THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MICOZZIE, DeLUCA, BOYD, GRELL, PICKETT, MENSCH, QUINN, BEYER, FAIRCHILD, GEIST, GEORGE, HARHART, HARPER, HORNAMAN, LONGIETTI, MILLER, MILNE, MOUL, RAPP, SCAVELLO AND VULAKOVICH, AUGUST 7, 2009

REFERRED TO COMMITTEE ON INSURANCE, AUGUST 7, 2009  

AN ACT

Amending the act of March 20, 2002 (P.L.154, No.13), entitled

"An act reforming the law on medical professional liability;

providing for patient safety and reporting; establishing the

Patient Safety Authority and the Patient Safety Trust Fund;

abrogating regulations; providing for medical professional

liability informed consent, damages, expert qualifications,

limitations of actions and medical records; establishing the

Interbranch Commission on Venue; providing for medical

professional liability insurance; establishing the Medical

Care Availability and Reduction of Error Fund; providing for

medical professional liability claims; establishing the Joint

Underwriting Association; regulating medical professional

liability insurance; providing for medical licensure

regulation; providing for administration; imposing penalties;

and making repeals," further providing for medical

professional liability insurance, for Medical Care

Availability and Reduction of Error Fund and for actuarial

data; and making repeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 711(d) of the act of March 20, 2002

(P.L.154, No.13), known as the Medical Care Availability and

Reduction of Error (Mcare) Act, is amended to read:

Section 711.  Medical professional liability insurance.

* * *

(d)  Basic coverage limits.--A health care provider shall

insure or self-insure medical professional liability in

accordance with the following:

(1)  For policies issued or renewed in the calendar year

2002, the basic insurance coverage shall be:

(i)  $500,000 per occurrence or claim and $1,500,000

per annual aggregate for a health care provider who

conducts more than 50% of its health care business or

practice within this Commonwealth and that is not a

hospital.

(ii)  $500,000 per occurrence or claim and $1,500,000

per annual aggregate for a health care provider who

conducts 50% or less of its health care business or

practice within this Commonwealth.

(iii)  $500,000 per occurrence or claim and

$2,500,000 per annual aggregate for a hospital.

(2)  For policies issued or renewed in the calendar years

2003[, 2004 and 2005] through 2009, the basic insurance

coverage shall be:

(i)  $500,000 per occurrence or claim and $1,500,000

per annual aggregate for a participating health care

provider that is not a hospital.

(ii)  $1,000,000 per occurrence or claim and

$3,000,000 per annual aggregate for a nonparticipating

health care provider.

(iii)  $500,000 per occurrence or claim and

$2,500,000 per annual aggregate for a hospital.

(3)  [Unless the commissioner finds pursuant to section

745(a) that additional basic insurance coverage capacity is

not available, for] For policies issued or renewed in

calendar [year 2006 and each year thereafter subject to

paragraph (4)] years 2010, 2011 and 2012, the basic insurance

coverage shall be:

(i)  $750,000 per occurrence or claim and $2,250,000

per annual aggregate for a participating health care

provider that is not a hospital.

(ii)  $1,000,000 per occurrence or claim and

$3,000,000 per annual aggregate for a nonparticipating

health care provider.

(iii)  $750,000 per occurrence or claim and

$3,750,000 per annual aggregate for a hospital.

[If the commissioner finds pursuant to section 745(a) that

additional basic insurance coverage capacity is not

available, the basic insurance coverage requirements shall

remain at the level required by paragraph (2); and the

commissioner shall conduct a study every two years until the

commissioner finds that additional basic insurance coverage

capacity is available, at which time the commissioner shall

increase the required basic insurance coverage in accordance

with this paragraph.]

(4)  [Unless the commissioner finds pursuant to section

745(b) that additional basic insurance coverage capacity is

not available, for] For policies issued or renewed [three

years after the increase in coverage limits required by

paragraph (3)] in calendar year 2013 and for each year

thereafter, the basic insurance coverage shall be:

(i)  $1,000,000 per occurrence or claim and

$3,000,000 per annual aggregate for a participating

health care provider that is not a hospital.

(ii)  $1,000,000 per occurrence or claim and

$3,000,000 per annual aggregate for a nonparticipating

health care provider.

(iii)  $1,000,000 per occurrence or claim and

$4,500,000 per annual aggregate for a hospital.

[If the commissioner finds pursuant to section 745(b) that

additional basic insurance coverage capacity is not

available, the basic insurance coverage requirements shall

remain at the level required by paragraph (3); and the

commissioner shall conduct a study every two years until the

commissioner finds that additional basic insurance coverage

capacity is available, at which time the commissioner shall

increase the required basic insurance coverage in accordance

with this paragraph.]

* * *

Section 2.  Section 712(c), (d), (e), (j), (k), (l) and (m)

of the act are amended and the section is amended by adding

subsections to read:

Section 712.  Medical Care Availability and Reduction of Error

Fund.

* * *

(c)  Fund liability limits.--

(1)  For calendar year 2002, the limit of liability of

the fund created in section 701(d) of the former Health Care

Services Malpractice Act for each health care provider that

conducts more than 50% of its health care business or

practice within this Commonwealth and for each hospital shall

be $700,000 for each occurrence and $2,100,000 per annual

aggregate.

(2)  The limit of liability of the fund for each

participating health care provider shall be as follows:

(i)  For calendar [year 2003 and each year

thereafter] years 2003 through 2009, the limit of

liability of the fund shall be $500,000 for each

occurrence and $1,500,000 per annual aggregate.

(ii)  [If the basic insurance coverage requirement is

increased in accordance with section 711(d)(3) and,

notwithstanding subparagraph (i), for each calendar year

following the increase in the basic insurance coverage

requirement] For calendar years 2010, 2011 and 2012, the

limit of liability of the fund shall be $250,000 for each

occurrence and $750,000 per annual aggregate.

(iii)  [If the basic insurance coverage requirement

is increased in accordance with section 711(d)(4) and,

notwithstanding subparagraphs (i) and (ii), for each

calendar year following the increase in the basic

insurance coverage requirement] For 2013 and each

calendar year thereafter, the limit of liability of the

fund shall be zero.

(3)  A policy period of less than 12 months shall result

in a pro rata reduction in the fund annual aggregation

limits.

(d)  Assessments.--

(1)  For calendar [year 2003 and for each year

thereafter] years 2003 through 2012, the fund shall be funded

by an assessment on each participating health care provider.

Assessments shall be levied by the department on or after

January 1 of each year. The assessment shall be based on the

prevailing primary premium for each participating health care

provider [and]. Except as provided in subsection (d)(1.1),

the assessment shall, in the aggregate, produce an amount

sufficient to do all of the following:

(i)  Reimburse the fund for the payment of reported

claims which became final during the preceding claims

period.

(ii)  Pay expenses of the fund incurred during the

preceding claims period.

(iii)  Pay principal and interest on moneys

transferred into the fund in accordance with section

713(c).

(iv)  Provide a reserve that shall be 10% of the sum

of subparagraphs (i), (ii) and (iii).

(1.1)  The assessments for calendar years 2010, 2011 and

2012 shall be reduced to 40% of the amount otherwise

determined by the formula in paragraph (d)(1) to coincide

with the change in coverage limits in section 701(c)(3).

(2)  The department shall notify all basic insurance

coverage insurers and self-insured participating health care

providers of the assessment by November 1 for the succeeding

calendar year.

(3)  The assessment will apply to medical professional

liability policies providing basic insurance coverage with an

effective or renewal date during each calendar year in which

there is an assessment.

(4)  Any appeal of the assessment shall be filed with the

department.

(5)  For calendar year 2013 and each year thereafter, no

assessment shall be levied against any participating health

care provider and all claims and expenses of the fund shall

be paid from the funds set forth in subsection (m.1).

(6)  A health care provider or professional corporation,

professional association or partnership shall not be

responsible for any portion of a judgment or settlement which

is the responsibility of the fund under this section.

[(e)  Discount on surcharges and assessments.--

(1)  For calendar year 2002, the department shall

discount the aggregate surcharge imposed under section 701(e)

(1) of the Health Care Services Malpractice Act by 5% of the

aggregate surcharge imposed under that section for calendar

year 2001 in accordance with the following:

(i)  Fifty percent of the aggregate discount shall be

granted equally to hospitals and to participating health

care providers that were surcharged as members of one of

the four highest rate classes of the prevailing primary

premium.

(ii)  Notwithstanding subparagraph (i), 50% of the

aggregate discount shall be granted equally to all

participating health care providers.

(iii)  The department shall issue a credit to a

participating health care provider who, prior to the

effective date of this section, has paid the surcharge

imposed under section 701(e)(1) of the former Health Care

Services Malpractice Act for calendar year 2002 prior to

the effective date of this section.

(2)  For calendar years 2003 and 2004, the department

shall discount the aggregate assessment imposed under

subsection (d) for each calendar year by 10% of the aggregate

surcharge imposed under section 701(e)(1) of the former

Health Care Services Malpractice Act for calendar year 2001

in accordance with the following:

(i)  Fifty percent of the aggregate discount shall be

granted equally to hospitals and to participating health

care providers that were assessed as members of one of

the four highest rate classes of the prevailing primary

premium.

(ii)  Notwithstanding subparagraph (i), 50% of the

aggregate discount shall be granted equally to all

participating health care providers.

(3)  For calendar years 2005 and thereafter, if the basic

insurance coverage requirement is increased in accordance

with section 711(d)(3) or (4), the department may discount

the aggregate assessment imposed under subsection (d) by an

amount not to exceed the aggregate sum to be deposited in the

fund in accordance with subsection (m).]

* * *

(j)  Payment of claims.--Claims which became final during the

preceding claims period shall be paid on [or before] December 31 

or the last business day of the year following the August 31 on

which they became final.

(k)  Termination.--Upon satisfaction of all liabilities of

the fund, the fund shall terminate. Any balance remaining in the

fund upon such termination shall be [returned] transferred by

the department to the [participating health care providers who

participated in the fund in proportion to their assessments in

the preceding calendar year] General Fund.

(l)  Sole and exclusive source of funding.--Except as

provided in subsection (m), section 713(c) and any

appropriations to the fund, the surcharges imposed under section

701(e)(1) of the Health Care Services Malpractice Act and

assessments on participating health care providers and any

income realized by investment or reinvestment shall constitute

the sole and exclusive sources of funding for the fund. Nothing

in this subsection shall prohibit the fund from accepting

contributions from nongovernmental sources. A claim against or a

liability of the fund shall not be deemed to constitute a debt

or liability of the Commonwealth or a charge against the General

Fund.

(m)  Supplemental funding.--Notwithstanding the provisions of

75 Pa.C.S. § 6506(b) (relating to surcharge) to the contrary,

for the period beginning January 1, 2004, [and for a period of

nine calendar years thereafter] through December 31, 2023, all

surcharges levied and collected under 75 Pa.C.S. § 6506(a) by

any division of the unified judicial system shall be remitted to

the Commonwealth for deposit in the Medical Care Availability

and [Restriction] Reduction of Error Fund. [These funds shall be

used to reduce surcharges and assessments in accordance with

subsection (e).] Beginning January 1, [2014] 2024, and each year

thereafter, [the] all surcharges levied and collected under 75

Pa.C.S. § 6506(a) shall be deposited into the General Fund.

(m.1)  Fund balance.--The balance of the fund as of July 1,

2009, assessments levied for calendar years 2009 through 2012,

supplemental funding provided under subsection (m), any

appropriations to the fund and other fund revenue, including any

interest or other investment income earned thereon, shall be

held in trust for the exclusive purpose of paying the fund's

share of settlements and judgments, the fund's operating

expenses and the fund's obligations under section 713(c) and

shall not be used for any other purpose.

(m.2)  Penalties.--By March 15 of each year beginning in 2013

and continuing until termination of the fund under subsection

(k), the commissioner shall report to the General Assembly on

the financial solvency of the fund. The report shall include the

current balance of the fund and projections as to the fund's

future liabilities and revenue by year as certified by an

independent actuary using generally accepted actuarial practices

and methods.

* * *

(o)  Coverage of claims in relation to payment of certain

late assessments.--

(1)  All basic insurance coverage insurers, self-insured

participating health care providers and risk retention groups

shall bill, collect and remit the assessment to the

department within 60 days of the inception or renewal date of

the primary professional liability policy.

(2)  All basic insurance coverage insurers, self-insured

participating health care providers and risk retention groups

shall be subject to the following:

(i)  For assessments remitted to the department in

excess of 60 days after the inception or renewal date of

the primary policy, the basic insurance coverage insurer,

self-insured participating health care provider or risk

retention group shall pay to the department a penalty

equal to 10% per annum of each untimely assessment

accruing from the 61st day after the inception or renewal

date of the primary policy until the remittance is

received by the department.

(ii)  In addition to the provisions of subparagraph

(i), if the department finds that there has been a

pattern or practice of not complying with this section,

the basic insurance coverage insurer, self-insured

participating health care provider or risk retention

group shall be subject to the penalties and process set

forth in the act of July 22, 1974 (P.L.589, No.205),

known as the Unfair Insurance Practices Act.

(iii)  If the basic insurance coverage insurer, self-

insurer or risk retention group receives the assessment

from a health care provider, professional corporation or

professional association with less than 30 days to make

the remittance timely as provided under this subsection,

the basic insurance coverage insurer, self-insurer or

risk retention group remittance period shall be extended

by 30 days from the date of receipt upon providing

reasonable evidence to the department regarding the date

of receipt and shall not be subject to the penalties

provided for under this section.

(iv)  If the basic insurance coverage insurer, self-

insurer or risk retention group receives an assessment

after 60 days of the inception or renewal date of the

primary professional liability policy and remits the

assessment within 30 days from the date of receipt, the

basic insurance coverage insurer, self-insurer or risk

retention group shall not be subject to the penalties

provided for under this section. Remittances to the

department beyond the 30-day period shall be subject to

the penalties provided for under this section.

(v)  (A)  A health care provider or professional

corporation, professional association or partnership

shall be provided fund coverage from the inception or

renewal date of the primary professional liability

policy if the billed assessment is paid to the basic

insurance coverage insurer, self-insurer or risk

retention group within 60 days of the inception or

renewal date of the primary professional liability

policy.

(B)  Except as provided in clause (C), a health

care provider or professional corporation,

professional association or partnership that fails to

pay the billed assessment to its basic insurance

coverage insurer, self-insurer or risk retention

group within 60 days of policy inception or renewal

date and before receiving notice of a claim shall not

have fund coverage for that claim.

(C)  If a health care provider or professional

corporation, professional association or partnership

is billed by the basic insurance coverage insurer,

self-insurer or risk retention group no later than 30

days after the policy inception or renewal date and

the health care provider or professional corporation,

professional association or partnership pays the

basic insurance coverage insurer, self-insurer or

risk retention group within 30 days from the date of

receipt of the bill, the health care provider shall

be provided fund coverage as of the inception or

renewal date of the primary policy. Fund coverage

shall also be provided to the health care provider or

professional corporation, professional association or

partnership for all professional liability claims

made after payment of the assessment.

(vi)  Notwithstanding any provisions to the contrary,

nothing in this section shall be construed to affect

existing regulations saved by section 5107(a), and all

existing regulations shall remain in full force and

effect.

Section 3.  Section 745 of the act is amended to read:

[Section 745.  Actuarial data.

(a)  Initial study.--The following shall apply:

(1)  No later than April 1, 2005, each insurer providing

medical professional liability insurance in this Commonwealth

shall file loss data as required by the commissioner. For

failure to comply, the commissioner shall impose an

administrative penalty of $1,000 for every day that this data

is not provided in accordance with this paragraph.

(2)  By July 1, 2005, the commissioner shall conduct a

study regarding the availability of additional basic

insurance coverage capacity. The study shall include an

estimate of the total change in medical professional

liability insurance loss-cost resulting from implementation

of this act prepared by an independent actuary. The fee for

the independent actuary shall be borne by the fund. In

developing the estimate, the independent actuary shall

consider all of the following:

(i)  The most recent accident year and ratemaking

data available.

(ii)  Any other relevant factors within or outside

this Commonwealth in accordance with sound actuarial

principles.

(b)  Additional study.--The following shall apply:

(1)  Three years following the increase of the basic

insurance coverage requirement in accordance with section

711(d)(3), each insurer providing medical professional

liability insurance in this Commonwealth shall file loss data

with the commissioner upon request. For failure to comply,

the commissioner shall impose an administrative penalty of

$1,000 for every day that this data is not provided in

accordance with this paragraph.

(2)  Three months following the request made under

paragraph (1), the commissioner shall conduct a study

regarding the availability of additional basic insurance

coverage capacity. The study shall include an estimate of the

total change in medical professional liability insurance

loss-cost resulting from implementation of this act prepared

by an independent actuary. The fee for the independent

actuary shall be borne by the fund. In developing the

estimate, the independent actuary shall consider all of the

following:

(i)  The most recent accident year and ratemaking

data available.

(ii)  Any other relevant factors within or outside

this Commonwealth in accordance with sound actuarial

principles.]

Section 4.  All acts and parts of acts are repealed insofar

as they are inconsistent with this act.

Section 5.  This act shall take effect in 30 days.