To amend sections 3903.28 and 3903.32 and to enact sections 3929.62, 3929.63, 3929.631, 3929.632, 3929.64, 3929.65, 3929.66, 3929.661, 3929.67, 3929.68, 3929.681, 3929.682, 3929.69, and 3929.70 of the Revised Code to lengthen the time period during which the liquidator of an insolvent insurance company may void certain preferential transfers, to provide for the establishment of a Medical Liability Underwriting Association for medical liability insurance, to make an appropriation, and to declare an emergency.

Section 1. That sections 3903.28 and 3903.32 be amended and sections 3929.62, 3929.63, 3929.631, 3929.632, 3929.64, 3929.65, 3929.66, 3929.661, 3929.67, 3929.68, 3929.681, 3929.682, 3929.69, and 3929.70 of the Revised Code be enacted to read as follows:

Sec. 3903.28.  (A)(1) A preference is a transfer of any of the property of an insurer or of an interest in the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year two years before the filing of a successful complaint for liquidation under sections 3903.01 to 3903.59 of the Revised Code, the effect of which transfer may be to enable the creditor to obtain a greater percentage of his debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfer shall be deemed preferences if made or suffered within one year before the filing of the successful complaint for rehabilitation, or within two years before the filing of the successful complaint for liquidation, whichever time is shorter date that enables the creditor to receive more than the creditor would receive if the insurer was liquidated under this chapter, the transfer had not been made, and the creditor received payment of the debt to the extent provided by the provisions of this chapter.

(2) Any preference may be avoided by the liquidator if any of the following apply:

(a) The insurer was insolvent at the time of the transfer;

(b) The transfer was made within four months one hundred twenty days before the filing of the complaint date;

(c) The creditor receiving it or to be benefited thereby or his the creditor's agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent;

(d) The creditor receiving it was an officer, or any of the following:

(i) An officer or director of the insurer;

(ii) A person, including but not limited to an employee or attorney or other person, who was in fact in a position of comparable influence in to effect a level of control over the actions of the insurer comparable to that of an officer or director whether or not he the person held such position, or any but excluding employees of the department of insurance and any person retained or appointed by the department to assist in the examination, supervision, or other regulation or monitoring of the insurer;

(iii) A shareholder holding directly or indirectly more than five per cent of any class of any equity security issued by the insurer, or any;

(iv) Any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.

(3) Where the preference is voidable, the liquidator may recover the property or the value of the property from the initial transferee, and if it the property has been transferred or converted, its the liquidator may recover the property or the value of the property from any person who has received or converted the property, except that a subsequent bona fide purchaser or lienor who has given consideration of less than fair equivalent value has a lien upon the property to the extent of the consideration actually given. Where a preference by way of lien or security title is voidable, the court may on due notice order the such lien or title to be is preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.

(4) The liquidator may not avoid a transfer under this section as provided by the following:

(a) To the extent that the transfer was intended, by both the insurer and the creditor to or for whose benefit the transfer was made, to be a contemporaneous exchange for new value given to the insurer and was in fact a substantially contemporaneous exchange;

(b) To the extent that the transfer was in payment of a debt incurred by the insurer in the ordinary course of business or financial affairs of the insurer and the transferee and the transfer both was made in the ordinary course of business or financial affairs of the insurer and the transferee and was made according to ordinary business terms;

(c) If the transfer was made to or for the benefit of a creditor, to the extent that after the transfer the creditor gave new value to or for the benefit of the insurer not secured by an otherwise unavoidable security interest, on account of which new value the insurer did not make an otherwise unavoidable transfer to or for the benefit of such creditor.

(B)(1) A transfer of property other than real property is deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract can become superior to the rights of the transferee.

(2) A transfer of real property is deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer can obtain rights superior to the rights of the transferee.

(3) A transfer which creates an equitable lien is not deemed to be perfected if there are available means by which a legal lien can be created.

(4) A transfer not perfected prior to the filing of a complaint for liquidation date is deemed to be made immediately before the filing of the successful complaint date.

(5) The provisions of division (B) of this section apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.

(C)(1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.

(2) A lien obtainable by legal or equitable proceedings is superior to the rights of a transferee, or a purchaser may obtain rights superior to the rights of a transferee within the meaning of division (B) of this section, if such consequences follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien is not, however, superior and such a purchase does not create superior rights for the purpose of division (B) of this section through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action or ruling.

(D) A transfer of property for or on account of a new and contemporaneous consideration that is deemed under division (B) of this section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within twenty-one days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan, has the same effect as a transfer for or on account of a new and contemporaneous consideration.

(E) If any lien deemed voidable under division (A)(2) of this section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a complaint under sections 3903.01 to 3903.59 of the Revised Code which results in a liquidation order date, the indemnifying transfer or lien is also deemed voidable.

(F) The property affected by any lien deemed voidable under divisions (A) and (E) of this section is discharged from such lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety passes to the liquidator, except that the court may on due notice order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the liquidator.

(G) The Franklin county court of common pleas has exclusive jurisdiction of any proceeding initiated by the liquidator filed in the state to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon motion of any party in interest, shall may in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within such reasonable times as the court shall fix.

(H) The liability of a surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the liquidator, or where the property is retained under division (G) of this section to the extent of the amount paid to the liquidator.

(I) If a creditor has been preferred, and afterward in good faith gives the insurer further credit without security of any kind, for property which becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the complaint may be set off against the preference which would otherwise be recoverable from him.

(J) If an insurer shall, directly or indirectly, within four months one hundred twenty days before the filing of a successful complaint for liquidation under sections 3903.01 to 3903.59 of the Revised Code date, or at any time in contemplation of a proceeding to liquidate it, pay money or transfer property to an attorney-at-law for services rendered or to be rendered, the transaction may be examined by the court on its own motion or shall be examined by the court on motion of the liquidator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefit of the estate provided that where the attorney is in a position of influence in the insurer or an affiliate thereof, payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered shall be governed by the provisions of division (A)(2) of this section.

(K)(1) Every officer, manager, employee, shareholder, member, subscriber, attorney, or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he has reasonable cause to believe the insurer is or is about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It shall be presumed that there is reasonable cause to so believe if the transfer was made within four months before the date of filing of the successful complaint for liquidation.

(2)(J) As to every transfer subject to avoidance under this section:

(1) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under division (A) of this section shall be personally liable for the property and shall be bound to account to the liquidator.

(3)(2) The liquidator has the burden of proving that a transfer is voidable under division (A)(2) of this section, and the person against which recovery or voidability is sought has the burden of proving that a transfer is not voidable under division (A)(4) of this section.

(3) The fact that the insurer was under examination, supervision, or other regulatory oversight by the department of insurance, or that the department may have acquiesced in or approved any payments made by the insurer, does not effect or otherwise create a defense to avoidance of a transfer voidable under this section.

(K) Nothing in this division shall be construed to prejudice any other claim by the liquidator against any person.

(L) As used in this section:

(1) "Complaint date" means the date on which a complaint is filed by the superintendent of insurance seeking the liquidation of an insurer, if the complaint results in an order of liquidation. If the insurer is placed in rehabilitation, which rehabilitation is later converted to liquidation, the "complaint date" is the date on which the original complaint seeking rehabilitation was filed.

(2) "New value" means money or money's worth in goods, services, new credit, or the release by a transferee of property previously transferred to the transferee in a transaction that is neither void nor voidable by the liquidator under any applicable law, including the proceeds of the transferred property, but does not include an obligation substituted for an existing obligation.

Sec. 3903.32.  The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made by a reinsurer directly to an insured or other creditor does not diminish the reinsurer's obligation to the insurer's estate except when the reinsurance contract or other written agreement either provides for direct payment of the reinsurance to the insured or beneficiary of the insurance policy in the event of the insolvency of the ceding insurer or provides for payment to a third party and has received the prior written approval of the superintendent of insurance.

Sec. 3929.62. As used in sections 3929.62 to 3929.70 of the Revised Code and any rules adopted pursuant to those sections:

(A) "Applicant" means any licensed physician, podiatrist, or hospital as those terms are defined in section 2305.113 of the Revised Code.

(B) "Medical liability underwriting association" means a nonprofit unincorporated underwriting association for medical liability insurance established under section 3929.63 of the Revised Code.

(C) "Medical liability insurance" means insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death, disease, or injury of any person as the result of negligence or malpractice in rendering professional service or related to the credentialing or accreditation of any medical professional or hospital by any licensed physician, podiatrist, or hospital, as those terms are defined in section 2305.113 of the Revised Code, or any employee or agent acting within the scope of their duties for a physician, podiatrist, or hospital.

Sec. 3929.63. (A) A medical liability underwriting association for medical liability insurance may be created for one or more classes of insurance by rule of the superintendent of insurance pursuant to Chapter 119. of the Revised Code upon a finding by the superintendent that both of the following circumstances exist:

(1) A substantial number of applicants for such class or classes of medical liability insurance have not been placed with insurers authorized to write medical liability insurance in this state, and are insurable risks. For purposes of this section, "insurable risk" means that the physician, podiatrist, or hospital is licensed, certified, or accredited as required by law.

(2) The lack of such class or classes of medical liability insurance threatens the availability of health care for any group of individuals in this state.

(B) The medical liability underwriting association may:

(1) Issue or cause to be issued policies of insurance to applicants, including incidental coverages, subject to terms, conditions, exclusions, and limits, established by the medical liability underwriting association's board of governors subject to the superintendent's approval. Coverages under such policies may be made available as primary or excess protection, provided limits of primary protection under one policy shall not exceed one million dollars for each claim and three million dollars in any year unless otherwise provided for in the plan of operation.

(2) Underwrite the insurance and adjust and pay losses with respect thereto, or appoint service companies or associations to perform those functions;

(3) Assume reinsurance;

(4) Cede reinsurance.

Sec. 3929.631. (A) In the event the superintendent of insurance creates the medical liability underwriting association under section 3929.63 of the Revised Code or reactivates the medical liability underwriting association under section 3929.632 of the Revised Code, the superintendent also shall create a stabilization reserve fund for the medical liability underwriting association under Chapter 119. of the Revised Code. The stabilization reserve fund shall be administered by thirteen directors, one of whom shall be the superintendent of insurance or the superintendent's deputy. The remaining twelve directors shall be appointed by the superintendent. Of these twelve directors, five shall be doctors of medicine and surgery, two shall be doctors of osteopathic medicine and surgery, one shall be a doctor of podiatric medicine, and four shall be representatives of hospitals.

(B) The directors shall act by majority vote with seven directors constituting a quorum for the transaction of any business or the exercise of any power of the stabilization reserve fund. The directors shall serve without salary, but each director shall be reimbursed for actual and necessary expenses incurred in the performance of official duties as a director of the stabilization reserve fund. The directors are not subject to any personal liability with respect to administration of the fund.

(C) Each policyholder of the medical liability underwriting association shall pay to the medical liability underwriting association annually a stabilization reserve fund charge. The charge shall be determined by the directors with the agreement of the board of governors of the medical liability underwriting association, subject to the approval of the superintendent. In the event that there is no agreement among the directors, the board of governors, and the superintendent as to the charge, the superintendent shall determine the charge. The amount of the charge may differentiate between types of coverage, but shall be sufficient to ensure that the medical liability underwriting association is actuarially sound, adequately reserved, financially stable, and efficiently managed so as to satisfy the purposes of sections 3929.62 to 3929.70 of the Revised Code. The medical liability underwriting association shall cancel the policy of any policyholder who fails to pay the stabilization reserve fund charge.

(D) The medical liability underwriting association promptly shall pay to the trustee of the stabilization reserve fund all stabilization reserve fund charges that it collects from its policyholders.

(E) All money received by the stabilization reserve fund shall be held in trust by a corporate trustee selected by the directors. The corporate trustee may invest the money held in trust, subject to the approval of the directors. All investment income shall be credited to the stabilization reserve fund. All expenses of administration of the stabilization reserve fund shall be charged against the stabilization reserve fund. The money held in trust shall be used for the purpose of reimbursing the medical liability underwriting association for any deficit that arises out of the operations of the medical liability underwriting association and for any other purpose that is approved by the board of directors, if the purpose is reasonably consistent with the purposes of the association. Such payment to the medical liability underwriting association shall be made by the directors upon the medical liability underwriting association's certification to the directors of the amount due.

(F) If the board of governors determines that the moneys contained in the stabilization reserve fund at the end of a fiscal year, exclusive of dollars allocated for pending claims and after payment of all claims and expenses, are in excess of amounts that are necessary to ensure that the medical liability underwriting association is actuarially sound, adequately reserved, financially stable, and efficiently managed as to satisfy the purposes of sections 3929.62 to 3929.70 of the Revised Code, and the superintendent concurs, the superintendent shall cause the return of the excess fund moneys to applicants that have contributed to the fund and that are not medical liability underwriting association policyholders at the end of the fiscal year. In effectuating the return of fund moneys, the superintendent shall ascertain the total amount contributed to the fund by each applicant during the entire period of the fund's existence. Within a reasonable time period not to exceed one year, the superintendent shall remit to each eligible applicant an amount that bears the same ratio to the total amount of excess fund moneys as the total amount contributed to the fund by each applicant bears to the total amount contributed to the fund by all applicants. Notwithstanding the return of moneys under this division, policyholders shall continue to be subject to the charges of the stabilization reserve fund under this section. The total amount to be returned under this division shall reflect any interest actually earned by the fund less fund operating expenses.

Sec. 3929.632. (A) The medical liability underwriting association created under section 3929.63 of the Revised Code may be dissolved, or its operations may be suspended, by rule of the superintendent of insurance adopted pursuant to Chapter 119. of the Revised Code, upon a finding by the superintendent that the circumstances described in division (A) of section 3929.63 of the Revised Code no longer exist, or if the superintendent finds that the continued operation of the medical liability underwriting association undermines its statutory purpose or threatens its ability to meet its contractual obligations.

(B) In the case of any dissolution or suspension under division (A) of this section, the superintendent shall adopt rules pursuant to Chapter 119. of the Revised Code that establish standards and procedures for the fair and equitable cessation or suspension of operations, including rules that ensure the payment of all claims on policies issued and expenses incurred by the medical liability underwriting association. Rules adopted under this section may include rules relating to reinsurance. The remaining funds of the medical liability underwriting association shall be used for funding the medical liability underwriting association or for funding another medical malpractice initiative with the approval of the general assembly.

(C) If operations of the medical liability underwriting association are suspended, the superintendent may subsequently reactivate its operations by rule adopted in accordance with Chapter 119. of the Revised Code.

(D) The following persons shall not incur or suffer any liability to any person, by reason of actions taken in order to comply with this section:

(1) The medical liability underwriting association;

(2) The board of governors of the medical liability underwriting association or any member of the board;

(3) The agents or employees of the medical liability underwriting association;

(4) The superintendent;

(5) Any other state officer responsible for the care and custody of the funds of the medical liability underwriting association.

Sec. 3929.64. (A)(1) A board of governors consisting of nine members shall govern the medical liability underwriting association. The members shall be appointed by the governor with the advice of the superintendent of insurance. Five shall be selected from insurers licensed to write and writing liability insurance in this state, at least two of which insurers must write medical liability insurance in this state. One shall be a licensed physician and one shall be from a hospital operating in this state. One shall be an insurance agent licensed and writing medical liability insurance in this state. One shall represent the interests of consumers and shall neither be a member of, or associated with, a health insuring corporation holding a certificate of authority under Chapter 1751. of the Revised Code or an insurance company. The members of the board of governors shall serve without compensation but shall be reimbursed for their actual and necessary expenses incurred in the discharge of their official duties. The directors of the stabilization reserve fund shall serve as ex officio members of the medical liability underwriting association's board of governors.

(2) Of the initial member appointments made under division (A)(1) of this section, three shall be for terms of one year, three shall be for terms of two years, and three shall be for terms of three years, with the members' terms determined from the date the medical liability underwriting association is created under section 3929.63 of the Revised Code. Thereafter, terms of office for appointed members shall be for three years, each term ending on the same day of the same month of the year as did the term it succeeds. A vacancy shall be filled in the same manner as the original appointment. Members may be reappointed to the board of governors.

(B) The board of governors may employ, compensate, and prescribe the duties and powers of as many employees and consultants as are necessary to carry out the purposes of sections 3929.62 to 3929.70 of the Revised Code.

Sec. 3929.65. (A)(1) Within forty-five days after the creation or a reactivation of the medical liability underwriting association, the board of governors of the medical liability underwriting association shall submit to the superintendent of insurance, for the superintendent's review, a proposed plan of operation consistent with sections 3929.62 to 3929.70 of the Revised Code. The superintendent may adopt this plan by rule promulgated in accordance with Chapter 119. of the Revised Code. If the superintendent does not adopt the plan within thirty days of its submission, the superintendent shall formulate a plan of operation consistent with sections 3929.62 to 3929.70 of the Revised Code. Subsequent to the termination of the thirty-day period, the superintendent shall establish the plan by rule in the minimum time permitted by Chapter 119. of the Revised Code.

(2) At any time after the adoption of a plan of operation under division (A)(1) of this section, the board of governors may submit proposals for amendments to the plan of operation to the superintendent for the superintendent's approval. The superintendent also may propose amendments to the plan of operation. All amendments to the plan of operation shall be consistent with sections 3929.62 to 3929.70 of the Revised Code and shall be adopted as rules in accordance with Chapter 119. of the Revised Code.

(B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of medical liability insurance, and shall contain other provisions, including, but not limited to, provisions relating to all of the following:

(1) Establishment of necessary facilities;

(2) Management of the medical liability underwriting association;

(3) Reasonable and objective eligibility and underwriting standards;

(4) Acceptance and cession of reinsurance;

(5) The appointment of servicing carriers or the direct issuance of syndicate policies;

(6) The issuance of a binder providing coverage for which an applicant tenders an amount equal to the annual premium as estimated by the medical liability underwriting association.

(C) The medical liability underwriting association shall separately code all policies written so that appropriate records may be compiled for purposes of calculating the adequate premium levels for each classification of risk. The plan of operation shall set forth the manner in which policies are coded.

Sec. 3929.66. (A) Any applicant practicing or operating in this state seeking to purchase medical liability insurance being offered by the medical liability underwriting association, on or after the effective date of the medical liability underwriting association's plan of operation, may apply to the medical liability underwriting association for medical liability insurance. The application may be made on behalf of an applicant by a broker or agent authorized by the applicant, or may be made on behalf of a number of eligible applicants who are members of a medical society.

(B) The board of governors of the medical liability underwriting association, in formulating the plan of operation under section 3929.65 of the Revised Code, shall include minimum eligibility and underwriting standards for applicants. If the medical liability underwriting association determines that an applicant meets the eligibility and underwriting standards of the medical liability underwriting association as prescribed in the plan of operation and there is no unpaid, uncontested premium due to the medical liability underwriting association from the applicant for prior medical liability insurance, the medical liability underwriting association, upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall issue a policy of medical liability insurance for a term of one year.

(C)(1) The medical liability underwriting association is under no obligation to issue any policy of insurance to any applicant who fails to meet the medical liability underwriting association's eligibility and underwriting standards.

(2) As an eligibility standard, the medical liability underwriting association, as a condition for issuing or renewing insurance, shall require that the applicant has been declined for medical liability insurance by two insurers authorized to write medical liability insurance in this state.

(D) The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to the insurance written by the medical liability underwriting association and related statistics are subject to Chapter 3937. of the Revised Code and shall be established by the board of governors subject to the approval of the superintendent of insurance, giving due consideration to the past and prospective loss and expense experience for medical liability insurance sold by insurers in this state, trends in the frequency and severity of losses, and such other information as the superintendent may require. All rates shall be on an actuarially sound basis, and shall be calculated to be self-supporting exclusive of any amounts held by the stabilization reserve fund. There shall be a presumption that the rates filed and premiums for the business of the medical liability underwriting association are not unreasonable or excessive. The superintendent shall take all appropriate steps to make available to the medical liability underwriting association the profit, loss, and expense experience of insurers currently or previously writing medical liability insurance in this state.

(E) All policies issued by or on behalf of the medical liability underwriting association shall be written so as to apply only to death, disease, or injury which results from acts or omissions covered by the policy and reported during the policy period and for which written claim is made against the insured, unless otherwise provided for in the plan of operation.

(F) All policies issued by or on behalf of the medical liability underwriting association shall contain a provision that upon termination of the policy through cancellation on grounds other than nonpayment of premiums, or through retirement or death of the insured, the insured or the insured's estate has the right on payment of appropriate additional premiums to extend coverage to include claims covered by the policy and discovered and reported after the policy period and for which written claim is made against the insured.

Sec. 3929.661. The medical liability underwriting association may offer policyholders the option of being liable as a co-insurer on sums paid out by way of settlement or judgment against the policyholder on any claim made under the policy. The medical liability underwriting association has sole authority to settle any claim subject to the co-insurance option without the consent of the insured. The plan of operation shall set forth the terms and conditions of the optional co-insurance coverage.

Sec. 3929.67. (A) A medical liability insurance policy that insures a physician or podiatrist, written by or on behalf of the medical liability underwriting association pursuant to sections 3929.62 to 3929.70 of the Revised Code, may only be cancelled during the term of the policy for one of the following reasons:

(1) Nonpayment of premiums;

(2) The license of the insured to practice medicine and surgery, osteopathic medicine and surgery, or podiatric medicine and surgery has been suspended or revoked;

(3) The insured's failure to meet minimum eligibility and underwriting standards;

(4) The occurrence of a change in the individual risk that substantially increases any hazard insured against after the coverage has been issued or renewed, except to the extent that the medical liability underwriting association reasonably should have foreseen the change or contemplated the risk in writing the policy;

(5) Discovery of fraud or material misrepresentation in the procurement of insurance or with respect to any claim submitted thereunder.

(B) A medical liability insurance policy that insures a hospital, written by or on behalf of the medical liability underwriting association pursuant to sections 3929.62 to 3929.70 of the Revised Code, may only be cancelled during the term of the policy for one of the following reasons:

(1) Nonpayment of premiums;

(2) The hospital is not certified or accredited in accordance with Chapter 3727. of the Revised Code;

(3) An injunction against the hospital has been granted under section 3727.05 of the Revised Code;

(4) The insured's failure to meet minimum eligibility and underwriting standards;

(5) The occurrence of a change in the individual risk that substantially increases any hazard insured against after the coverage has been issued or renewed, except to the extent that the medical liability underwriting association reasonably should have foreseen the change or contemplated the risk in writing the policy;

(6) Discovery of fraud or material misrepresentation in the procurement of insurance or with respect to any claim submitted thereunder.

Sec. 3929.68. (A) There shall be no liability imposed on the part of, and no cause of action of any nature arises against, the medical liability underwriting association or the stabilization reserve fund, its board of governors, directors, agents, or employees, an insurer or its employees, any licensed agent or broker, or the superintendent of insurance or the superintendent's authorized representatives and employees, for any action taken by them in the performance of their powers and duties under sections 3929.62 to 3929.70 of the Revised Code. Any reports and communications made in connection with those actions are not public records.

(B) With respect to any policy of insurance issued by the medical liability underwriting association, any contract executed by the medical liability underwriting association or the stabilization reserve fund, or any action taken under or related to sections 3929.62 to 3929.70 of the Revised Code, there shall be no liability on the part of the state beyond amounts paid into or earned by the medical liability underwriting association and stabilization reserve fund.

Sec. 3929.681. Any insurer or other person aggrieved by any action or decision of the medical liability underwriting association may appeal to the board of governors. The decision of the board of governors may be appealed to the superintendent of insurance within thirty days from the date of the action or the decision. The superintendent shall, after a hearing held upon proper notice, issue an order approving or disapproving the action or decision, with respect to the matter that is the subject of appeal. All final orders and decisions of the superintendent are subject to judicial review as provided in Chapter 119. of the Revised Code.

Sec. 3929.682. (A) A medical liability fund is hereby created in the state treasury. The medical liability fund shall consist of the remaining funds of the joint underwriting association, the association created under section 3929.72 of the Revised Code and dissolved under section 3929.721 of the Revised Code, and shall be used for the purposes of funding the medical liability underwriting association that is created in accordance with sections 3929.62 to 3929.70 of the Revised Code or for funding another medical malpractice initiative with the approval of the general assembly.

(B) As used in this section, "remaining funds of the joint underwriting association" means funds paid to the treasurer of state in accordance with section 3929.721 of the Revised Code and any plan of dissolution or trust agreement adopted under section 3929.721 of the Revised Code.

Sec. 3929.69. (A) Annually on or before the first day of March, the medical liability underwriting association and the stabilization reserve fund shall file in the office of the superintendent of insurance a statement or statements containing information with respect to their transactions, condition, operations, and affairs during the preceding year. The statement or statements shall contain such matters and information as are prescribed and shall be in a form approved by the superintendent.

(B) The superintendent or any person designated by the superintendent, at any time, may visit and examine the operation and experience of the medical liability underwriting association and stabilization reserve fund. The association and stabilization reserve fund shall give the superintendent or the superintendent's designee free access to all the books, records, files, papers, and documents that relate to the operation of the medical liability underwriting association and stabilization reserve fund, and may summon, qualify, and allow the examination as witnesses of all persons having knowledge of the operations of the medical liability underwriting association and the stabilization reserve fund, including officers, agents, and employees of the medical liability underwriting association and the stabilization reserve fund.

(C) The medical liability underwriting association and stabilization reserve fund also are subject to examination by the superintendent in accordance with section 3901.07 of the Revised Code.

Sec. 3929.70. The medical liability underwriting association and the stabilization reserve fund are exempt from all license fees, and income, franchise, premium, and privilege taxes levied or assessed by this state or any of its political subdivisions.

Section 2. That existing sections 3903.28 and 3903.32 of the Revised Code are hereby repealed.

Section 3. The amendment by this act of section 3903.28 of the Revised Code shall apply only to liquidations for which an order of liquidation has been entered by the court on or after ninety days after the effective date of this section.

Section 4. The amendment by this act of section 3903.32 of the Revised Code first applies ninety days after the effective date of this section.

Section 5. (A) As used in this section:

(1) "Joint Underwriting Association" means the Joint Underwriting Association created under section 3929.72 of the Revised Code and dissolved under section 3929.721 of the Revised Code.

(2) "Remaining funds of the Joint Underwriting Association" means funds paid to the Treasurer of State in accordance with section 3929.721 of the Revised Code and any plan of dissolution or trust agreement adopted under section 3929.721 of the Revised Code.

(B) The Superintendent of Insurance shall certify to the Director of Budget and Management the amount of cash deposited from the remaining funds of the Joint Underwriting Association to the General Revenue Fund. Notwithstanding section 3929.721 of the Revised Code, the Director of Budget and Management shall transfer an amount equal to the certified amount from the General Revenue Fund to the Medical Liability Fund created in section 3929.682 of the Revised Code. The amount transferred is hereby appropriated in fiscal year 2004. Any unencumbered and unallocated balances are hereby reappropriated in fiscal year 2005.

This section is not subject to the referendum. Therefore, under Ohio Constitution, Article II, Section 1d and section 1.471 of the Revised Code, this section goes into immediate effect when this act becomes law.

Section 6. This act is hereby declared to be an emergency measure necessary for the immediate preservation of the public peace, health, and safety. The reason for this necessity is the need to maintain ready access to medical liability insurance for Ohio's physicians, podiatrists, and hospitals as the availability of this insurance in the market declines; access to medical liability insurance needed if Ohio's physicians, podiatrists, and hospitals are to maintain their practices and operations in this state, providing Ohio's residents with ready, quality medical care. Therefore, this act shall go into immediate effect.