

     (2) Actuarial soundness of the entity;

     (3) Adequate capitalization and reserves;

     (4) Claims-paying ability under reasonably foreseeable adverse conditions;

     (5) Ongoing financial reporting and independent audit; and

     (6) The hospital entity will establish to the satisfaction of the department of business

regulation that the self-insurance entities existence and reserves will survive the bankruptcy,

dissolution or reorganization of the hospital.

     (d)(1) The department shall have authority to examine, audit, and require corrective action,

including suspension or revocation of approval in the same manner in which the department has

authority over licensed insurers under title 27.

     (2) If the self-insured entity is domiciled outside of Rhode Island, the department of

business regulation shall be given access to all records of the entity and of the foreign jurisdiction

regarding the entity upon demand.

     (e) The hospital will be responsible for all costs incurred by the department of business

regulation pursuant to § 27-13.1-7.

     (f) The provisions of § 27-13.1-5(f) shall apply to all information received or created by

the department of business regulation in regulation of the self-insured entity.

     (g) Any exemption from traditional insurance requirements under this section shall not

exempt such entities from solvency, reporting, or oversight requirements imposed by the

department of business regulation.

     (h) No medical malpractice coverage provided under this section shall be recognized for

purposes of licensure unless approved by the department of business regulation.

     (i) The department of business regulation may withdraw approval of the self-insurance

entity if the department determines that the entity is in hazardous financial condition pursuant to

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chapter 14.2 of title 27 or is otherwise out of compliance with this statute.

     (j) The department of business regulation shall prescribe the manner of application for

permissible self-insurance and shall require renewal of the permission to self-insure on an annual

basis.

     (k) If a hospital that has been granted self-insured status, a general description of the self-

insured entity, including all contact information, shall be public along with information pursuant to

§ 27-13.1-5(e). All other information provided to the department of business regulation shall be

subject to § 27-13.1-5(f).

     SECTION 2. Chapter 27-16 of the General Laws entitled "Unauthorized Insurance

Business" is hereby amended by adding thereto the following section:

     27-16-2.7. Comprehensive regulation of medical malpractice coverage.

     (a) All forms of medical malpractice coverage for Rhode Island licensed providers,

including insurance policies, self-insurance programs, captive insurance arrangements, and risk-

sharing pools, shall be subject to the exclusive regulatory authority of the department of business

regulation.

     (b) No such coverage shall be valid for purposes of licensure unless approved by the

department of business regulation.

     (c) The department shall establish standards for:

     (1) Financial solvency;

     (2) Reserve adequacy;

     (3) Claims-paying ability; and

     (4) Governance and risk management.

     (d) The department shall have authority to examine, audit, and enforce compliance for all

entities providing such coverage.

     (e) No form of medical malpractice insurance shall satisfy the requirement of coverage in

this statute unless it meets the limits and deductibles established by the department of business

regulation by rule or regulation.

     (f) The identity of medical malpractice coverage, including the insurer or self-insured

entity, policy limits and deductibles shall be provided to the public upon demand.

     SECTION 3. Section 42-14-2.1 of the General Laws in Chapter 42-14 entitled "Department

of Business Regulation" is hereby amended to read as follows:

     42-14-2.1. Reporting by certain insurers — Settlements Reporting of claims and

coverage.

     (a) Every insurer or entity exempt pursuant to § 27-16-2.6 or entity permissibly self-insured

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pursuant to § 42-14.1-2 providing professional liability insurance to licensed healthcare

professionals or licensed healthcare facilities shall send a complete report to the board of medical

licensure and discipline established pursuant to chapter 37 of title 5, or the board of examiners in

dentistry established pursuant to chapter 31.1 of title 5 and the department of business regulation

as to any claim, notice, settlement, judgment, or arbitration award of a claim or action for damages

for death or personal injury caused by such person’s negligence, error, or omission in practice or

the person’s rendering of unauthorized professional services. The report shall be sent within thirty

(30) days after service of such arbitration award on the parties or notice of the claim, settlement,

judgment, or arbitration award.

     (b) Notwithstanding any other provision of law, an insurer or entity exempt pursuant to §

27-16-2.6 or entity permissibly self-insured pursuant to § 42-14.1-2 providing professional liability

coverage to licensed healthcare professionals or licensed healthcare facilities shall have the

contractual right to settle any claim up to the limits of the policy without the insured’s consent,

unless the policy by its express terms prohibits the insurer from settling any claim without the

consent of the insured.

     (c) All insurers doing business in the state of Rhode Island or entity exempt pursuant to §

27-16-2.6 or entity permissibly self-insured pursuant to § 42-14.1-2 providing professional liability

insurance for healthcare professionals or licensed healthcare facilities shall file an annual report

with the commissioner of insurance. This report must be filed for each year by March 1 of the next

year. The information required for each year shall include, for each rating class:

     (1) The number of insured;

     (2) The total premiums paid;

     (3) The total number of claims made, the years in which the incidents giving rise to the

claims occurred, and the total number of those claims outstanding at the end of the year;

     (4) The total amount of claims paid, the years in which the incidents giving rise to the

claims occurred, and the amount of the costs that can be identified with these claims for

investigation, processing, and defense of these claims; and

     (5) The number of lawsuits filed.

     (a) All insurers, self-insurance programs, captive arrangements, risk retention groups, or

any entity providing professional liability coverage to Rhode Island licensed providers shall

provide all information requested by the department of business regulation regarding their financial

status, claims and coverage.

     (b) The information shall include, but not be limited to:

     (1) Claims activity;

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     (2) Coverage limits and structure;

     (3) Financial condition of the coverage provider; and

     (4) Actuarial reserve status for self-insured programs.

     (c) Reporting shall occur as directed by the department of business regulation.

     (d) The department of business regulation shall have the authority to require additional

financial and actuarial reporting necessary to assess solvency.

     (e) The department of business regulation shall share data and coordinate enforcement

actions with the department of health or with other jurisdictions in accordance with § 27-13.1-

5(e)(2).

     (f) The provisions of § 27-13.1-5(f) shall apply to all information received or created by

the department of business regulation in regulation of the self-insured entity.

     (g) Any material impairment, insolvency risk, or regulatory action identified by the

department of business regulation shall be reported to the department of health and may trigger

licensure review or action.

     (h) In addition to any action taken by the department of health, the department of business

regulation may take action against the self-insurance entity pursuant to § 27-13.1-5(d) independent

of any action taken by the department of health.

     (i) If the department of business regulation believes that the solvency of the self-insured

entity is at risk, it may take action against the self-insured entity under the provisions of § 27-13.1-

5(d).

     (j) The hospital will be responsible for all costs incurred by the department of business

regulation pursuant to § 27-13.1-7.

     SECTION 4. Section 42-14.1-2 of the General Laws in Chapter 42-14.1 entitled

"Department of Business Regulation — Medical Malpractice Insurance" is hereby amended to read

as follows:

     42-14.1-2. Malpractice insurance Professional liability insurance required.

     (a) The director of business regulation shall promulgate rules and regulations requiring all

licensed medical and dental professional and all licensed healthcare providers to be covered by

professional liability insurance insuring the practitioner for claims of bodily injury or death arising

out of malpractice, professional error, or mistake. The director of the department of business

regulation is hereby authorized to promulgate regulations establishing the minimum insurance

coverage limits that shall be required; provided, however, that such limits shall not be less than one

hundred thousand dollars ($100,000) for claims arising out of the same professional service and

three hundred thousand dollars ($300,000) in the aggregate. The director of the department of

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business regulation is further authorized to establish rules and regulations allowing persons or

entities with sufficient financial resources to be self-insurers.

     (b) Every licensed healthcare provider in direct patient care within a licensed hospital shall

obtain liability insurance in a minimum amount determined by the board of trustees of that hospital.

     (a) Every physician, hospital, and healthcare provider shall maintain professional liability

coverage as a condition of licensure.

     (b) Such coverage shall be obtained from:

     (1) An insurer licensed or approved by the department of business regulation; or

     (2) A self-insurance entity expressly approved by the department of business regulation

pursuant to the provisions of title 27.

     (c) The department of health shall not issue, renew, or maintain any license unless proof of

such approved coverage is provided.

     (d) The department of health shall not recognize, approve, or accept any form of

professional liability coverage that has not been reviewed and approved by the department of

business regulation.

     (e) Any lapse, suspension, or revocation of such coverage shall constitute grounds for

licensure action, including suspension or revocation by the department of health.

     SECTION 5. Section 23-17-6 of the General Laws in Chapter 23-17 entitled "Licensing of

Healthcare Facilities" is hereby amended to read as follows:

     23-17-6. Issuance of license — Posting — Transfer — Conditions.

     (a) Upon receipt of an application for a license, the licensing agency shall issue a license if

the applicant and healthcare facility meet the requirements established under this chapter and any

rules and regulations that may be established in accordance with the requirements established under

this chapter. A license issued under the provisions of this section shall be the property of the state

and loaned to the licensee, and it shall be kept posted in a conspicuous place on the licensed

premises. Each license shall be issued only for the premises and persons named in the application,

and shall not be transferable or assignable except with the written approval of the licensing agency.

Home nursing-care providers and home-care providers operating under a single license may

establish branch offices under that same single license and that license shall be maintained and

posted in the central office.

     (b) Any change in owner, operator, or lessee of a licensed healthcare facility, (except for

single-practice physician ambulatory-surgery centers, multi-practice physician ambulatory-surgery

centers, single-practice podiatry ambulatory-surgery centers and multi-practice podiatry

ambulatory-surgery centers as defined in subsections (17) and (18) of chapter 17, section 2) which

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license shall be transferable or assignable by decision of the licensing agency as shall be provided

by regulation, shall require prior review by the health services council and approval of the licensing

agency as a condition precedent to the transfer, assignment, or issuance of a new license. Issuance

of the license may be made subject to any condition; provided, that no condition may be made

unless it directly relates to the statutory purpose expressed in § 23-17-3 or to the review criteria set

forth in § 23-17-14.3. This shall not limit the authority of the licensing agency to require correction

of conditions or defects which existed prior to the proposed change of owner, operator, or lessee

and of which notice had been given to the healthcare facility by the licensing agency.

     (c) Issuance of the license shall be conditioned on obtaining and maintaining a medical

malpractice policy in compliance with § 42-14.1-2 or otherwise being in compliance with § 27-16-

2.6. If a healthcare facility license fails to maintain such coverage, its license may be denied,

suspended or revoked pursuant to § 23-17-8.

     SECTION 6. This act shall take effect on January 1, 2027.

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LC006268

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- UNAUTHORIZED INSURANCE BUSINESS -- MEDICAL

MALPRACTICE INSURANCE

***

     This act would provide for greater oversight and regulation by the department of business

regulation on medical-malpractice insurance among self-insured entities.

     This act would take effect on January 1, 2027.

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LC006268

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