PRINTER'S NO. 1488
No. 1137 Session of 2007
INTRODUCED BY D. WHITE, RAFFERTY, PILEGGI, ORIE, SCARNATI,
ROBBINS, ERICKSON, GORDNER, C. WILLIAMS AND FONTANA,
OCTOBER 23, 2007
REFERRED TO BANKING AND INSURANCE, OCTOBER 23, 2007
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 medical
16 professional liability insurance and for the Medical Care
17 Availability and Reduction of Error Fund; providing for the
18 Medical Care Availability and Reduction of Error (Mcare)
19 Reserve Fund; and further providing for abatement program,
20 for the Health Care Provider Retention Account and for
21 expiration.
22 The General Assembly of the Commonwealth of Pennsylvania
23 hereby enacts as follows:
24 Section 1. Sections 711 and 712 of the act of March 20, 2002
25 (P.L.154, No.13), known as the Medical Care Availability and
26 Reduction of Error (Mcare) Act, are amended to read:
27 Section 711. Medical professional liability insurance.
1 (a) Requirement.--A health care provider providing health
2 care services in this Commonwealth shall:
3 (1) purchase medical professional liability insurance
4 from an insurer which is licensed or approved by the
5 department; or
6 (2) provide self-insurance.
7 (b) Proof of insurance.--A health care provider required by
8 subsection (a) to purchase medical professional liability
9 insurance or provide self-insurance shall submit proof of
10 insurance or self-insurance to the department within 60 days of
11 the policy being issued.
12 (c) Failure to provide proof of insurance.--If a health care
13 provider fails to submit the proof of insurance or self-
14 insurance required by subsection (b), the department shall,
15 after providing the health care provider with notice, notify the
16 health care provider's licensing authority. A health care
17 provider's license shall be suspended or revoked by its
18 licensure board or agency if the health care provider fails to
19 comply with any of the provisions of this chapter.
20 (d) Basic coverage limits.--A health care provider shall
21 insure or self-insure medical professional liability in
22 accordance with the following:
23 (1) For policies issued or renewed in the calendar year
24 2002, the basic insurance coverage shall be:
25 (i) $500,000 per occurrence or claim and $1,500,000
26 per annual aggregate for a health care provider who
27 conducts more than 50% of its health care business or
28 practice within this Commonwealth and that is not a
29 hospital.
30 (ii) $500,000 per occurrence or claim and $1,500,000
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1 per annual aggregate for a health care provider who
2 conducts 50% or less of its health care business or
3 practice within this Commonwealth.
4 (iii) $500,000 per occurrence or claim and
5 $2,500,000 per annual aggregate for a hospital.
6 (2) For policies issued or renewed in the calendar years
7 2003, 2004 and 2005, the basic insurance coverage shall be:
8 (i) $500,000 per occurrence or claim and $1,500,000
9 per annual aggregate for a participating health care
10 provider that is not a hospital.
11 (ii) $1,000,000 per occurrence or claim and
12 $3,000,000 per annual aggregate for a nonparticipating
13 health care provider.
14 (iii) $500,000 per occurrence or claim and
15 $2,500,000 per annual aggregate for a hospital.
16 (3) Unless the commissioner finds pursuant to section
17 745(a) that additional basic insurance coverage capacity is
18 not available, for policies issued or renewed in calendar
19 year 2006 and each year thereafter subject to paragraph (4),
20 the basic insurance coverage shall be:
21 (i) Up to $750,000 per occurrence or claim and
22 $2,250,000 per annual aggregate for a participating
23 health care provider that is not a hospital.
24 (ii) Up to $1,000,000 per occurrence or claim and
25 $3,000,000 per annual aggregate for a nonparticipating
26 health care provider.
27 (iii) Up to $750,000 per occurrence or claim and
28 $3,750,000 per annual aggregate for a hospital.
29 If the commissioner finds pursuant to section 745(a) that
30 additional basic insurance coverage capacity is not
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1 available, the basic insurance coverage requirements shall
2 remain at the level required by paragraph (2); and the
3 commissioner shall conduct a study every [two years] year
4 until the commissioner finds that additional basic insurance
5 coverage capacity is available, at which time the
6 commissioner shall increase the required basic insurance
7 coverage in accordance with this paragraph.
8 (4) Unless the commissioner finds pursuant to section
9 745(b) that additional basic insurance coverage capacity is
10 not available, for policies issued or renewed [three] two
11 years after the increase in coverage limits required by
12 paragraph (3) and for each year thereafter, the basic
13 insurance coverage shall be:
14 (i) Up to $1,000,000 per occurrence or claim and
15 $3,000,000 per annual aggregate for a participating
16 health care provider that is not a hospital.
17 (ii) Up to $1,000,000 per occurrence or claim and
18 $3,000,000 per annual aggregate for a nonparticipating
19 health care provider.
20 (iii) Up to $1,000,000 per occurrence or claim and
21 $4,500,000 per annual aggregate for a hospital.
22 If the commissioner finds pursuant to section 745(b) that
23 additional basic insurance coverage capacity is not
24 available, the basic insurance coverage requirements shall
25 remain at the level required by paragraph (3); and the
26 commissioner shall conduct a study every [two years] year
27 until the commissioner finds that additional basic insurance
28 coverage capacity is available, at which time the
29 commissioner shall increase the required basic insurance
30 coverage in accordance with this paragraph.
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1 (e) Fund participation.--A participating health care
2 provider shall be required to participate in the fund.
3 (f) Self-insurance.--
4 (1) If a health care provider self-insures its medical
5 professional liability, the health care provider shall submit
6 its self-insurance plan, such additional information as the
7 department may require and the examination fee to the
8 department for approval.
9 (2) The department shall approve the plan if it
10 determines that the plan constitutes protection equivalent to
11 the insurance required of a health care provider under
12 subsection (d).
13 (g) Basic insurance liability.--
14 (1) An insurer providing medical professional liability
15 insurance shall not be liable for payment of a claim against
16 a health care provider for any loss or damages awarded in a
17 medical professional liability action in excess of the basic
18 insurance coverage required by subsection (d) unless the
19 health care provider's medical professional liability
20 insurance policy or self-insurance plan provides for a higher
21 limit.
22 (2) If a claim exceeds the limits of a participating
23 health care provider's basic insurance coverage or self-
24 insurance plan, the fund shall be responsible for payment of
25 the claim against the participating health care provider up
26 to the fund liability limits.
27 (h) Excess insurance.--
28 (1) No insurer providing medical professional liability
29 insurance with liability limits in excess of the fund's
30 liability limits to a participating health care provider
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1 shall be liable for payment of a claim against the
2 participating health care provider for a loss or damages in a
3 medical professional liability action except the losses and
4 damages in excess of the fund coverage limits.
5 (2) No insurer providing medical professional liability
6 insurance with liability limits in excess of the fund's
7 liability limits to a participating health care provider
8 shall be liable for any loss resulting from the insolvency or
9 dissolution of the fund.
10 (i) Governmental entities.--A governmental entity may
11 satisfy its obligations under this chapter, as well as the
12 obligations of its employees to the extent of their employment,
13 by either purchasing medical professional liability insurance or
14 assuming an obligation as a self-insurer, and paying the
15 assessments under this chapter.
16 (j) Exemptions.--The following participating health care
17 providers shall be exempt from this chapter:
18 (1) A physician who exclusively practices the specialty
19 of forensic pathology.
20 (2) A participating health care provider who is a member
21 of the Pennsylvania military forces while in the performance
22 of the member's assigned duty in the Pennsylvania military
23 forces under orders.
24 (3) A retired licensed participating health care
25 provider who provides care only to the provider or the
26 provider's immediate family members.
27 Section 712. Medical Care Availability and Reduction of Error
28 Fund.
29 (a) Establishment.--There is hereby established within the
30 State Treasury a special fund to be known as the Medical Care
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1 Availability and Reduction of Error Fund. Money in the fund
2 shall be used to pay claims against participating health care
3 providers for losses or damages awarded in medical professional
4 liability actions against them in excess of the basic insurance
5 coverage required by section 711(d), liabilities transferred in
6 accordance with subsection (b) and for the administration of the
7 fund.
8 (b) Transfer of assets and liabilities.--
9 (1) (i) The money in the Medical Professional Liability
10 Catastrophe Loss Fund established under section 701(d) of
11 the former act of October 15, 1975 (P.L.390, No.111),
12 known as the Health Care Services Malpractice Act, is
13 transferred to the fund.
14 (ii) The rights of the Medical Professional
15 Liability Catastrophe Loss Fund established under section
16 701(d) of the former Health Care Services Malpractice Act
17 are transferred to and assumed by the fund.
18 (2) The liabilities and obligations of the Medical
19 Professional Liability Catastrophe Loss Fund established
20 under section 701(d) of the former Health Care Services
21 Malpractice Act are transferred to and assumed by the fund.
22 (c) Fund liability limits.--
23 (1) For calendar year 2002, the limit of liability of
24 the fund created in section 701(d) of the former Health Care
25 Services Malpractice Act for each health care provider that
26 conducts more than 50% of its health care business or
27 practice within this Commonwealth and for each hospital shall
28 be $700,000 for each occurrence and $2,100,000 per annual
29 aggregate.
30 (2) The limit of liability of the fund for each
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1 participating health care provider shall be as follows:
2 (i) For calendar year 2003 and each year thereafter,
3 the limit of liability of the fund shall be $500,000 for
4 each occurrence and $1,500,000 per annual aggregate.
5 (ii) If the basic insurance coverage requirement is
6 increased in accordance with section 711(d)(3) or (4)
7 and, notwithstanding subparagraph (i), for each calendar
8 year following the increase in the basic insurance
9 coverage requirement, the limit of liability of the fund
10 shall be [$250,000 for each occurrence and $750,000 per
11 annual aggregate.
12 (iii) If the basic insurance coverage requirement is
13 increased in accordance with section 711(d)(4) and,
14 notwithstanding subparagraphs (i) and (ii), for each
15 calendar year following the increase in the basic
16 insurance coverage requirement, the limit of liability of
17 the fund shall be zero] $1,000,000 per occurrence and
18 $3,000,000 per annual aggregate, except hospitals which
19 shall be $1,000,000 per occurrence and $4,500,000 per
20 annual aggregate, minus the amount the commissioner
21 determines for basic insurance coverage under section
22 711(d)(3) and (4).
23 (d) Assessments.--
24 (1) For calendar year 2003 and for each year thereafter,
25 the fund shall be funded by an assessment on each
26 participating health care provider. Assessments shall be
27 levied by the department on or after January 1 of each year.
28 The assessment shall be based on the prevailing primary
29 premium for each participating health care provider and
30 shall, in the aggregate, produce an amount sufficient to do
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1 all of the following:
2 (i) Reimburse the fund for the payment of reported
3 claims which became final during the preceding claims
4 period.
5 (ii) Pay expenses of the fund incurred during the
6 preceding claims period.
7 (iii) Pay principal and interest on moneys
8 transferred into the fund in accordance with section
9 713(c).
10 (iv) Provide a reserve that shall be 10% of the sum
11 of subparagraphs (i), (ii) and (iii).
12 (2) The department shall notify all basic insurance
13 coverage insurers and self-insured participating health care
14 providers of the assessment by November 1 for the succeeding
15 calendar year. The department shall bill and collect the
16 assessment from all participating health care providers.
17 (3) Any appeal of the assessment shall be filed with the
18 department.
19 (e) Discount on surcharges and assessments.--
20 (1) For calendar year 2002, the department shall
21 discount the aggregate surcharge imposed under section
22 701(e)(1) of the Health Care Services Malpractice Act by 5%
23 of the aggregate surcharge imposed under that section for
24 calendar year 2001 in accordance with the following:
25 (i) Fifty percent of the aggregate discount shall be
26 granted equally to hospitals and to participating health
27 care providers that were surcharged as members of one of
28 the four highest rate classes of the prevailing primary
29 premium.
30 (ii) Notwithstanding subparagraph (i), 50% of the
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1 aggregate discount shall be granted equally to all
2 participating health care providers.
3 (iii) The department shall issue a credit to a
4 participating health care provider who, prior to the
5 effective date of this section, has paid the surcharge
6 imposed under section 701(e)(1) of the former Health Care
7 Services Malpractice Act for calendar year 2002 prior to
8 the effective date of this section.
9 (2) For calendar years 2003 and 2004, the department
10 shall discount the aggregate assessment imposed under
11 subsection (d) for each calendar year by 10% of the aggregate
12 surcharge imposed under section 701(e)(1) of the former
13 Health Care Services Malpractice Act for calendar year 2001
14 in accordance with the following:
15 (i) Fifty percent of the aggregate discount shall be
16 granted equally to hospitals and to participating health
17 care providers that were assessed as members of one of
18 the four highest rate classes of the prevailing primary
19 premium.
20 (ii) Notwithstanding subparagraph (i), 50% of the
21 aggregate discount shall be granted equally to all
22 participating health care providers.
23 (3) For calendar years 2005 and thereafter, if the basic
24 insurance coverage requirement is increased in accordance
25 with section 711(d)(3) or (4), the department may discount
26 the aggregate assessment imposed under subsection (d) by an
27 amount not to exceed the aggregate sum to be deposited in the
28 fund in accordance with subsection (m).
29 (f) Updated rates.--The joint underwriting association shall
30 file updated rates for all health care providers with the
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1 commissioner by May 1 of each year. The department shall review
2 and may adjust the prevailing primary premium in line with any
3 applicable changes which have been approved by the commissioner.
4 (g) Additional adjustments of the prevailing primary
5 premium.--The department shall adjust the applicable prevailing
6 primary premium of each participating health care provider in
7 accordance with the following:
8 (1) The applicable prevailing primary premium of a
9 participating health care provider which is not a hospital
10 may be adjusted through an increase in the individual
11 participating health care provider's prevailing primary
12 premium not to exceed 20%. Any adjustment shall be based upon
13 the frequency of claims paid by the fund on behalf of the
14 individual participating health care provider during the past
15 five most recent claims periods and shall be in accordance
16 with the following:
17 (i) If three claims have been paid during the past
18 five most recent claims periods by the fund, a 10%
19 increase shall be charged.
20 (ii) If four or more claims have been paid during
21 the past five most recent claims periods by the fund, a
22 20% increase shall be charged.
23 (2) The applicable prevailing primary premium of a
24 participating health care provider which is not a hospital
25 and which has not had an adjustment under paragraph (1) may
26 be adjusted through an increase in the individual
27 participating health care provider's prevailing primary
28 premium not to exceed 20%. Any adjustment shall be based upon
29 the severity of at least two claims paid by the fund on
30 behalf of the individual participating health care provider
20070S1137B1488 - 11 -
1 during the past five most recent claims periods.
2 (3) The applicable prevailing primary premium of a
3 participating health care provider not engaged in direct
4 clinical practice on a full-time basis may be adjusted
5 through a decrease in the individual participating health
6 care provider's prevailing primary premium not to exceed 10%.
7 Any adjustment shall be based upon the lower risk associated
8 with the less-than-full-time direct clinical practice.
9 (4) The applicable prevailing primary premium of a
10 hospital may be adjusted through an increase or decrease in
11 the individual hospital's prevailing primary premium not to
12 exceed 20%. Any adjustment shall be based upon the frequency
13 and severity of claims paid by the fund on behalf of other
14 hospitals of similar class, size, risk and kind within the
15 same defined region during the past five most recent claims
16 periods.
17 (h) Self-insured health care providers.--A participating
18 health care provider that has an approved self-insurance plan
19 shall be assessed an amount equal to the assessment imposed on a
20 participating health care provider of like class, size, risk and
21 kind as determined by the department.
22 (i) Change in basic insurance coverage.--If a participating
23 health care provider changes the term of its medical
24 professional liability insurance coverage, the assessment shall
25 be calculated on an annual basis and shall reflect the
26 assessment percentages in effect for the period over which the
27 policies are in effect.
28 (j) Payment of claims.--Claims which became final during the
29 preceding claims period shall be paid on or before December 31
30 following the August 31 on which they became final.
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1 (k) Termination.--Upon satisfaction of all liabilities of
2 the fund, the fund shall terminate. Any balance remaining in the
3 fund upon such termination shall be returned by the department
4 to the participating health care providers who participated in
5 the fund in proportion to their assessments in the preceding
6 calendar year.
7 (l) Sole and exclusive source of funding.--Except as
8 provided in subsection (m), the surcharges imposed under section
9 701(e)(1) of the Health Care Services Malpractice Act and
10 assessments on participating health care providers and any
11 income realized by investment or reinvestment shall constitute
12 the sole and exclusive sources of funding for the fund. Nothing
13 in this subsection shall prohibit the fund from accepting
14 contributions from nongovernmental sources. A claim against or a
15 liability of the fund shall not be deemed to constitute a debt
16 or liability of the Commonwealth or a charge against the General
17 Fund.
18 (m) Supplemental funding.--Notwithstanding the provisions of
19 75 Pa.C.S. § 6506(b) (relating to surcharge) to the contrary,
20 beginning January 1, 2004, and for a period of nine calendar
21 years thereafter, all surcharges levied and collected under 75
22 Pa.C.S. § 6506(a) by any division of the unified judicial system
23 shall be remitted to the Commonwealth for deposit in the Medical
24 Care Availability and Restriction of Error Fund. These funds
25 shall be used to reduce surcharges and assessments in accordance
26 with subsection (e). Beginning January 1, 2014, and each year
27 thereafter, the surcharges levied and collected under 75 Pa.C.S.
28 § 6506(a) shall be deposited into the General Fund.
29 (n) Waiver of right to consent to settlement.--A
30 participating health care provider may maintain the right to
20070S1137B1488 - 13 -
1 consent to a settlement in a basic insurance coverage policy for
2 medical professional liability insurance upon the payment of an
3 additional premium amount.
4 Section 2. Chapter 7 of the act is amended by adding
5 subchapters to read:
6 SUBCHAPTER E
7 MEDICAL CARE AVAILABILITY AND REDUCTION OF ERROR
8 (MCARE) RESERVE FUND
9 Section 751. Establishment.
10 There is established within the State Treasury a special fund
11 to be known as the Medical Care Availability and Reduction of
12 Error (Mcare) Reserve Fund.
13 Section 752. Allocation.
14 Money in the Medical Care Availability and Reduction of Error
15 (Mcare) Reserve Fund shall be allocated annually as follows:
16 (1) Fifty percent of the total amount in the Medical
17 Care Availability and Reduction of Error (Mcare) Reserve Fund
18 shall remain in the Medical Care Availability and Reduction
19 of Error (Mcare) Reserve Fund for the sole purpose of
20 reducing the unfunded liability of the fund.
21 (2) Twenty-five percent of the total amount in the
22 Medical Care Availability and Reduction of Error (Mcare)
23 Reserve Fund shall be transferred to the Patient Safety Trust
24 Fund for use by the Department of Public Welfare for
25 implementing section 407.
26 (3) Twenty-five percent of the total amount in the
27 Medical Care Availability and Reduction of Error (Mcare)
28 Reserve Fund shall be transferred to the Medical Safety
29 Automation Fund.
30 SUBCHAPTER F
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1 MEDICAL SAFETY AUTOMATION FUND
2 Section 762. Medical Safety Automation Fund established.
3 There is established within the State Treasury a special fund
4 to be known as the Medical Safety Automation Fund. No money in
5 the Medical Safety Automation Fund shall be used until
6 legislation is enacted for the purpose of providing medical
7 safety automation system grants to health care providers under
8 the act of July 19, 1979 (P.L.130, No.48), known as the Health
9 Care Facilities Act, a group practice or a community-based
10 health care provider.
11 Section 3. Section 1102 of the act, amended October 27, 2006
12 (P.L.1198, No.128), is amended to read:
13 Section 1102. Abatement program.
14 (a) Establishment.--There is hereby established within the
15 Insurance Department a program to be known as the Health Care
16 Provider Retention Program. The Insurance Department, in
17 conjunction with the Department of Public Welfare, shall
18 administer the program. The program shall provide assistance in
19 the form of assessment abatements to health care providers for
20 calendar years 2003, 2004, 2005, 2006 [and], 2007 and 2008,
21 except that licensed podiatrists shall not be eligible for
22 calendar years 2003 and 2004, and nursing homes shall not be
23 eligible for calendar years 2003, 2004 and 2005.
24 (b) Other abatement.--Emergency physicians not employed full
25 time by a trauma center or working under an exclusive contract
26 with a trauma center shall retain eligibility for an abatement
27 pursuant to section 1104(b)(2) for calendar years 2003, 2004,
28 2005 and 2006. Commencing in calendar year 2007, these emergency
29 physicians shall be eligible for an abatement pursuant to
30 section 1104(b)(1).
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1 Section 4. Section 1112 of the act, added December 22, 2005
2 (P.L.458, No.88), is amended to read:
3 Section 1112. Health Care Provider Retention Account.
4 (a) Fund established.--There is established within the
5 General Fund a special account to be known as the Health Care
6 Provider Retention Account. Funds in the account shall be
7 subject to an annual appropriation by the General Assembly to
8 the Department of Public Welfare. The Department of Public
9 Welfare shall administer funds appropriated under this section
10 consistent with its duties under section 201(1) of the act of
11 June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code.
12 (b) Transfers from Mcare Fund.--By December 31 of each year,
13 the Secretary of the Budget may transfer from the Medical Care
14 Availability and Reduction of Error (Mcare) Fund established in
15 section 712(a) to the account an amount equal to the difference
16 between the amount deposited under section 712(m) and the amount
17 granted as discounts under section 712(e)(2) for that calendar
18 year.
19 (c) Transfers from account.--The Secretary of the Budget may
20 annually transfer from the account to the Medical Care
21 Availability and Reduction of Error (MCARE) Fund an amount up to
22 the aggregate amount of abatements granted by the Insurance
23 Department under section 1104(b).
24 (c.1) Transfers to the Medical Care Availability and
25 Reduction of Error (Mcare) Reserve Fund.--If the Secretary of
26 the Budget makes a transfer from the account under subsection
27 (c), the remaining funds in the account shall be transferred to
28 the Medical Care Availability and Reduction of Error (Mcare)
29 Reserve Fund. If the Secretary of the Budget does not make a
30 transfer from the account under subsection (c), all of the funds
20070S1137B1488 - 16 -
1 in the account shall be transferred to the Medical Care
2 Availability and Reduction of Error (Mcare) Reserve Fund.
3 (d) Other deposits.--The Department of Public Welfare may
4 deposit any other funds received by the department which it
5 deems appropriate in the account.
6 (e) Administration assistance.--The Insurance Department
7 shall provide assistance to the Department of Public Welfare in
8 administering the account.
9 Section 5. Section 1115 of the act, amended October 27, 2006
10 (P.L.1198, No.128), is amended to read:
11 Section 1115. Expiration.
12 The Health Care Provider Retention Program established under
13 this chapter shall expire December 31, [2008] 2009.
14 Section 6. Section 5106 of the act is amended to read:
15 Section 5106. Expiration.
16 Section 312 shall expire on December 31, [2007] 2008.
17 Section 7. This act shall take effect in 60 days.
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