PRINTER'S NO. 580
No. 160 Session of 2003
INTRODUCED BY MICOZZIE, HENNESSEY, PIPPY, SATHER, TANGRETTI,
VANCE, WALKO, BISHOP, BROWNE, J. EVANS, FREEMAN, LEVDANSKY,
STABACK, STEIL, E. Z. TAYLOR, WASHINGTON AND YOUNGBLOOD,
FEBRUARY 26, 2003
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 26, 2003
AN ACT
1 Amending the act of March 20, 2002 (P.L.154, No.13), entitled
2 "An act reforming the law on medical professional liability;
3 providing for patient safety and reporting; establishing the
4 Patient Safety Authority and the Patient Safety Trust Fund;
5 abrogating regulations; providing for medical professional
6 liability informed consent, damages, expert qualifications,
7 limitations of actions and medical records; establishing the
8 Interbranch Commission on Venue; providing for medical
9 professional liability insurance; establishing the Medical
10 Care Availability and Reduction of Error Fund; providing for
11 medical professional liability claims; establishing the Joint
12 Underwriting Association; regulating medical professional
13 liability insurance; providing for medical licensure
14 regulation; providing for administration; imposing penalties;
15 and making repeals," further providing for the Medical Care
16 Availability and Reduction of Error Fund.
17 The General Assembly of the Commonwealth of Pennsylvania
18 hereby enacts as follows:
19 Section 1. Section 712 of the act of March 20, 2002
20 (P.L.154, No.13), known as the Medical Care Availability and
21 Reduction of Error (Mcare) Act, is amended to read:
22 Section 712. Medical Care Availability and Reduction of Error
23 Fund.
24 (a) Establishment.--There is hereby established within the
1 State Treasury a special fund to be known as the Medical Care
2 Availability and Reduction of Error Fund. Money in the fund
3 shall be used to pay claims against participating health care
4 providers for losses or damages awarded in medical professional
5 liability actions against them in excess of the basic insurance
6 coverage required by section 711(d), liabilities transferred in
7 accordance with subsection (b) and for the administration of the
8 fund.
9 (b) Transfer of assets and liabilities.--
10 (1) (i) The money in the Medical Professional Liability
11 Catastrophe Loss Fund established under section 701(d) of
12 the former act of October 15, 1975 (P.L.390, No.111),
13 known as the Health Care Services Malpractice Act, is
14 transferred to the fund.
15 (ii) The rights of the Medical Professional
16 Liability Catastrophe Loss Fund established under section
17 701(d) of the former Health Care Services Malpractice Act
18 are transferred to and assumed by the fund.
19 (2) The liabilities and obligations of the Medical
20 Professional Liability Catastrophe Loss Fund established
21 under section 701(d) of the former Health Care Services
22 Malpractice Act are transferred to and assumed by the fund.
23 (c) Fund liability limits.--
24 (1) For calendar year 2002, the limit of liability of
25 the fund created in section 701(d) of the former Health Care
26 Services Malpractice Act for each health care provider that
27 conducts more than 50% of its health care business or
28 practice within this Commonwealth and for each hospital shall
29 be $700,000 for each occurrence and $2,100,000 per annual
30 aggregate.
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1 (2) The limit of liability of the fund for each
2 participating health care provider shall be as follows:
3 (i) For calendar year 2003 and each year thereafter,
4 the limit of liability of the fund shall be $500,000 for
5 each occurrence and $1,500,000 per annual aggregate.
6 (ii) If the basic insurance coverage requirement is
7 increased in accordance with section 711(d)(3) and,
8 notwithstanding subparagraph (i), for each calendar year
9 following the increase in the basic insurance coverage
10 requirement, the limit of liability of the fund shall be
11 $250,000 for each occurrence and $750,000 per annual
12 aggregate.
13 (iii) If the basic insurance coverage requirement is
14 increased in accordance with section 711(d)(4) and,
15 notwithstanding subparagraphs (i) and (ii), for each
16 calendar year following the increase in the basic
17 insurance coverage requirement, the limit of liability of
18 the fund shall be zero.
19 (d) Assessments.--
20 (1) For calendar year 2003 and for each year thereafter,
21 the fund shall be funded by an assessment on each
22 participating health care provider. Assessments shall be
23 levied by the department on or after January 1 of each year.
24 The assessment shall be based on the prevailing primary
25 premium for each participating health care provider and
26 shall, in the aggregate, produce an amount sufficient to do
27 all of the following:
28 (i) Reimburse the fund for the payment of reported
29 claims which became final during the preceding claims
30 period.
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1 (ii) Pay expenses of the fund incurred during the
2 preceding claims period.
3 (iii) Pay principal and interest on moneys
4 transferred into the fund in accordance with section
5 713(c).
6 (iv) Provide a reserve that shall be 10% of the sum
7 of subparagraphs (i), (ii) and (iii).
8 (2) The department shall notify all basic insurance
9 coverage insurers and self-insured participating health care
10 providers of the assessment by November 1 for the succeeding
11 calendar year.
12 (3) Any appeal of the assessment shall be filed with the
13 department.
14 (e) Discount on surcharges and assessments.--
15 (1) For calendar year 2002, the department shall
16 discount the aggregate surcharge imposed under section
17 701(e)(1) of the Health Care Services Malpractice Act by 5%
18 of the aggregate surcharge imposed under that section for
19 calendar year 2001 in accordance with the following:
20 (i) Fifty percent of the aggregate discount shall be
21 granted equally to hospitals and to participating health
22 care providers that were surcharged as members of one of
23 the four highest rate classes of the prevailing primary
24 premium.
25 (ii) Notwithstanding subparagraph (i), 50% of the
26 aggregate discount shall be granted equally to all
27 participating health care providers.
28 (iii) The department shall issue a credit to a
29 participating health care provider who, prior to the
30 effective date of this section, has paid the surcharge
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1 imposed under section 701(e)(1) of the former Health Care
2 Services Malpractice Act for calendar year 2002 prior to
3 the effective date of this section.
4 (2) For calendar years 2003 and 2004, the department
5 shall discount the aggregate assessment imposed under
6 subsection (d) for each calendar year by 10% of the aggregate
7 surcharge imposed under section 701(e)(1) of the former
8 Health Care Services Malpractice Act for calendar year 2001
9 in accordance with the following:
10 (i) Fifty percent of the aggregate discount shall be
11 granted equally to hospitals and to participating health
12 care providers that were assessed as members of one of
13 the four highest rate classes of the prevailing primary
14 premium.
15 (ii) Notwithstanding subparagraph (i), 50% of the
16 aggregate discount shall be granted equally to all
17 participating health care providers.
18 (3) For calendar years 2005 and thereafter, if the basic
19 insurance coverage requirement is increased in accordance
20 with section 711(d)(3) or (4), the department may discount
21 the aggregate assessment imposed under subsection (d) by an
22 amount not to exceed the aggregate sum to be deposited in the
23 fund in accordance with subsection (m).
24 (f) Updated rates.--The joint underwriting association shall
25 file updated rates for all health care providers with the
26 commissioner by May 1 of each year. The department shall review
27 and may adjust the prevailing primary premium in line with any
28 applicable changes which have been approved by the commissioner.
29 (g) Additional adjustments of the prevailing primary
30 premium.--The department shall adjust the applicable prevailing
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1 primary premium of each participating health care provider in
2 accordance with the following:
3 (1) The applicable prevailing primary premium of a
4 participating health care provider which is not a hospital
5 may be adjusted through an increase in the individual
6 participating health care provider's prevailing primary
7 premium not to exceed 20%. Any adjustment shall be based upon
8 the frequency of claims paid by the fund on behalf of the
9 individual participating health care provider during the past
10 five most recent claims periods and shall be in accordance
11 with the following:
12 (i) If three claims have been paid during the past
13 five most recent claims periods by the fund, a 10%
14 increase shall be charged.
15 (ii) If four or more claims have been paid during
16 the past five most recent claims periods by the fund, a
17 20% increase shall be charged.
18 (2) The applicable prevailing primary premium of a
19 participating health care provider which is not a hospital
20 and which has not had an adjustment under paragraph (1) may
21 be adjusted through an increase in the individual
22 participating health care provider's prevailing primary
23 premium not to exceed 20%. Any adjustment shall be based upon
24 the severity of at least two claims paid by the fund on
25 behalf of the individual participating health care provider
26 during the past five most recent claims periods.
27 (3) The applicable prevailing primary premium of a
28 participating health care provider not engaged in direct
29 clinical practice on a full-time basis may be adjusted
30 through a decrease in the individual participating health
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1 care provider's prevailing primary premium not to exceed 10%.
2 Any adjustment shall be based upon the lower risk associated
3 with the less-than-full-time direct clinical practice.
4 (4) The applicable prevailing primary premium of a
5 hospital may be adjusted through an increase or decrease in
6 the individual hospital's prevailing primary premium not to
7 exceed 20%. Any adjustment shall be based upon the frequency
8 and severity of claims paid by the fund on behalf of other
9 hospitals of similar class, size, risk and kind within the
10 same defined region during the past five most recent claims
11 periods.
12 (h) Self-insured health care providers.--A participating
13 health care provider that has an approved self-insurance plan
14 shall be assessed an amount equal to the assessment imposed on a
15 participating health care provider of like class, size, risk and
16 kind as determined by the department.
17 (i) Change in basic insurance coverage.--If a participating
18 health care provider changes the term of its medical
19 professional liability insurance coverage, the assessment shall
20 be calculated on an annual basis and shall reflect the
21 assessment percentages in effect for the period over which the
22 policies are in effect.
23 (j) Payment of claims.--Claims which became final during the
24 preceding claims period shall be paid on or before December 31
25 following the August 31 on which they became final.
26 (k) Termination.--Upon satisfaction of all liabilities of
27 the fund, the fund shall terminate. Any balance remaining in the
28 fund upon such termination shall be returned by the department
29 to the participating health care providers who participated in
30 the fund in proportion to their assessments in the preceding
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1 calendar year.
2 (l) Sole and exclusive source of funding.--Except as
3 provided in subsection (m), the surcharges imposed under section
4 701(e)(1) of the Health Care Services Malpractice Act and
5 assessments on participating health care providers and any
6 income realized by investment or reinvestment shall constitute
7 the sole and exclusive sources of funding for the fund. Nothing
8 in this subsection shall prohibit the fund from accepting
9 contributions from nongovernmental sources. A claim against or a
10 liability of the fund shall not be deemed to constitute a debt
11 or liability of the Commonwealth or a charge against the General
12 Fund.
13 (m) Supplemental funding.--Notwithstanding the provisions of
14 75 Pa.C.S. § 6506(b) (relating to surcharge) to the contrary,
15 beginning January 1, 2004, and for a period of nine calendar
16 years thereafter, all surcharges levied and collected under 75
17 Pa.C.S. § 6506(a) by any division of the unified judicial system
18 shall be remitted to the Commonwealth for deposit in the Medical
19 Care Availability and Restriction of Error Fund. These funds
20 shall be used to reduce surcharges and assessments [in
21 accordance with subsection (e)] for hospitals and participating
22 health care providers that were assessed as members of one of
23 the four highest rate classes of the prevailing primary premium.
24 Beginning January 1, 2014, and each year thereafter, the
25 surcharges levied and collected under 75 Pa.C.S. § 6506(a) shall
26 be deposited into the General Fund.
27 (n) Waiver of right to consent to settlement.--A
28 participating health care provider may maintain the right to
29 consent to a settlement in a basic insurance coverage policy for
30 medical professional liability insurance upon the payment of an
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1 additional premium amount.
2 Section 2. This act shall take effect in 60 days.
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