TITLE: CONCERNING THE ESTABLISHMENT OF A DUTY OF ORDINARY CARE FOR HEALTH CARE COVERAGE CARRIERS PROVIDING COVERAGE THROUGH MANAGED CARE PLANS WITH RESPECT TO DECISIONS RELATING TO HEALTH CARE SERVICES.

The provisions of this bill would establish that managed care plans operated by insurance carriers have a duty to exercise ordinary care when making decisions with respect to health care services and are liable for damages for harm to a covered person proximately caused by the carrier’s or managed care plan’s failure to exercise ordinary care. The bill would allow patients to sue their managed care plans for damages. The bill would become effective July 1, 1998, and would apply to acts or omissions occurring on or after that date.

The bill would require the managed care plans to report judgments, settlements, and arbitration awards made pursuant to the bill to the Division of Insurance, Department of Regulatory Agencies. Failure to do so would result in a civil penalty. The division does not expect that a carrier would fail to report. The bill also would allow the division to review, investigate, and where appropriate to take disciplinary or other action.

STATE FISCAL IMPACT SUMMARY	FY 1998/99	FY 1999/2000
State Revenues General Fund Other Fund	Potential Increase in Penalty Revenue
State Expenditures General Fund Other Fund
FTE Position Change	None	None
Local Government Impact — None.

The provisions of this bill could result in a potential increase of minimal revenues from penalties that would be deposited in the General Fund.

Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources will affect the amount of the state revenue to be refunded.

It is assumed that the bill’s provisions could result in an increase in the number of judgments filed. At this time, the number of new judgements that would be filed cannot be estimated. Therefore, it is not possible to accurately estimate the impact on the workload of the division. The division, and the Department of Public Health and Environment already follow-up as necessary on complaints affecting the quality of care. The bill would have no fiscal impact on any other agency of the state, or unit of local government.

Since the number of additional judgements that would be filed cannot be estimated at this time, no additional spending authority is implied for FY 1998/99.