Bill Text: PA SB1018 | 2009-2010 | Regular Session | Introduced

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Bill Title: Further providing for medical professional liability insurance, for Medical Care Availability and Reduction of Error Fund and for actuarial data; and making repeals.

Spectrum: Slight Partisan Bill (Republican 14-5)

Status: (Introduced - Dead) 2009-07-10 - Referred to BANKING AND INSURANCE [SB1018 Detail]

Download: Pennsylvania-2009-SB1018-Introduced.html

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PRINTER'S NO. 1288
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1018 Session of2009
INTRODUCED BY ERICKSON, RAFFERTY, O'PAKE, BOSCOLA, GREENLEAF, ROBBINS, STACK, ORIE, WOZNIAK, PIPPY, M. WHITE, BRUBAKER, BAKER, PICCOLA, TOMLINSON, FERLO AND YAW, JULY 10, 2009
REFERRED TO BANKING AND INSURANCE, JULY 10, 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
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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
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$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:
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(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
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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,
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professional association or partnership shall not be liable
in any medical professional liability action against the
provider or entity for any portion of a settlement or a
judgment within Mcare coverage under this act.
[(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:
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(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
20090SB1018PN1288 - 8 -
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, 2027, 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] 2028, 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
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(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
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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
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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
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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
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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.
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