MEDICAL MALPRACTICE SELF–INSURANCE TRUST FUNDS

M.G.L. pt. Part I, tit. Title XXII, ch. c. 175F

in effect

M.G.L. c. 175F, § 1 Definitions

c. 175F, § 1. Definitions Section 1. The following words, as used in this chapter, unless the context otherwise requires or a different meaning is specifically prescribed, shall have the following meanings: ''Certified fund'', a fund holding a certificate issued pursuant to section three and not revoked pursuant to section ten; ''Commissioner'', the commissioner of insurance; ''Fund'', a health care provider self-insurance trust fund; ''Health care provider'', a licensed hospital, clinic, nursing home, health maintenance organization, foundation, educational institution engaged in the training of health care personnel; or society of such other classification of health care providers, as that term is defined in section six of chapter three hundred and sixty-two of the acts of nineteen hundred and seventy-five, for which the commissioner determines that medical malpractice insurance is not adequately available at reasonable cost; ''Health care provider self-insurance trust fund'', a trust fund established in accordance with the provisions of this chapter to provide insurance to a group of two or more participating health care providers; ''Insurance'', formal self-insurance or commercial insurance, or a combination thereof, covering risks of medical malpractice liability and general liability of any participating health care provider, and, at the option of the fund, of any affiliated institution or person of a participating health care provider, and of staff members of participating health care providers and affiliates who are full-time employees or who satisfy other reasonable criteria for coverage. A fund with a participant which is a society of individual health care providers who are natural persons shall provide only medical malpractice coverage to the members of that society. Insurance shall include all layers of coverage, on either a claims made or occurrence basis, and reinsurance by one fund of the risk of another fund; ''Participating health care provider'' or ''Participant'', a health care provider that is a settlor or grantor and beneficiary of a health care provider self-insurance trust fund; ''Trustee'', the trustee of a fund.

M.G.L. c. 175F, § 2 Establishment of fund; filing of trust instrument; certification; appointment of trustee; dissolution, voluntary or involuntary

c. 175F, § 2. Establishment of fund; filing of trust instrument; certification; appointment of trustee; dissolution, voluntary or involuntary Section 2. A group of two or more participating health care providers may establish a health care provider self-insurance trust fund under this chapter prior to the issuance of a certificate in accordance with section three. Said fund shall be deemed established upon the execution of a trust instrument by the initial participants and establishment of a fund balance. When a group of participants has established a fund, said participants shall file the trust instrument with the commissioner with such supporting documentation as he might reasonably require by regulation. Such trust instrument shall be in compliance with the provisions of this chapter. The coverage provisions of an insurance contract issued by a fund under its trust instrument shall not become effective to provide coverage until the fund is certified in accordance with section three although the fund may require and accept payments of premiums prior to certification. A fund shall appoint a trustee to satisfy reasonable standards of performance which shall be promulgated by the commissioner by regulation. A fund desiring to dissolve may petition the supreme judicial court for voluntary dissolution. The court may authorize such dissolution and may, upon such authorization, distribute the petitioner's assets in a manner consistent with the fund's legal obligations. The commissioner may petition the supreme judicial court for the involuntary dissolution of any fund if such fund has not filed for two consecutive years, an annual statement in accordance with section six, or if the commissioner is satisfied that the fund is inactive and its continued existence is not in the public interest. Upon authorizing such dissolution, the court shall distribute all assets of the fund in accordance with the fund's legal obligations.

M.G.L. c. 175F, § 3 Application for certification; denial; approval

c. 175F, § 3. Application for certification; denial; approval Section 3. Any fund established under section two may be certified to provide insurance in accordance with the provisions of this chapter upon filing an application for certification with the commissioner. Such application shall be on a form provided by the commissioner and shall include such information as he shall require by regulation. The commissioner shall review each application and may, after a hearing in accordance with chapter thirty A, deny any application for the following reasons: (a) that the application is not on the prescribed form or the information as submitted is not in compliance with regulations promulgated under the provisions of section seventeen; (b) that the dollar reserve is not in compliance with section eight; (c) that the trustee is found by the commissioner to be unable to satisfy the standards of performance promulgated by the commissioner pursuant to section two; or (d) that there was fraud or wilful misrepresentation in providing required written information. Within sixty days of the date of filing of an application under this section an application shall be deemed approved, unless the commissioner shall schedule a hearing in accordance with chapter thirty A to consider denial thereof and shall hold such hearing within thirty days of such scheduling. The decision of the commissioner shall be rendered within thirty days following such hearing, or the application so filed will be deemed approved.

M.G.L. c. 175F, § 4 Application of chapter

c. 175F, § 4. Application of chapter Section 4. A certified fund shall be exempt from the provisions of chapters one hundred seventy-four A, one hundred seventy-five D, one hundred seventy-four B, one hundred seventy-five, one hundred seventy-five A, one hundred seventy-six, one hundred seventy-six A, one hundred seventy-six B, one hundred seventy-six C, one hundred seventy-six E, and one hundred seventy-six F, and from the provisions of any other statute relating to insurance. A certified fund shall not be considered to be an insurer and any participant shall not be considered a purchaser of insurance under the provisions of section six of chapter three hundred sixty-two of the acts of nineteen hundred and seventy-five. Any such participant or other person to whom coverage is provided by a fund shall receive any dividends to which it would be entitled and shall be subject to any assessments due from it as a ''policyholder'' under said section 6 if such dividends or assessments relate to any year during which that participant or other person purchased insurance from the Joint Underwriting Association under said section six. The provisions of this chapter shall be subject to the enforcement provisions of sections three A and three B of chapter one hundred and seventy-five. A hearing held under this chapter shall be subject to the commissioner's powers under section eight A of chapter one hundred and seventy-five. A fund shall be subject to the provisions of section twenty of said chapter one hundred and seventy-five as they relate to insurance companies. A fund shall be subject as an insurer to the provisions of chapter one hundred and seventy-six D.

M.G.L. c. 175F, § 5 Rights, obligations and responsibilities of fund and trustee

c. 175F, § 5. Rights, obligations and responsibilities of fund and trustee Section 5. A fund and a trustee of such fund shall have the rights and shall be subject to the legal responsibilities and obligations applicable to a trust and trustee under the General Laws, except to the extent such rights, obligations and responsibilities are in conflict with this chapter.

M.G.L. c. 175F, § 6 Annual statement of financial condition; penalty for failure to file

c. 175F, § 6. Annual statement of financial condition; penalty for failure to file Section 6. A fund shall annually on January first file with the commissioner a statement showing its financial condition as of September thirtieth of the prior year. Such statement shall be on a form provided by the commissioner. The commissioner may require in writing, at any time, such additional information as is reasonable and necessary to determine the financial condition of a fund. A fund unreasonably neglecting to file the statement required hereunder in a timely fashion, or unreasonably neglecting to comply with any such informational request by the commissioner within thirty days following receipt of a written request for said information, shall forfeit one hundred dollars for each day which such unreasonable neglect continues. Such fine shall be imposed only after a hearing in accordance with chapter thirty A, conducted by the commissioner. The commissioner shall have the power to examine the financial condition of a fund.

M.G.L. c. 175F, § 7 Standards for proper accounting methods to be used

c. 175F, § 7. Standards for proper accounting methods to be used Section 7. The commissioner shall, by regulation, prescribe standards for proper accounting methods to be used by a fund. Said standards shall be consistent with customary accounting principles.

M.G.L. c. 175F, § 8 Claims reserve

c. 175F, § 8. Claims reserve Section 8. A fund organized under this chapter shall, before it shall be certified pursuant to section three, satisfy the commissioner in its application that a claims reserve exists in accordance with this section. Such claims reserve shall be maintained at a level prescribed by an actuary or by a reasonable substitute for an actuary, which level shall exceed four hundred thousand dollars or some other reasonable minimum to be established by the commissioner by regulation. In establishing this minimum, the commissioner shall consider other legal obligations which might be required of the fund by other governmental units, in order to avoid unnecessary and duplicative or conflicting requirements.

M.G.L. c. 175F, § 9 Amendment of trust instrument or original application for certification; notification to commissioner

c. 175F, § 9. Amendment of trust instrument or original application for certification; notification to commissioner Section 9. A trustee of a fund shall notify the commissioner of any amendment to its trust instrument or to its original application for certification under section three within thirty days of the making of such amendment.

M.G.L. c. 175F, § 10 Revocation or suspension of certification of fund; removal of trustee

c. 175F, § 10. Revocation or suspension of certification of fund; removal of trustee Section 10. The commissioner may, after a hearing in accordance with chapter thirty A, revoke or suspend the certification of any fund, or, in lieu of such suspension or revocation, fine that fund up to ten thousand dollars, for intentionally doing any of the following: (1) violating any provision of this chapter or any regulations promulgated hereunder; (2) presenting false or misleading statements on any document which is filed in accordance with this chapter; (3) holding a claims reserve less than the minimum required to be maintained by section eight; (4) using improper accounting procedures not in conformity with section seven. If the certification of a fund is suspended, that fund shall not accept any new participants, but may continue to provide insurance to its present participants. If the certification of a fund is revoked, the fund shall not accept any new participant and such fund shall cease providing any insurance at the end of the policy period during which such revocation occurs or twelve months from the date of such revocation, whichever occurs first. Prior to the total cessation of provision of insurance under this section, such fund shall be treated as if it were a certified fund. The commissioner may, after a hearing in accordance with chapter thirty A, remove any trustee of a fund for the reasons described in clauses one to four, inclusive, or for any fact which demonstrates that the trustee did not satisfy the standards of performance established pursuant to section two.

M.G.L. c. 175F, § 11 Exclusion of health care provider from participation; new participants; request for arbitration by aggrieved

c. 175F, § 11. Exclusion of health care provider from participation; new participants; request for arbitration by aggrieved Section 11. No fund shall exclude a health care provider from participation except as provided in this section if the health care provider has complied with all necessary and required application procedures. A fund may exclude a health care provider from participation if: (1) the applicant health care provider is not situated in a geographical location which is reasonably contiguous to the initial participants; (2) the applicant health care provider does not meet standards of risk and claims management and financial management promulgated by a fund in its trust instrument; (3) the applicant is not a nonprofit health care provider, if that fund's present participants are nonprofit; or (4) the applicant is not a member of the classification of health care providers to which the fund's present participants belong. Each type of health care provider set forth in section 1 shall be considered to be a separate classification of health care providers. No fund shall be required to provide insurance to a new participant except beginning at the start of the next policy year after the new participant's application is accepted, and no fund shall be required to accept more than one applicant health care provider during any policy year; provided, however, that a fund at its option may accept more than one such applicant during any policy year. If any applicant health care provider is aggrieved by a decision to exclude him from participation in a fund, he may request arbitration by a board consisting of a member designated by the health care provider, a member chosen by the fund, and a member designated by the commissioner. Such board shall hold a hearing and render a decision on the issues presented.

M.G.L. c. 175F, § 12 Trust instrument provisions

c. 175F, § 12. Trust instrument provisions Section 12. The trust instrument may provide (a) that there shall be a minimum period during which any participant must participate in the fund; (b) that the fund may provide tail coverage to any participant which joins or withdraws from the fund; (c) that all participants shall execute a participation agreement; (d) that the trustee shall be free of all personal liability for his actions in good faith on behalf of the fund; and (e) that the trustee may be either an individual or an institution such as a bank, an insurance company or any other appropriate entity.

M.G.L. c. 175F, § 13 Merger or consolidation of funds

c. 175F, § 13. Merger or consolidation of funds Section 13. A fund desiring to consolidate or merge with any other fund shall comply with the procedures set forth in section seven of chapter one hundred and seventy-six, inserted by section one of chapter five hundred and forty of the acts of nineteen hundred and fifty-eight. Such merger or consolidation shall be considered to be approved by the commissioner unless, after a hearing in accordance with chapter thirty A, the commissioner disapproves said merger or consolidation in writing within sixty days after the filing of all materials. Any such merger or consolidation shall have the effects on the rights and property of the funds which are set forth as to fraternal benefit societies in said section seven of said chapter one hundred and seventy-six, as so inserted.

M.G.L. c. 175F, § 14 Legal requirement of insurance or commercial insurance

c. 175F, § 14. Legal requirement of insurance or commercial insurance Section 14. Any participant shall be considered to have insurance equivalent to commercial insurance, to the extent of the limits of coverage provided by the fund, for the purpose of any requirements of insurance or commercial insurance contained in any law or any bonds, notes, mortgages, contracts or other agreements to which that participant is a party.

M.G.L. c. 175F, § 15 Liability of fund

c. 175F, § 15. Liability of fund Section 15. No money or other asset of any fund shall be liable to attachment, trustee process, equitable lien or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of any legal person except as provided in this chapter or in the trust instrument governing the fund.

M.G.L. c. 175F, § 16 Fund declared to be charitable and benevolent institution; exemption from taxes

c. 175F, § 16. Fund declared to be charitable and benevolent institution; exemption from taxes Section 16. A fund is hereby declared to be a charitable and benevolent institution, and all of its assets shall be exempt from all and every state, county, district, municipal and school tax, if all of its participants qualify for exemption from federal taxes under 26 U.S.C. Section 501, or qualify for the exclusion from gross income provided under 26 U.S.C. Section 115.

M.G.L. c. 175F, § 17 Regulations to consider requirements of federal governmental or quasi-governmental agencies

c. 175F, § 17. Regulations to consider requirements of federal governmental or quasi-governmental agencies Section 17. All regulations promulgated by the commissioner pursuant to this chapter shall consider the requirements of federal governmental agencies or quasi-governmental agencies so as to permit funds to satisfy such requirements.

M.G.L. c. 175F, § 18 Violation of chapter

c. 175F, § 18. Violation of chapter Section 18. Whoever violates any provisions of this chapter shall be punished by a fine of not more than five hundred dollars.

Source: Massachusetts General Court (malegislature.gov)URL: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175FFetched: 10/20/2026

MEDICAL MALPRACTICE SELF&ndash;INSURANCE TRUST FUNDS