Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
SECTION 1. As used in this section, and sections two to twelve, inclusive, the following words shall have the following meaning:-
"Association", the joint underwriting association established pursuant to the provisions of this section.
"Commissioner", the commissioner of insurance.
"Licensee", any person, firm, corporation, association or other combination of persons presently holding a valid license for the sale of alcoholic beverages pursuant to chapter one hundred and thirty-eight.
"Liquor legal liability insurance", insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of death or injury to any person as the result of negligence in the distribution, sale or serving of alcohol by any licensee, or by any other person or entity to whom a policy of liquor legal liability insurance has been issued or an employee, or agent thereof, except that no payment under a policy of liquor legal liability insurance issued by the association shall be made where the cause of action giving rise to a claim is the result of the actions of an intoxicated person which occurred off of and away from the premises of the licensee excluding however, those causes of action arising out of the intoxicated individual's operation of a motor vehicle.
"Net direct premiums", gross direct premiums written on personal injury liability insurance written pursuant to the provisions of chapter ninety and one hundred and seventy-five of the General Laws, including the liability component of multiple paid package policies as computed by the commissioner, less all premiums and dividends credited or returned to policyholders or the unused or unabsorbed portions of premium deposits.
SECTION 2. There is hereby established a temporary, nonexclusive, joint underwriting association consisting of all insurers authorized to write and engage in writing, within the commonwealth on a direct basis, personal injury liability insurance pursuant to the provisions of chapters ninety and one hundred and seventy-five of the General Laws including insurers covering such perils in multiple peril packages policies. Every such insurer shall be a member of the association and shall remain a member as a condition of its authority to continue to transact such kind of insurance within the commonwealth. The purpose of the association shall be to provide liquor legal liability insurance on a self supporting basis.
SECTION 3. The association shall, pursuant to the provisions of this chapter and the plan of operation with respect to liquor legal liability insurance, on behalf of its members, issue or cause to be issued, policies of insurance to applicants, including incidental coverages and subject to limits as specified in the plan of operation, but not to exceed five hundred thousand dollars for each claimant under one policy and one million dollars for all claimants under one policy in any one cause of action to underwrite such insurance and to adjust and pay losses with respect thereto, to appoint service companies to perform these functions; to assume reinsurance from its members; and to assign reinsurance.
SECTION 4. The commissioner shall, after consultation with the joint underwriting association, representatives of the public, the Alcoholic Beverage Control Commission, Massachusetts Package Store Association, Massachusetts Restaurant Association, Western Massachusetts Cafe Owners, Hospitality Industry Association, and other affected individuals and organizations, promulgate a plan of operation consistent with the provisions of this section to become effective and operative no later than thirty days from the effective date of this act. Said plan of operation shall provide for economic, fair and non-discriminatory administration, and for the prompt and efficient provision of liquor legal liability insurance, and shall contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers and procedures for determining amounts of insurance to be provided by the association. Said plan of operation shall establish specific limits of coverage based upon type of license, gross volume of liquor sales or service, employee participation in alcohol awareness training programs approved by the governing board of the association, and such other criteria as the directors shall develop. Said plan shall also provide for the offering of an installment payment plan for each policy which either gives the insured the option to pay the annual premium in a minimum of six monthly installments or gives the insured the option to pay the annual premium in a minimum of six monthly installments or gives the insured the option to pay the annual premium in four quarterly installments. Said plan shall also provide for sufficient levels of reserves achieved by the association. Amendments to the plan of operation may be made by the directors of the association subject to the approval of the commissioner, or shall be made at the direction of the commissioner.
SECTION 5. Any licensee, or any person or entity which is engaged in serving alcoholic beverages as an incident of its business but for which where a license is not required, upon proof that the licensee or such person or entity has made a reasonable effort to obtain insurance and has been unable to obtain it, shall be entitled to apply to the association for such coverage. Such application shall be made on behalf of an applicant by a broker or agent authorized by the applicant. If the association determines that the applicant meets the underwriting standards of the association as prescribed in the plan of operation, and there is no unpaid, uncontested premium due from the applicant for prior insurance as shown by the insured having failed to make written objection to premium charges within thirty days after billing, the association, upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of liquor legal liability insurance for a term of one year. The joint underwriting association shall establish and promulgate rules and regulations for a mandatory offer for insurance, and the criteria pertaining thereto under the provisions of this statute and subject to the approval of the commissioner.
SECTION 6. The rates, rating plans, rating rules, rating classifications and policy forms applicable to the insurance written by the association and statistics relating thereto shall be subject to the provisions of chapter one hundred and seventy-five A of the General Laws. Within such time as the commissioner shall direct, the association shall submit for the approval of the commissioner, in such form as he shall require, an initial filing, of policy forms applicable to liquor legal liability insurance to be written by the association. In the event the commissioner disapproves such initial filing, the association shall amend such filing, in whole or in part, in accordance with the direction of the commissioner. If the commissioner is unable to approve such filing or amended filing, within the time specified, he shall promulgate the policy forms, and rules to be used by the association in writing such insurance.
Any deficit sustained by the association in any one year shall be recouped, pursuant to the plan of operation and the rating plan then in effect by an assessment upon the policyholders, or a rate increase applicable prospectively, or both; provided however, that in no event shall a deficit incurred by the association be charged directly or indirectly, to any person other than the insured under a policy of liquor legal liability insurance; and provided, further, that for purposes of this sentence, when deficits sustained on account of liquor legal liability coverage are being recouped, the term "policyholders" shall mean all those licensees insured under a policy of liquor legal liability insurance, whether obtained through the joint underwriting association or not.
Effective after the initial year of operation, rates, rating plans and any provision for recoupment through policyholder assessment or premium rate increase, shall be based upon the association's loss and expense experience, and investment income from unearned premium and loss reserves together with such other information based upon such experience as the commissioner may deem appropriate. The resultant premium rates shall be on an actuarially sound basis and shall be calculated to be self-supporting. In the event that sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided hereinbefore, all members shall, on a temporary basis contribute to the financial requirements of the association in the manner hereinafter provided. Any such contribution shall be reimbursed to the members following recoupment as provided in this section. The association shall offer policies on both a claims made and occurrence basis so that applicants may select either policy at their option; provided, however, that the rates charged for both claims made and occurrence policies shall be at rates established on an actuarially sound basis and which are calculated to be self-supporting.
SECTION 7. All insurers which are members of the association shall participate in its writings, expenses, and losses in the proportion that the net direct premiums of each such member, excluding that portion of premiums attributable to the operation of the association written during the preceding calendar year, bears to the aggregate net direct premiums written in the commonwealth by all members of the association. Each insurer's participation in the association shall be determined annually on the basis of such net direct premiums of each such member, excluding that portion of premiums attributable to the operation of the association written during the preceding calendar year, bears to the aggregate net direct premiums written in the commonwealth by all members of the association. Each insurer's participation in the association shall be determined annually on the basis of such net direct premiums written during the preceding calendar year, bears to the aggregate net direct premiums written in the commonwealth by all members of the association. Each insurer's participation in the association shall be determined annually on the basis of such net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. No member shall be obligated in any one year to reimburse the association on account of its proportionate share in the deficit from operations of the association in that year in excess of one per cent of its surplus to policyholders and the aggregate amount not so reimbursed shall be reallocated among the remaining members in accordance with the method of determining participation prescribed in this chapter after excluding from the computation the total net direct premiums of all members not sharing in such excess deficit. In the event that the deficit from operation allocated to all members of the association in any calendar year shall exceed one per cent of their respective surplus to policyholders, the amount of such deficit shall be allocated to each member in accordance with the method of determining participation prescribed in this chapter.
SECTION 8. The association shall be governed by a board of thirteen directors, eight of whom shall be elected by cumulative voting by the members of the association, whose votes in such election shall be weighed in accordance with each member's net direct premiums written during the preceding calendar year. Four directors shall be appointed by the commissioner as representatives of the licensees. One shall be appointed by the commissioner as a representative of the insurance producers. The eight elected directors serving on the first board shall be elected at a meeting of members, or their authorized representatives, which shall be held at a time and place designated by the commissioner. The other five directors serving on the first board shall be appointed on or before the date of such meeting.
SECTION 9. Any applicant to the association, any person insured pursuant to this section, or their representatives, or any affected insurer, may appeal for review to the commissioner within thirty days after any ruling, action, or decision by or on behalf of the association, with respect to those items the plan of operation defines as appealable matters. On receipt of any such appeal, the commissioner shall, after due hearing and investigation enter such finding or decision as he deems shall best meet the purpose of this section.
SECTION 10. Any person aggrieved by any such finding, order or decision and any person aggrieved by any other rule or regulation of the commissioner made pursuant to this chapter may, within thirty days of the filing of any such finding, order, decision, rule or regulation in the office of the commissioner, appeal therefrom to the superior court for the county in which the complainant resides. The court shall, after such notice to the parties as it deems reasonable, hold a summary hearing on such appeal and shall have jurisdiction to review all question of fact and law, and to affirm or reverse such finding or order and to make any appropriate judgment.
SECTION 11. The association shall file in the office of the commissioner, annually on or before the first day of March, a statement which shall contain information with respect to its transactions, condition, operations and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed and shall be in such form as is approved by the commissioner. The commissioner may, at any time, require the association to furnish additional information with respect to its transactions, conditions or any matter connected therewith considered to be material and of assistance, in evaluating the scope, operation and experience of the association.
SECTION 11A. The commissioner of insurance is hereby authorized to make an annual estimated assessment against each insurer who is required under the provisions of this act to be a member of the joint underwriting association relative to liquor legal liability insurance. Said estimated assessment shall be in an amount determined and certified by the commissioner as necessary to cover the costs to be incurred by the division of insurance in carrying out its responsibilities under sections one through twelve, inclusive, of this act. Said estimated assessment shall be made against each such insurer in the same proportion as would apply under the provisions of this act to such insurer's participation in the writings, expenses and losses of the association and shall be paid to the commissioner within thirty days after the date of the notice from the commissioner of such estimated assessments. The commissioner shall subsequently determine and assess proportionately the amount of actual costs against each such insurer and shall make assessment adjustments for any variation between estimated and actual costs.
SECTION 12. The commissioner shall make an examination into the affairs of the association at least annually. Such examination shall be conducted and the report thereon filed in the manner prescribed in section four of chapter one hundred and seventy-five of the General Laws.
There shall be no liability on the part of, and no cause of action of any nature shall arise against the association, its agents or employees, an insurer, any licensed agent or broker, or the commissioner or his authorized representatives, for any statements made in good faith by them in any reports or communications concerning risks insured or to be insured by the association, or at any administrative hearing conducted in connection therewith.
SECTION 13. Section one to twelve, inclusive, of this act shall expire on December thirty-first, nineteen hundred and eighty-seven.
SECTION 14. Section 24J of chapter 90 of the General Laws, as appearing in section 10 of chapter 373 of the acts of 1982, is hereby further amended by striking out the second paragraph and inserting in place thereof the following paragraph:-
Any information so acquired by the court shall be transmitted to the office of the attorney general, the office of the district attorney for the district in which the establishment is located, and the establishment.
SECTION 15. Chapter 175 of the General Laws is hereby amended by inserting after section 112 the following two sections:-
Section 112A. Liquor legal liability insurance shall provide insurance coverage against the legal liability of the insured and against loss, damage or expense incident to a claim arising out of death or injury to any person as the result of negligence in the distribution, sale, or serving of alcohol by a licensee or an employee, or agent thereof, or any other person or entity to whom a policy of liquor legal liability insurance has been issued, except that no payment shall be made where the cause of action giving rise to a claim is the result of the actions of an intoxicated person which occurred off of and away from the premises of the licensee excluding, however, those causes of action arising out of the intoxicated individual's operation of a motor vehicle.
Section 112B. Effective sixty days after the inception of a liquor legal liability insurance contract, no notice of intention to terminate the contract or, if the contract is a renewal, no notice of intention not to renew the contract shall be effective unless the insurer at least sixty days prior to the effective date of such cancellation or the end of the contract period, as the case may be, mails or delivers to the insured at the address shown on the policy such notice of cancellation or intention not to renew except where the cancellation is for non-payment of premium, or where the insured has lost his license.
Chapter 175 of the General Laws is hereby further amended by adding after
section 195 the following section:-
Section 196. Where a payment is made by an insurer under the terms of a
policy of liquor liability insurance, it shall be the duty of the insurer
to give notice of said payment to the office of the Attorney General within
ten days of payment.
Said notice shall include, but not be limited to the following: the name
of the insured, name of claimant(s), amount paid, date(s) or
incident for which payment is made.
In the absence of fraud, malice or criminal act, no insurance company, or
person who furnished information on its behalf, or any duly licensed
insurance agent or broker, through whom the policy was issued shall be
liable for damages in a civil action or subject to criminal prosecution for
any conduct reasonably undertaken pursuant to the provisions of this section.
Chapter 231 of the General Laws is hereby amended by inserting after
section 60E, the following section:-
Section 60F. Every action for negligence in the distribution, sale or
serving of alcoholic beverages to a minor or to an intoxicated person shall
be commenced in the superior court department and shall proceed according
to the Massachusetts Rules of Civil Procedure unless otherwise provided for
by this section.
The plaintiff shall file, together with his complaint, or at such later
time not to exceed ninety days thereafter, an affidavit setting forth
sufficient facts to raise a legitimate question of liability appropriate
for judicial inquiry.
Any party may make a motion for summary judgment pursuant to Rule 56 of
the Massachusetts Rules of Civil Procedure. Any such motion shall be
heard and decided promptly after issue is joined as to any party, unless
the court enlarges the time for discovery. Said enlarged time for
discovery shall not exceed ninety days, except on further order of the court.
On or within thirty days of filing a notice of appeal from summary judgment adverse to a plaintiff, the plaintiff shall file a bond in the amount of two thousand dollars for each adverse party on appeal secured by cash or its equivalent with the clerk of the appellate court in which the case is pending. Said bond shall be payable to the named adverse party or parties for costs assessed and attorney fees on appeal, if the appellant does not prevail on appeal. Upon motion filed by the plaintiff, and a determination by a single justice of the appellate court that the plaintiff is indigent, said justice may reduce or eliminate the amount of the bond.
If a judgment is entered for a plaintiff, the court shall report its judgment to the alcoholic beverages control commission.
SECTION 18. Chapter 231 of the General Laws is hereby amended by adding after section 85R the following section:-
Section 85S. In any action for personal injuries, property damage or consequential damages caused by or arising out of the negligent serving of alcohol to an intoxicated person by a licensee properly licensed under chapter one hundred and thirty-eight or by a person or entity serving alcohol as an incident of its business but for which no license is required, no such intoxicated person who causes injuries to himself, may maintain an action against the said licensee or person or entity in the absence of wilful, wanton, or reckless conduct on the part of the licensee or such person or entity.