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[378]

Part of Minutes of the University of Kentucky Board of Trustees

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Section 6.03. Hospital Professional Liability Insurance. So long as any of the Bonds are Outstanding, the Board covenants to maintain a medical professional liability self-insurance fund or a commercial policy of medical professional liability insurance, or a combination of self- insurance and commercial medical professional liability insurance in limits of not less than $1,000,000 for each claim and $3,000,000 in the aggregate (exclud- ing any umbrella coverage) or such additional amounts as may be provided in a Series Resolution. Any fund for self-insurance against medical professional liability (which fund may be a combination of commercial insurance and self- insurance) shall be (i) in compliance with the Medicare Provider Reimbursement Manual of the United States Department of Health and Human Services, Social Security Administration, or its successor rules or regulations, for so long as the Hospital is a participant in the Medicare Provider Program, (ii) held by a trustee in a segregated account solely for payment of such medical professional liability claims, (iii) reviewed annually by an independant actuary who will provide a report thereof to the Board, and which shall provide for actuarially sound reserves. In the event the Board shall terminate such self-insurance fund and obtain commercial insurance, such fund shall thereafter be maintained on an actuarially sound basis in accordance with the report of the independent actuary. Section 6.04. Other Insurance. The Board covenants that it will procure and maintain, to the extent available, fire and extended coverage insurance on the Hospital in amounts sufficient to provide for not less than full recovery whenever the loss from causes covered by such insurance does not exceed 80% of the full insurable value of the Hospital. If the Board implements a self-insurance program as to the Hospital, the Board shall appoint a Consultant who shall review the Hospital's insurance coverage on an annual basis and make recommendations in regard thereto and the Board shall comply with such recommendations within thirty (30) days after such recommendations have been made. The proceeds of such insurance shall be available for, and shall to the extent necessary, be applied to the repair, replacement or reconstruction of the damaged or destroyed property. If such proceeds are more than sufficient for such purpose, the balance remaining shall be deposited to the credit of the applicable Construction Account if such damage or *destruction is to a Hospital Project then under construction or to the Revenue Fund, subject to any restrictions on investment as may be imposed by the Code. If such proceeds, with other available funds, shall be insufficient for such purpose, such proceeds shall be deposited to the credit of a special Redemption Fund to be established with the Trustee and used to purchase or redeem Bonds, or shall be used to repair, replace or reconstruct the damaged or destroyed property, as the Board, by resolution, may determine. -22-