Superintendent asks committee to fold PCF settlements into baseline budget, expand fraud and market‑conduct capacity
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Summary
The Office of Superintendent of Insurance asked lawmakers to include routine Patient Compensation Fund settlements in its operating budget, to fund expanded market‑conduct and financial review capability, and to add staff to the insurance‑fraud law‑enforcement unit; the committee adopted the LFC recommendation and asked analysts to examine two fraud positions.
The Office of the Superintendent of Insurance (OSI) asked the Appropriations & Finance Committee to shift expected Patient Compensation Fund (PCF) settlement costs into the baseline operating budget and to expand recurring capacity for market‑conduct examinations, financial reviews and fraud enforcement.
Superintendent Alice Kane said the PCF pays settlements funded primarily via hospital and provider surcharges and investment income; the office reported near‑term settlement activity and proposed bringing roughly $74.9 million of PCF settlement workload into the operating budget to reduce repeated supplemental requests. "We wanted to bring in the whole claims adjuster department into OSI," Kane said, explaining a plan to hire experienced malpractice adjusters into state service to improve claims handling and reduce outside‑vendor litigation risk.
Why it matters: The Patient Compensation Fund covers medical‑malpractice awards above providers’ private coverage limits and is funded through provider and hospital surcharges. OSI argues budgetary inclusion of routine PCF activity will stabilize the agency’s spending plan and reduce frequent BAR/supplemental requests.
Other requests: Kane requested recurring operations funding to make previously nonrecurring salary adjustments permanent, recurring funding for independent external financial reviews required by NAIC protocols, and expansion of market‑conduct examination capacity to examine insurer practices. The agency also asked for litigation funds to defend ongoing cases, including challenges to health‑care‑sharing ministries and a State Farm court matter.
Fraud enforcement: OSI briefed the committee on the insurance‑fraud law enforcement unit. The office reported roughly 1,400 referrals in the backlog and that six sworn special agents currently cover the state; the office requested additional fraud‑unit positions to reduce backlog and improve investigative reach. The committee asked analysts to consider adding two fraud‑unit positions as a follow‑up to the adopted LFC recommendation.
Committee action: Members adopted the LFC operating recommendation with direction that analysts continue technical work; the committee also asked analysts to evaluate adding two additional fraud enforcement positions in a follow‑up ("catch‑up") action.