PRIOR PRINTER'S NO. 1596 PRINTER'S NO. 1925
No. 1367 Session of 1975
INTRODUCED BY MESSRS. FINEMAN, A. K. HUTCHINSON, IRVIS,
MANDERINO, SHANE, BERSON, O'KEEFE, DeMEDIO, MORRIS, MILLIRON,
GEORGE, COLE, STAPLETON, BRUNNER, ENGLEHART, SCHMITT,
RAPPAPORT, GILLESPIE, REED, GARZIA, WOJDAK, MRS. TOLL,
MESSRS. ROMANELLI, PETRARCA, SALOOM, BLACKWELL,
KOLTER, ZORD, CESSAR AND FISHER, JUNE 3, 1975
REPORTED FROM COMMITTEE ON JUDICIARY, AS AMENDED, HOUSE OF
REPRESENTATIVES, JULY 2, 1975
AN ACT
1 Relating to medical and health related malpractice insurance,
2 prescribing the powers and duties of the Insurance <--
3 Department; providing for a joint underwriting association; <--
4 the Regional Arbitration Panels for Health Care, compulsory
5 screening of claims; collateral sources requirement;
6 limitation of Statute of Limitations; limitation on
7 contingent fee compensation; and prescribing penalties.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 ARTICLE I
11 Preliminary Provisions
12 Section 101. Short Title.--This act shall be known and may
13 be cited as the "Health Care Services Malpractice Act."
14 Section 102. Legislative Findings.--The General Assembly
15 finds that:
16 (1) The number of suits and claims for damages arising from
17 professional patient care has increased greatly in the past
18 several years and the size of judgments and settlements in
1 connection therewith have increased substantially.
2 (2) The effects of such suits and the settlements of such
3 claims have allegedly caused the insurance industry providing <--
4 patients' compensation PROFESSIONAL LIABILITY insurance coverage <--
5 to uniformly and substantially increase the cost of such <--
6 insurance coverage.
7 (3) These increased insurance costs are being passed on to
8 patients in the form of higher charges for health care services
9 and facilities.
10 (4) The increased costs of providing health care services,
11 the increased incidence of claims and suits against health care
12 providers, and the large size of such claims and judgments, have
13 caused liability insurance companies to withdraw from insuring <--
14 high risk health care providers. RESTRICTED THE AVAILABILITY OF <--
15 AN ADEQUATE INSURANCE MARKET TO PROVIDE PROFESSIONAL LIABILITY
16 INSURANCE AND HAVE CAUSED SOME INSURERS TO THREATEN WITHDRAWAL
17 OF SUCH INSURANCE FROM THE MARKET.
18 (5) The rising number of suits and claims may be forcing HAS <--
19 CONTRIBUTED TO CAUSING health care providers to practice
20 defensively, viewing each patient as a potential adversary in a
21 lawsuit, to the detriment of both the health care provider and
22 the patient. Health care providers for their own protection have
23 often employed excessive diagnostic procedures for their
24 patients, unnecessarily increasing the cost of patient care.
25 (6) As a result of the increase of suits and claims and the
26 costs thereof, some health care providers refuse to provide
27 certain health care services which in themselves entail some
28 risk of patient injury.
29 (7) Many health care providers cannot obtain insurance and <--
30 are thus exposing consumers to unreasonable risk in the event of
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1 loss. PROFESSIONAL LIABILITY INSURANCE TO PROTECT THEMSELVES <--
2 AGAINST LAWSUITS AND ARE THUS EXPOSING PATIENTS TO UNREASONABLE
3 FINANCIAL RISK IN THE EVENT OF A HEALTH CARE PROVIDERS
4 NEGLIGENCE.
5 (8) The difficulty and high cost of obtaining PROFESSIONAL <--
6 LIABILITY insurance for health care providers discourages young
7 physicians from entering into the practice of medicine in the
8 Commonwealth of Pennsylvania, resulting in the loss of
9 physicians to other states.
10 (9) The difficulty and high cost of obtaining PROFESSIONAL <--
11 LIABILITY insurance affects the medical and hospital services <--
12 AND THE COST OF SUCH SERVICES available in the Commonwealth of <--
13 Pennsylvania to the detriment of its citizens.
14 (10) Some health care providers have been forced to curtail
15 the practice of all or a part of their professions because of
16 the unavailability and high cost of patients' compensation <--
17 PROFESSIONAL LIABILITY insurance. <--
18 (11) The cumulative effect of suits and claims is working to
19 the detriment of both the health care providers and the citizens
20 of the Commonwealth.
21 Section 103. Purpose.--Due to the conditions stated in
22 section 102, it is the purpose of this act to make available
23 patients' compensation PROFESSIONAL LIABILITY insurance at a <--
24 reasonable cost, and to establish a system through which a
25 person who has sustained injury or death as a result of tort or
26 breach of contract by a health care provider can obtain a prompt
27 determination and adjudication of his claim and THE <--
28 DETERMINATION OF fair and reasonable compensation. at a fair and <--
29 reasonable cost.
30 Section 104. Definitions.--As used in this act:
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1 "Administrator" means the office of Administrator for
2 Regional Arbitration Panels for Health Care.
3 "Arbitration panel" means Regional Arbitration Panels for
4 Health Care.
5 "CLAIMS MADE" MEANS A POLICY OF PROFESSIONAL LIABILITY <--
6 INSURANCE THAT WOULD LIMIT OR RESTRICT THE LIABILITY OF THE
7 INSURER UNDER THE POLICY TO ONLY THOSE CLAIMS MADE OR REPORTED
8 DURING THE CURRENCY OF THE POLICY PERIOD AND WOULD EXCLUDE
9 COVERAGE FOR CLAIMS REPORTED SUBSEQUENT TO THE TERMINATION EVEN
10 WHEN SUCH CLAIMS RESULTED FROM OCCURRENCES DURING THE CURRENCY
11 OF THE POLICY PERIOD.
12 "Commissioner" means the Insurance Commissioner of this
13 Commonwealth.
14 "Health care provider" means a person, corporation, facility
15 institution or other entity licensed by the Commonwealth to
16 provide health care or professional services as a physician,
17 including a medical doctor and a doctor of osteopathy; dentist, <--
18 optometrist; podiatrist; psychologist; chiropractor; practical
19 nurse; registered nurse; hospital; nursing home; health
20 maintenance organization; physical therapist; health care <--
21 delivery organization for which a professional liability program
22 is not generally available; or an officer, employee or agent
23 thereof acting in the course and scope of his employment.
24 "JUA" means the Pennsylvania Joint Underwriting Association <--
25 established under Article VIII.
26 "Licensure Board" means the State Board of Medical Education
27 and Licensure, the State Board of Osteopathic Examiners, the <--
28 State Board of Nurse Examiners, the State Dental Council and
29 Examining Board, the State Board of Optometrical Examiners, the
30 State Board of Podiatry Examiners, the Pennsylvania Board of
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1 Psychologist Examiners, the State Board of Chiropractic
2 Examiners, the Department of Public Welfare and the Department
3 of Health.
4 "Patient" means a natural person who receives or should have
5 received health care from a licensed health care provider.
6 "Patients' Compensation Insurance" means insurance covering <--
7 health care provider liability as defined in Article VI.
8 "PROFESSIONAL LIABILITY INSURANCE" MEANS INSURANCE AGAINST <--
9 LIABILITY ON THE PART OF A HEALTH CARE PROVIDER ARISING OUT OF
10 ANY TORT OR BREACH OF CONTRACT CAUSING INJURY OR DEATH OCCURRING
11 IN OR RESULTING FROM THE FURNISHING OF MEDICAL SERVICES WHICH
12 WERE OR SHOULD HAVE BEEN PROVIDED.
13 ARTICLE II
14 Services Rendered by Non-Health Care Providers
15 Section 201. Any person rendering services normally rendered
16 by a health care provider who fails to qualify as a health care
17 provider under this act is subject to liability under the law
18 without regard to the provisions of this act.
19 ARTICLE III
20 Administrator for Regional Arbitration Panels for Health Care
21 Section 301. There is established within the Department of
22 Insurance the office of Administrator for Regional Arbitration
23 Panels for Health Care to be appointed by the Governor. The
24 salary of the administrator shall be set by the Executive Board.
25 Section 302. The administrator may be removed by the
26 Governor for incompetence, neglect of duty, misconduct in
27 office, or other good cause to be stated in writing in the order
28 of removal.
29 Section 303. The administrator shall appoint a secretary and
30 such other employees as are required to administer this act.
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1 Their salaries shall be set by the Executive Board.
2 Section 304. (a) The administration of this act shall be
3 funded in part from fees charged to each health care provider
4 practicing in the Commonwealth.
5 (b) Health care providers PHYSICIANS practicing in the <--
6 Commonwealth shall be charged $50 annually. as follows: <--
7 (1) Physicians $50 <--
8 (2) Dentists 50
9 (3) Podiatrists 50
10 (4) Optometrists 25
11 (5) Psychologists 25
12 (6) Chiropractors 25
13 (7) Registered Nurses 5
14 (8) Practical Nurses 5
15 (9) Physical Therapists 5
16 (c) An annual fee of $500 shall be charged to each hospital
17 with 250 or more beds. An annual fee of $350 shall be charged to
18 all other hospitals. An annual fee of $100 shall be charged to
19 all other health care organizations.
20 Section 305. The administrator shall prepare, print and
21 furnish upon request and free of charge, such blank forms and
22 literature as he considers necessary to facilitate and promote
23 the efficient administration of this act.
24 Section 306. The administrator shall submit to the Governor
25 and the General Assembly annually, on or before December 1, a
26 report of the work of the administrators office during the
27 preceding fiscal year.
28 Section 307. The Attorney General, after consultation with
29 the Insurance Commissioner and the Secretary of Health, shall
30 adopt and publish such uniform rules and regulations as may be
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1 necessary to carry out the provisions of this act, and prescribe
2 the means, methods and practices necessary to effectuate such
3 provisions.
4 Section 308. Regional Arbitration Panels for Health Care.--
5 (a) Regional arbitration panels shall be established by the
6 Governor. Regional boundaries shall be those districts
7 established by the Professional Standards Review Organization as
8 designated in section 249 F, Professional Standards Review,
9 Title II, 42 U.S.C. §1301. The regions shall be modified to the
10 extent that they are modified by that act. If said act is
11 repealed, the regions shall remain as last established by said
12 act.
13 (b) Each Regional Arbitration Panel for Health Care shall be
14 composed of three members who reside in the Professional
15 Standards Review Organization region, including one health care <--
16 provider PHYSICIAN practicing in the Professional Standards <--
17 Review Organization region, one attorney licensed to practice
18 before the Pennsylvania Supreme Court and one layperson who is
19 not a health care provider PHYSICIAN nor engaged in the practice <--
20 of law. or any other profession to which this act relates <--
21 Arbitration panel members for each region shall be appointed by
22 the Governor.
23 (c) The Governor shall appoint two alternates for each
24 category of arbitration panel members who shall serve on the
25 arbitration panel in the event that an arbitration panel member
26 must be absent or has a conflict of interest in a particular
27 case. In the event that the alternates have a conflict of
28 interest in a particular case, the remaining arbitration panel
29 members shall choose a substitute to sit for that case.
30 (d) Except as hereinafter provided, each arbitration panel
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1 member shall hold office for three years or until his successor
2 is appointed and assumes office. Initial members shall hold
3 office for one, two and three years, respectively.
4 (e) The attorney and health care provider PHYSICIAN members <--
5 of each arbitration panel shall be practicing members of their
6 respective professions. No member shall participate in a case in <--
7 which he may have an interest. The chairperson shall appoint a
8 temporary alternate from the same category of panel member for
9 such cases.
10 (f) Arbitration panel members shall be paid on a per diem or
11 salary basis as fixed by the Executive Board plus actual and
12 necessary expenses incurred in the performance of their official
13 duties. The administrator shall provide for all other necessary
14 expenses of the arbitration panels.
15 (g) Each arbitration panel shall select its own chairperson.
16 (h) A member of an arbitration panel may be removed by the
17 Governor for incompetence, neglect of duty, misconduct in
18 office, or other good cause to be stated in writing in the order
19 of removal.
20 (i) No member shall participate in a case in which he may
21 have an interest. The chairperson shall appoint a temporary
22 alternate from the same category of arbitration panel member for
23 such case. If the chairperson has an interest in the case, the
24 alternate shall be chosen by the remaining arbitration panel
25 members.
26 Section 309. The arbitration panel shall have ORIGINAL <--
27 exclusive jurisdiction to hear and decide any claim for
28 compensation or benefits brought by a patient or his
29 representative. pursuant to the provisions of Article VI. <--
30 ARTICLE IV
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1 Procedure Before the Regional Arbitration Panel
2 Section 401. A patient or his representative, having a claim
3 for compensation or benefits pursuant to Article VI shall file a <--
4 complaint with the administrator. The administrator shall refer
5 the complaint to the appropriate arbitration panel.
6 Section 402. Upon assignment of a complaint to an
7 arbitration panel, said arbitration panel shall review the
8 complaint in accordance with the rules and regulations
9 promulgated by the Attorney General.
10 ARTICLE V
11 Procedure Before the Regional Arbitration Panel for Health Care
12 Section 501. Arbitration panel hearings shall be conducted
13 in the Professional Standards Review Organization region where
14 the cause of action arose, but may, within the discretion of the
15 administrator, be held in any other place.
16 Section 502. The arbitration panel, at any time, upon a
17 proper showing or on its own motion, may order, with appropriate
18 notice, that any additional party be joined when it deems the
19 presence of that party necessary and proper to a just
20 determination of the claim.
21 Section 503. Service of complaints and notice of all
22 hearings and proceedings before the arbitration panel, unless
23 otherwise directed, shall be made personally or given by
24 certified mail, and proof of the mailing of notice shall be
25 prima facie evidence of service.
26 Section 504. All briefs or pleadings shall contain a
27 certification that on or before the day of filing, a copy of the
28 document was served on opposing counsel, or on the adverse party
29 or parties if there is no counsel of record.
30 Section 505. A majority vote of the full arbitration panel
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1 shall be required to decide all matters before it.
2 Section 506. Except as provided in this act, the arbitration
3 panel is bound by the common and statutory law of the
4 Commonwealth, and by the Pennsylvania Rules of Civil Procedure.
5 but may conduct its hearings and its investigations in such <--
6 manner as in its judgment is best adapted to determine the
7 rights of the parties.
8 Section 507. The arbitration panel may, upon the application
9 of either party or upon its own motion, appoint a disinterested
10 and qualified expert to make any necessary professional or
11 expert examination of the claimant or relevant evidentiary
12 matter and to testify as a witness in respect thereto. Such an
13 expert witness shall be allowed necessary expenses and a
14 reasonable fee to be fixed and paid by the arbitration panel and
15 taxed as costs as the panel deems appropriate.
16 Section 508. (a) The arbitration panel is authorized and
17 empowered to:
18 (1) examine the relevant facts to determine if a case exists
19 for recovery pursuant to Article VI;
20 (2) ascertain undisputed facts;
21 (3) take depositions and testimony;
22 (4) assure both parties full access to the facts;
23 (5) make available to the parties the norms, standards and
24 criteria employed by health care providers in the Professional
25 Standards Review Organization region;
26 (6) subpoena witnesses, and administer oaths;
27 (7) apply to the court of common pleas to enforce the
28 attendance and testimony of witnesses and the production and
29 examination of books, papers and records;
30 (8) consider and approve offers of settlement and proposals
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1 of adjustment between plaintiffs and defendants;
2 (9) make determinations as to liability and award of
3 damages; and
4 (10) exercise all other powers and duties conferred upon it
5 by law.
6 (b) A copy of the arbitration panel's decision shall be sent
7 to each part PARTY at the same time it is submitted to the <--
8 administrator.
9 Section 509. Appeals from determinations made by the
10 arbitration panel may be taken to the court of common pleas in
11 the same manner as appeals in civil actions, except that where
12 the arbitration panel finds the defendant not liable to the
13 plaintiff, the plaintiff may appeal to the court of common pleas
14 only upon filing bond in the amount of $2,000 secured by cash or <--
15 its equivalent with PAYMENT OF ALL COSTS, INCLUDING ALL <--
16 ARBITRATORS FEES WHICH HAVE PREVIOUSLY ACCRUED TO the
17 prothonotary of the court in which he seeks to file his appeal.
18 Said bond shall be payable to the defendant for costs assessed, <--
19 including witness and experts fees and attorneys fees, if the
20 plaintiff does not prevail in the final judgment.
21 Section 510. Where an appeal is taken the decision and
22 findings of the arbitration panel shall be admissible as
23 evidence before the court.
24 Section 511. (a) If an appeal is not entered within the
25 prescribed time, the party in whose favor the award shall be
26 made may request the arbitration panel to transfer the record
27 and judgment to the court of common pleas in the district where
28 the plaintiff or defendant resides, for execution. It shall be
29 the duty of the prothonotary, at the request of the party in
30 whose favor the award shall have been made, to issue execution,
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1 or such other process as may be necessary and proper, to carry
2 into effect the judgment entered upon such award, subject to the
3 provisions of law concerning the stay of execution upon
4 judgments.
5 (b) After judgment, the plaintiff may proceed upon said
6 transferred record and judgment for the collection thereof, with
7 costs, by execution, bill of discovery or attachment, in like
8 manner as if the same were a judgment of the court to which it
9 has been transferred.
10 Section 512. In an action brought to recover damages under
11 this act, no advance payment made by the defendant health care
12 provider or his patients' compensation PROFESSIONAL LIABILITY <--
13 insurer to or for the plaintiff shall be construed as an
14 admission of liability for injuries or damages suffered by the
15 plaintiff.
16 Section 513. Any final award in favor of the plaintiff,
17 shall be reduced to the extent of any advance payment. The
18 advance payment shall inure to the exclusive benefit of the
19 defendant or the insurer making the payment.
20 Section 514. In the event that the arbitration panel finds
21 that the injury or death of the patient was the result in whole
22 or in part of tort or breach of contract by a health care
23 provider, the arbitration panel shall report such findings to
24 the licensure board and the Professional Standards Review
25 Organization for investigation and disciplinary proceedings.
26 ARTICLE VI
27 Awards
28 Section 601. Upon a finding by the arbitration panel that
29 the defendant was negligent in the conduct of professional
30 service as a health care provider, the plaintiff shall have the
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1 same rights of recovery for damages as are now provided by law.
2 Section 602. The compensation and benefits awarded under
3 this act shall be reduced by any collateral source of
4 compensation or benefits, public or private. A right of
5 subrogation is not enforceable against any benefit or
6 compensation awarded under this act or against any health care
7 provider or its liability insurer.
8 Section 603. The arbitration panel, in its discretion, may <--
9 make in addition to its award, an allowance for any part or all
10 of the reasonable costs actually incurred in the necessary
11 preparation and presentation of the plaintiff's case. In the
12 event of dismissal, the panel, in its discretion, may charge
13 court costs to the plaintiff.
14 Section 604. 603. In the event the arbitration panel finds <--
15 that the injury or damage to the patient was caused in whole or
16 in part by the wilful or wanton misconduct of any of the
17 defendants, the panel may award punitive damages against the
18 defendant.
19 Section 605. 604. When a plaintiff is represented by an <--
20 attorney in the prosecution of his claim, the arbitration panel,
21 if compensation is awarded, shall fix reasonable attorney's fees
22 and state in the award the amount of the claimant's attorney's
23 fees, which may not exceed 33 1/3% of the award. The fee is
24 binding on the plaintiff, his attorney and all defendants. No
25 additional fee may be charged in a case in which the plaintiff
26 prevails.
27 Section 606. Attorney fees shall be payable in addition to <--
28 the award, and assessed against the defendant or defendants.
29 Section 607. 605. No claim for recovery pursuant to the <--
30 provisions of this act may be commenced, unless the action is
19750H1367B1925 - 13 -
1 filed within the longer period of (i) two years after the breach
2 of contract or the tort complained of, or, (ii) one year after
3 the date when the breach of contract or the tort, or the
4 resulting injury was discovered, or in the exercise of
5 reasonable care, should have been discovered. In no instance
6 shall a claim be commenced for pain and suffering benefits more <--
7 than six SEVEN years after the breach of contract or the tort <--
8 complained of. This section applies to all persons regardless of
9 minority or other legal disability. THE FILING OF A COMPLAINT <--
10 WITH THE ADMINISTRATOR PURSUANT TO SECTION 401 SHALL TOLL THE
11 RUNNING OF THE LIMITATIONS CONTAINED HEREIN.
12 ARTICLE VII
13 Insurance - Health Care Providers
14 Section 701. Every THE ADMINISTRATOR MAY REQUIRE THAT EVERY <--
15 health care provider subject to the terms of this act shall file
16 with the administrator before August 1 of each calendar year, on <--
17 a prescribed form, SATISFACTORY, proof of financial <--
18 responsibility UP TO $200,000 PER PERSON AND $600,000 PER <--
19 OCCURRENCE.
20 Section 702. Every health care provider subject to the
21 provisions of this act, shall MAY insure his liability as <--
22 provided in Article VI, or shall AGAINST NEGLIGENCE OR UPON <--
23 REQUEST furnish to the administrator a cash or surety bond. The
24 submission of a cash or surety bond is subject to the approval
25 of the administrator and is valid only when approved by the
26 administrator. The insurance, cash or surety bond will be in an
27 amount determined by the Joint Underwriting Association to be <--
28 sufficient coverage. ADMINISTRATOR TO BE EQUIVALENT TO THAT <--
29 PRESCRIBED IN SECTION 701. Health care providers may elect to
30 purchase, and the Joint Underwriting Association shall provide, <--
19750H1367B1925 - 14 -
1 patients' compensation PROFESSIONAL LIABILITY insurance in an <--
2 amount exceeding that determined by the Joint Underwriting <--
3 Association to be sufficient coverage. PRESCRIBED IN SECTION <--
4 701.
5 ARTICLE VIII <--
6 Joint Underwriting Association
7 Section 801. Within 90 days after the passage of this act,
8 the commissioner shall establish a Pennsylvania Joint
9 Underwriting Association (JUA), to provide patients'
10 compensation insurance to health care providers. The
11 commissioner may dissolve the Joint Underwriting Association if
12 he determines that it is no longer necessary and that an
13 adequate market will be maintained for patients' compensation
14 insurance by the private insurance industry. The commissioner
15 may reestablish the Joint Underwriting Association if he shall
16 find that the private industry has failed to provide an adequate
17 market for patients' compensation insurance.
18 Section 802. The Joint Underwriting Association shall
19 consist of all insurers authorized to write insurance pursuant
20 to 40 Pa.C.S. Ch. 61 (relating to Hospital Plan Corporations),
21 Ch. 63 (relating to Health Plan Corporations) and, if the entity
22 writes health and accident insurance, Ch. 65 (relating to
23 Fraternal and Beneficial Societies), and §§202(c)(1), (4) and
24 (11), and §202(a)(1) if the insurer writes health and accident
25 insurance, of the act of May 17, 1921 (P.L.682, No.284), known
26 as "The Insurance Company Law of 1921." Each such insurer shall
27 be a member of the Joint Underwriting Association and shall
28 remain a member as a condition of its authority to continue to
29 write such insurance in this Commonwealth pursuant to qualifying
30 powers.
19750H1367B1925 - 15 -
1 Section 803. The Joint Underwriting Association shall
2 provide patients' compensation insurance to all health care
3 providers in this Commonwealth who desire same. Cancellation or
4 non-renewal of such insurance shall occur only for the failure
5 to pay the required premium or for the suspension or revocation
6 of the health care providers license, during the period of such
7 suspension or revocation.
8 Section 804. The Joint Underwriting Association shall
9 establish a plan of operation as necessary to carry out its
10 purposes. Such plan shall be subject to the approval of the
11 commissioner. Pursuant to the plan of operation, the Joint
12 Underwriting Association shall:
13 (1) issue patient compensation insurance policies to health
14 care providers in its own name;
15 (2) establish procedures for the sharing among the members
16 of profit or loss on Joint Underwriting Association business and
17 other costs, charges, expenses, liabilities, income, property
18 and other assets of the Joint Underwriting Association;
19 (3) reinsure Joint Underwriting Association business as
20 determined to be appropriate by the Joint Underwriting
21 Association;
22 (4) appoint Joint Underwriting Association agents and engage
23 brokers as necessary for the conduct of Joint Underwriting
24 Association business, and fix their compensation;
25 (5) employ or retain such persons as are necessary to assist
26 in the performance of the duties of the Joint Underwriting
27 Association;
28 (6) join, advise, assist, associate, cooperate and contract
29 with its members and with such organizations, associations,
30 including health care provider associations, insurers,
19750H1367B1925 - 16 -
1 governmental agencies and others as may be necessary and proper
2 to accomplish the purpose of the Joint Underwriting Association;
3 (7) negotiate and become a party to such contracts as are
4 necessary to carry out the purposes of this act;
5 (8) sue and be sued in the name of the Joint Underwriting
6 Association of Pennsylvania. No judgment, obligation or expense
7 against the Joint Underwriting Association creates any direct
8 liability in the individual participating members thereof;
9 (9) conduct studies and review member records for the
10 purpose of determining the causes of patient compensation claims
11 and make recommendations for legislative, regulatory and other
12 changes necessary to reduce the frequency and severity of such
13 claims;
14 (10) report to the General Assembly annually on a date and,
15 on a form prescribed by the commissioner the total amount of
16 premium dollars collected, the total amount of claims paid and
17 expenses incurred therewith, the total amount of reserve set
18 aside for future claims, the nature and substance of each claim,
19 the date and place in which each claim arose, the amounts paid,
20 if any, and the disposition of each claim (judgment of
21 arbitration panel, judgment of court, settlement or otherwise),
22 and such additional information as the commissioner shall
23 require;
24 (11) contract for the servicing of the Joint Underwriting
25 Association's functions;
26 (12) assess members for initial expenses necessary to
27 establish the Joint Underwriting Association, begin operations
28 and pay claims, and thereafter assess members as necessary to
29 continue the operation of the Joint Underwriting Association.
30 The Joint Underwriting Association, in whole or in part, may
19750H1367B1925 - 17 -
1 exempt from assessment any member insurer or defer the
2 assessment of any member insurer if the assessment would result
3 in the impairment of capital or surplus below that required for
4 the lines of business the company is authorized to conduct in
5 this Commonwealth or in any other jurisdiction;
6 (13) establish rates, rules, and rate classifications as
7 appropriate; and
8 (14) do anything necessary and proper to accomplish the
9 purposes of the Joint Underwriting Association.
10 Section 805. The assessment of members for their appropriate
11 shares of profit or loss on Joint Underwriting Association
12 business shall be based on the members' premium volume or
13 exposure units for business other than Joint Underwriting
14 Association business, or on a combination of such bases, or on
15 any other equitable basis as determined by the commissioner.
16 Section 806. (a) The commissioner shall convene the first
17 meeting of the Joint Underwriting Association which shall elect
18 a Board of Governors. The Joint Underwriting Association Board
19 shall consist of ten members as follows:
20 (1) representatives of seven Joint Underwriting Association
21 member companies; and
22 (2) three persons knowledgeable in insurance matters but not
23 employed by any of the member companies.
24 (b) The members of the Joint Underwriting Association Board
25 shall elect one of its members to be chairperson.
26 (c) The terms of office and method of selection of the
27 subsequent members of the Joint Underwriting Association Board
28 shall be provided in the plan of operation.
29 (d) The plan of operation shall be subject to review by the
30 Insurance Commissioner, and the Insurance Commissioner shall by
19750H1367B1925 - 18 -
1 order approve, amend, modify or disapprove the plan. If
2 disapproved, the Joint Underwriting Association shall submit a
3 revised plan for review within 30 days of disapproval. If the
4 Joint Underwriting Association fails to do so, or if the revised
5 plan so filed is unacceptable, the Insurance Commissioner shall
6 promulgate a plan of operation.
7 Section 807. The Joint Underwriting Association shall be the
8 sole authorized or eligible source for patients' compensation
9 insurance. Member insurers may write patients' compensation
10 insurance only through the Joint Underwriting Association.
11 Section 808. On or after the effective date of the plan of
12 operation, a health care provider shall be entitled to apply for
13 patients' compensation coverage through the Joint Underwriting
14 Association. The application may be made directly by the health
15 care provider to the Joint Underwriting Association or may be
16 made on his behalf by any insurance agent or broker appointed by
17 the Joint Underwriting Association.
18 Section 809. If the Joint Underwriting Association
19 determines that the applicant is a health care provider, the
20 Joint Underwriting Association, upon receipt of the premium, or
21 that portion of the premium prescribed in the plan of operation,
22 shall issue a policy of patients' compensation insurance which
23 shall include such coverages, amount of insurance and policy
24 periods as are provided in the plan of operation.
25 Section 810. Prior to becoming effective, rates,
26 classifications, rules, rating plans and policy forms proposed
27 for use by the Joint Underwriting Association must be filed with
28 and approved by the Insurance Commissioner in accordance with
29 applicable law.
30 ARTICLE VIII
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1 AVAILABILITY OF INSURANCE <--
2 SECTION 801. THE COMMISSIONER SHALL ESTABLISH AND IMPLEMENT
3 OR APPROVE AND SUPERVISE A PLAN ASSURING THAT PROFESSIONAL
4 LIABILITY INSURANCE FOR ANY HEALTH CARE PROVIDER WILL BE
5 CONVENIENTLY AND EXPEDITIOUSLY AVAILABLE, SUBJECT ONLY TO
6 PAYMENT OR PROVISIONS FOR PAYMENT OF THE PREMIUM, TO EACH HEALTH
7 CARE PROVIDER WHO CANNOT CONVENIENTLY OBTAIN INSURANCE THROUGH
8 ORDINARY METHODS AT RATES NOT IN EXCESS OF THOSE APPLICABLE TO
9 SIMILARLY SITUATED HEALTH CARE PROVIDERS UNDER THE PLAN. THE
10 PLAN MAY PROVIDE REASONABLE MEANS FOR THE TRANSFER OF HEALTH
11 CARE PROVIDERS INSURED THEREUNDER INTO THE ORDINARY INSURANCE
12 MARKET, AT THE SAME OR LOWER RATES PURSUANT TO REGULATIONS
13 ESTABLISHED BY THE INSURANCE COMMISSIONER. THE PLAN MAY BE
14 IMPLEMENTED BY ASSIGNMENT OF APPLICANTS AMONG INSURERS, POOLING,
15 ANY JOINT INSURING AND REINSURING ARRANGEMENT OR ANY OTHER
16 METHOD, THAT RESULTS IN ALL APPLICANTS BEING CONVENIENTLY
17 AFFORDED ACCESS TO THE INSURANCE COVERAGES ON REASONABLE AND NOT
18 UNFAIRLY DISCRIMINATORY TERMS.
19 SECTION 802. ALL INSURERS ADMITTED TO TRANSACT THE BUSINESS
20 OF INSURANCE IN THIS COMMONWEALTH WRITING PROFESSIONAL LIABILITY
21 AND PERSONAL INJURY LIABILITY INSURANCE IN THIS COMMONWEALTH OR
22 ANY OTHER JURISDICTION OTHER THAN REINSURERS, SHALL PARTICIPATE
23 IN THE PLAN. THE PLAN SHALL PROVIDE FOR EQUITABLE APPORTIONMENT,
24 AMONG ALL PARTICIPATING INSURERS WRITING SUCH INSURANCE COVERAGE
25 OF THE FINANCIAL BURDENS OF INSURANCE PROVIDED TO APPLICANTS
26 UNDER THE PLAN AND THE COSTS OF OPERATION OF THE PLAN.
27 SECTION 803. SUBJECT TO THE SUPERVISION AND APPROVAL OF THE
28 COMMISSIONER, INSURERS MAY CONSULT AND AGREE WITH EACH OTHER AND
29 WITH OTHER APPROPRIATE PERSONS AS TO THE ORGANIZATION,
30 ADMINISTRATION AND OPERATION OF THE PLAN AND AS TO RATES AND
19750H1367B1925 - 20 -
1 RATE MODIFICATIONS FOR INSURANCE COVERAGES PROVIDED UNDER THE
2 PLAN. RATES AND RATE MODIFICATIONS ADOPTED OR CHANGED FOR
3 INSURANCE COVERAGES PROVIDED UNDER THE PLAN SHALL BE APPROVED BY
4 THE COMMISSIONER IN ACCORDANCE WITH THE ACT OF JUNE 11, 1947
5 (P.L.538, NO.246), KNOWN AS THE "CASUALTY AND SURETY RATE
6 REGULATORY ACT."
7 SECTION 804. TO CARRY OUT THE OBJECTIVES OF THIS ARTICLE,
8 THE COMMISSIONER MAY ADOPT RULES, MAKE ORDERS, ENTER INTO
9 AGREEMENTS WITH OTHER GOVERNMENTAL OR PRIVATE ENTITIES AND
10 INDIVIDUALS AND FORM AND OPERATE OR AUTHORIZE THE FORMATION AND
11 OPERATION OF BUREAUS AND OTHER LEGAL ENTITIES.
12 SECTION 805. THE PLAN MUST ALSO ASSURE THAT THERE IS
13 AVAILABLE THROUGH THE PRIVATE SECTOR OR OTHERWISE, TO ALL
14 APPLICANTS, ADEQUATE PREMIUM FINANCING OR PROVISION FOR THE
15 INSTALLMENT PAYMENT OF PREMIUMS SUBJECT TO CUSTOMARY TERMS AND
16 CONDITIONS.
17 SECTION 806. THE COMMISSIONER SHALL SELECT AN INSURER TO
18 ADMINISTER ANY PLAN ESTABLISHED PURSUANT TO THIS ARTICLE. SUCH
19 INSURER SHALL BE ADMITTED TO TRANSACT THE BUSINESS OF INSURANCE
20 IN THIS COMMONWEALTH.
21 SECTION 807. THE INSURANCE COMMISSIONER SHALL NOT APPROVE A
22 POLICY WRITTEN ON A "CLAIMS MADE" BASIS BY ANY INSURER DOING
23 BUSINESS IN THIS COMMONWEALTH UNLESS SUCH INSURER SHALL
24 GUARANTEE TO THE COMMISSIONER THE CONTINUED AVAILABILITY OF
25 SUITABLE LIABILITY PROTECTION FOR HEALTH CARE PROVIDERS
26 SUBSEQUENT TO THE DISCONTINUANCE OF PROFESSIONAL PRACTICE BY THE
27 HEALTH CARE PROVIDER OR THE SOONER TERMINATION OF THE INSURANCE
28 POLICY BY THE INSURER OR THE HEALTH CARE PROVIDER FOR SO LONG AS
29 THERE IS A REASONABLE ANTICIPATION OF THE PROBABILITY OF A CLAIM
30 FOR INJURY BEING DISCOVERED BUT NOT REPORTED.
19750H1367B1925 - 21 -
1 SECTION 808. IF 25% OR MORE OF ALL PHYSICIANS IN ANY OF
2 SPECIALTY BOARD CERTIFIED CLASSES 3, 4 AND 5 ARE DENIED
3 PROFESSIONAL LIABILITY INSURANCE COVERAGE THE COMMISSIONER MAY,
4 AFTER NOTICE IN THE PENNSYLVANIA BULLETIN AND PUBLIC HEARINGS,
5 DECLARE THAT THE METHOD OF PROVIDING COVERAGE UNDER SECTIONS 801
6 AND 802 SHALL BE THE SOLE AND EXCLUSIVE METHOD WITHIN THIS
7 COMMONWEALTH.
8 ARTICLE IX
9 DISCIPLINARY PROCEEDINGS
10 SECTION 901. INVESTIGATIONS.--THE STATE BOARD OF MEDICAL
11 EDUCATION AND LICENSURE SHALL EMPLOY SUCH QUALIFIED
12 INVESTIGATORS AND ATTORNEYS AS ARE NECESSARY TO FULLY IMPLEMENT
13 ITS AUTHORITY TO REVOKE, SUSPEND, LIMIT OR OTHERWISE REGULATE
14 THE LICENSES OF PHYSICIANS; ISSUE REPRIMANDS, FINES, REQUIRE
15 REFRESHER EDUCATIONAL COURSES, OR REQUIRE LICENSEES TO SUBMIT TO
16 MEDICAL TREATMENT.
17 SECTION 902. HEARINGS.--THE STATE BOARD OF MEDICAL EDUCATION
18 AND LICENSURE SHALL APPOINT, WITH THE APPROVAL OF THE GOVERNOR,
19 SUCH HEARING EXAMINERS AS SHALL BE NECESSARY TO CONDUCT HEARINGS
20 IN ACCORDANCE WITH THE DISCIPLINARY AUTHORITY GRANTED BY THE ACT
21 OF JULY 20, 1974 (NO.190), KNOWN AS THE "MEDICAL PRACTICE ACT OF
22 1974." SUCH HEARING EXAMINERS SHALL HAVE THE POWER TO ISSUE
23 SUBPOENAS REQUIRING THE ATTENDANCE AND TESTIMONY OF INDIVIDUALS
24 OR THE PRODUCTION OF, PERTINENT BOOKS, RECORDS, DOCUMENTS AND
25 PAPERS BY PERSONS WHOM THEY BELIEVE TO HAVE INFORMATION RELEVANT
26 TO ANY MATTER PENDING BEFORE THE EXAMINER. SUCH EXAMINER SHALL
27 ALSO HAVE THE POWER TO ADMINISTER OATHS.
28 SECTION 903. HEARING EXAMINERS' DECISIONS.--THE HEARING
29 EXAMINER SHALL HEAR EVIDENCE SUBMITTED AND ARGUMENTS OF COUNSEL,
30 IF ANY, WITH REASONABLE DISPATCH, AND SHALL PROMPTLY RECORD HIS
19750H1367B1925 - 22 -
1 DECISION, SUPPORTED BY FINDINGS OF FACT, AND A COPY THEREOF
2 SHALL IMMEDIATELY BE SENT TO THE STATE BOARD OF MEDICAL
3 EDUCATION AND LICENSURE AND TO COUNSEL OF RECORD, OR THE
4 PARTIES, IF NOT REPRESENTED.
5 SECTION 904. EVIDENCE.--IN ALL HEARINGS PROOF MAY BE MADE BY
6 ORAL TESTIMONY OR BY DEPOSITION OR INTERROGATORIES. SUCH
7 DEPOSITIONS SHALL BE TAKEN IN THE MANNER AND UPON THE NOTICE
8 REQUIRED BY THE RULES FOR TAKING DEPOSITIONS IN CIVIL CASES AND
9 MAY BE INTRODUCED INTO EVIDENCE WITHOUT REGARD TO THE
10 AVAILABILITY OF THE WITNESS TO TESTIFY AT THE TIME OF TRIAL. ANY
11 WITNESS, HOWEVER, MAY BE SUBPOENAED BY ANY PARTY TO THE
12 CONTROVERSY TO TESTIFY PURSUANT TO THE RULES APPROPRIATE TO
13 CIVIL ACTIONS AND SHALL BE CONSIDERED TO BE THE WITNESS OF THE
14 PARTY WHO OFFERED THE DEPOSITION.
15 SECTION 905. REVIEW OF THE STATE BOARD OF MEDICAL EDUCATION
16 AND LICENSURE.--(A) IF APPLICATION FOR REVIEW IS MADE TO THE
17 STATE BOARD OF MEDICAL EDUCATION AND LICENSURE WITHIN 20 DAYS
18 FROM THE DATE OF ANY DECISION MADE AS A RESULT OF A HEARING HELD
19 BY A HEARING EXAMINER, THE STATE BOARD OF MEDICAL EDUCATION AND
20 LICENSURE SHALL REVIEW THE EVIDENCE, AND IF DEEMED ADVISABLE BY
21 THE BOARD, HEAR ARGUMENT AND ADDITIONAL EVIDENCE.
22 (B) AS SOON AS PRACTICABLE, THE STATE BOARD OF MEDICAL
23 EDUCATION AND LICENSURE SHALL MAKE A DECISION AND SHALL FILE THE
24 SAME WITH ITS FINDING OF THE FACTS ON WHICH IT IS BASED AND SEND
25 A COPY THEREOF TO EACH OF THE PARTIES IN DISPUTE.
26 SECTION 906. APPEALS.--DECISION BY THE STATE BOARD OF
27 MEDICAL EDUCATION AND LICENSURE SHALL BE CONCLUSIVE AND BINDING
28 AS TO ALL QUESTIONS OF FACT, BUT ANY MEDICAL PRACTITIONER MAY,
29 WITHIN 30 DAYS FROM THE DATE OF SUCH DECISION APPEAL TO THE
30 COMMONWEALTH COURT OF PENNSYLVANIA ALLEGING CERTAIN ERRORS OF
19750H1367B1925 - 23 -
1 LAW UNDER THE SAME TERMS AND CONDITIONS AS COVER APPEALS IN
2 ACTIONS INVOLVING STATE AGENCIES.
3 SECTION 907. FEES.--ALL FEES, CHARGES AND FINES COLLECTED
4 UNDER THE PROVISIONS OF THE ACT OF JULY 20, 1974 (NO.190), KNOWN
5 AS THE "MEDICAL PRACTICE ACT OF 1974" ARE HEREBY SPECIFICALLY
6 APPROPRIATED FOR THE EXCLUSIVE USE BY THE STATE BOARD OF MEDICAL
7 EDUCATION AND LICENSURE IN CARRYING OUT THE PROVISIONS OF THAT
8 ACT.
9 SECTION 908. BUDGET.--BEFORE JULY 1 OF EACH YEAR, THE STATE
10 BOARD OF MEDICAL EDUCATION AND LICENSURE SHALL ESTIMATE ITS
11 TOTAL EXPENDITURES IN THE ADMINISTRATION OF THE ACT OF JULY 20,
12 1974 (NO.190), KNOWN AS "THE MEDICAL PRACTICE ACT OF 1974," FOR
13 THE FISCAL YEAR BEGINNING THAT DATE. SUCH ESTIMATE SHALL BE
14 SUBMITTED TO THE GOVERNOR, AND TO THE APPROPRIATIONS COMMITTEES
15 OF THE HOUSE AND SENATE THROUGH THEIR RESPECTIVE CHAIRMEN, FOR
16 THEIR RESPECTIVE APPROVALS OF SUCH ESTIMATE IN THE AMOUNT
17 SUBMITTED OR SUCH LESSER AMOUNT AS EACH OF THEM MAY DETERMINE:
18 PROVIDED, THAT IF THE GOVERNOR OR EITHER COMMITTEE, THROUGH ITS
19 CHAIRMAN, SHALL NOT NOTIFY THE STATE IN WRITING OF HIS OR ITS
20 ACTION WITHIN 30 DAYS AFTER SUCH SUBMISSION, THE ESTIMATE AS
21 SUBMITTED SHALL BE DEEMED APPROVED BY HIM OR BY SUCH COMMITTEE,
22 AS THE CASE MAY BE. THE LEAST OF THE AMOUNTS SO APPROVED BY THE
23 THREE APPROVING AUTHORITIES SHALL BE THE FINAL ESTIMATE; AND
24 APPROVAL OF SUCH LEAST AMOUNT SHALL CONSTITUTE COMPLIANCE WITH
25 SECTION 604 OF THE ACT OF APRIL 9, 1929 (P.L.177, NO.175), KNOWN
26 AS "THE ADMINISTRATIVE CODE OF 1929." THE STATE BOARD OF MEDICAL
27 EDUCATION AND LICENSURE SHALL SUBTRACT FROM THE FINAL ESTIMATE
28 THE ESTIMATED FEES TO BE COLLECTED PURSUANT TO THE ACT OF JULY
29 20, 1974 (NO.190), KNOWN AS THE "MEDICAL PRACTICE ACT OF 1974,"
30 DURING SUCH FISCAL YEAR AND THE ESTIMATED BALANCE OF THE
19750H1367B1925 - 24 -
1 APPROPRIATION, OF THE PREVIOUS YEAR, NOT TO LAPSE BUT TO BE
2 CARRIED OVER INTO SUCH FISCAL YEAR FROM THE PRECEDING ONE. THE
3 REMAINDER SO DETERMINED, HEREIN CALLED THE TOTAL ASSESSMENT,
4 SHALL BE THE AMOUNT OF THE APPROPRIATION DUE FROM THE
5 COMMONWEALTH.
6 ARTICLE IX X <--
7 General Provisions
8 Section 901. 1001. There shall be no liability on the part <--
9 of and no cause of action for libel shall arise against any
10 member insurer, the Joint Underwriting Association or its agents <--
11 or employees, the Board of Governors, STATE BOARD OF MEDICAL <--
12 EDUCATION AND LICENSURE, the Regional Arbitration Panels, or the
13 commissioner or his representatives for any action taken by any
14 of them in the performance of their respective powers and duties
15 under this act. However, the Joint Underwriting Association <--
16 shall not be relieved of contract liability for contracts issued
17 under its authority.
18 Section 902. 1002. Any termination of a Joint Underwriting <--
19 Association PROFESSIONAL LIABILITY INSURANCE policy by <--
20 cancellation is not effective as to patients claiming against <--
21 the insured covered thereby, unless at least 45 60 days before <--
22 the cancellation takes effect, a written notice giving the date
23 upon which termination becomes effective has been received by
24 the board at its offices ADMINISTRATOR AT HIS OFFICE. Mailing of <--
25 such notice to the board at its ADMINISTRATOR AT HIS principal <--
26 office address shall constitute notice to the board. <--
27 ADMINISTRATOR. <--
28 Section 903. 1003. The provisions of this act do not apply <--
29 to injuries or death from services rendered or which should have
30 been rendered by a health care provider which occurred before
19750H1367B1925 - 25 -
1 the effective date of this act.
2 Section 904. 1004. Every express contract between a patient <--
3 and health care provider in existence on the effective date of
4 this act, containing provisions inconsistent with the terms and
5 provisions of this act, remains unimpaired, binding and
6 effective as to all parties until the contract expires or is
7 rescinded by law or the mutual agreement of the parties.
8 Section 905. 1005. Fines and Penalties.--(a) No health care <--
9 provider shall provide any health care or professional services
10 until such assessments as are levied by the administrator are
11 paid. and a patients' compensation insurance policy is obtained <--
12 from the Joint Underwriting Association or a cash or surety bond
13 is filed and approved by the administrator and receipts showing
14 the same are in the possession of the health care provider.
15 (b) Any health care provider licensed by the Commonwealth or
16 operating under a certificate of authority issued by the
17 Commonwealth who violates the provisions of subsection (a) shall
18 upon conviction in a summary proceeding be sentenced to pay a
19 fine of not less than $100 nor more than $1,000 per day for each
20 day of practice without the necessary receipts, and may be
21 subject to a suspension of his license or certificate of
22 authority, or both.
23 SECTION 1006. JOINT COMMITTEE.--THERE IS HEREBY CREATED A <--
24 COMMITTEE TO CONSIST OF THE COMMISSIONER AS CHAIRMAN, THE
25 SECRETARY OF HEALTH AND TWO MEMBERS OF THE SENATE TO BE
26 APPOINTED BY THE PRESIDENT PRO TEMPORE AND TWO MEMBERS TO BE
27 APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES. THE
28 COMMITTEE SHALL STUDY THE DISTRIBUTION OF PROFESSIONAL LIABILITY
29 INSURANCE COSTS AS AMONG THE VARIOUS LOSSES OF PHYSICIANS AND
30 HEALTH CARE PROVIDERS AND SHALL REPORT THEIR FINDINGS AND
19750H1367B1925 - 26 -
1 RECOMMENDATIONS TO THE GENERAL ASSEMBLY ON OR BEFORE JULY 1,
2 1976.
3 Section 906. 1007. Repealer.--All acts and parts of acts are <--
4 repealed in so far as they are inconsistent with this act.
5 Section 907. 1008. Effective Date.--This act shall take <--
6 effect in 180 90 days. <--
F2L37RLC/19750H1367B1925 - 27 -