PRINTER'S NO. 1891
No. 1560 Session of 1975
INTRODUCED BY ZEARFOSS, VROON, A. K. HUTCHINSON, ROMANELLI,
SCHMITT AND PYLES, JULY 1, 1975
REFERRED TO COMMITTEE ON JUDICIARY, JULY 2, 1975
AN ACT
1 Relating to medical malpractice; imposing duties on health care
2 providers and the Insurance Commissioner; requiring
3 physicians to carry malpractice insurance; providing for a
4 Patient's Compensation Fund; and requiring all claims to be
5 presented to a medical review panel.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Article I
9 Definitions and General Application
10 Section 101. As used in this act:
11 "Authority" means the Residual Malpractice Insurance
12 Authority established under this act.
13 "Commissioner" means the Commissioner of Insurance of the
14 Commonwealth.
15 "Health care" means any act, or treatment performed or
16 furnished, or which should have been performed or furnished, by
17 any health care provider for, to, or on behalf of a patient
18 during the patient's medical care, treatment or confinement.
19 "Health care provider" means a person, corporation, facility
1 or institution licensed by the Commonwealth to provide health
2 care or professional services as a physician, hospital, dentist,
3 registered or licensed practical nurse, optometrist, podiatrist,
4 chiropractor, physical therapist or psychologist, or an officer,
5 employee or agent thereof acting in the course and scope of his
6 employment.
7 "Insurer" means the authority or an insurance company engaged
8 in writing malpractice liability insurance in the Commonwealth.
9 "Malpractice" means any tort or breach of contract based on
10 health care or professional services rendered, or which should
11 have been rendered, by a health care provided, to a patient.
12 "Patient" means a natural person who receives or should have
13 received health care from a licensed health care provider, under
14 a contract, express or implied.
15 "Representative" means the spouse, parent, guardian, trustee,
16 attorney or other legal agent of the patient.
17 "Risk" means any health care provider which shall apply for
18 malpractice liability insurance coverage under the provisions of
19 this act.
20 "Risk manager" means an insurance company authorized to write
21 insurance and actively engaged in writing insurance in the
22 Commonwealth, which company is appointed by the commissioner to
23 manage the authority.
24 "Tort" means any legal wrong, breach of duty, or negligent or
25 unlawful act or omission proximately causing injury or damage to
26 another.
27 Section 102. No liability shall be imposed upon any health
28 care provider on the basis of an alleged breach of contract,
29 express or implied, assuring results to be obtained from any
30 procedure undertaken in the course of health care, unless such
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1 contract is expressly set forth in writing and signed by such
2 health care provider or by an authorized agent of such health
3 care provider.
4 Section 103. A health care provider who fails to qualify
5 under this act is not covered by the provisions of this act and
6 is subject to liability under the law without regard to the
7 provisions of this act. If a health care provider does not so
8 qualify, the patient's remedy will not be affected by the terms
9 and provisions of this act.
10 Section 104. Subject to Article IX, a patient or his
11 representative having a claim under this act for bodily injury
12 or death on account of malpractice may file a complaint in any
13 court of law having requisite jurisdiction and demand right of
14 trial by jury. No dollar amount or figure shall be included in
15 the demand in any malpractice complaint, but the prayer shall be
16 for such damages as are reasonable in the premises.
17 Section 105. The provisions of this act do not apply to any
18 act of malpractice which occurred before the effective date of
19 this act.
20 Article II
21 Limitation of Recovery
22 Section 201. To be qualified under the provisions of this
23 act, a health care provider shall:
24 (1) file with the commissioner proof of financial
25 responsibility as provided by section 206 in the amount of
26 $100,000 or more; and
27 (2) pay the surcharge assessed by this act on all health
28 care providers according to Article IV.
29 Section 202. A health care provider qualified under this act
30 is not liable for an amount in excess of $100,000 for a claim of
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1 malpractice.
2 Section 203. Any amount due from a judgment or settlement
3 which is in excess of the total liability of all liable health
4 care providers, subject to section 202, shall be paid from the
5 patient's compensation fund pursuant to the provisions of
6 Article IV, section 403.
7 Section 204. Except as provided in Article IV, section 403,
8 any advance payment made by the defendant health care provider
9 or his insurer to or for the plaintiff, or any other person, may
10 not be construed as an admission of liability for injuries or
11 damages suffered by the plaintiff or anyone else in an action
12 brought for medical malpractice.
13 Section 205. Evidence of an advance payment is not
14 admissible until there is a final judgment in favor of the
15 plaintiff, in which event the court shall reduce the judgment to
16 the plaintiff to the extent of the advance payment. The advance
17 payment shall inure to the exclusive benefit of the defendant or
18 his insurer making the payment. In the event the advance payment
19 exceeds the liability of the defendant or the insurer making it,
20 the court shall order any adjustment necessary to equalize the
21 amount which each defendant is obligated to pay, exclusive of
22 costs. In no case shall an advance payment in excess of an award
23 be repayable by the person receiving it.
24 In the event the judgment is in excess of $100,000 and a
25 claim is due from the Patient's Compensation Fund the court
26 shall retain jurisdiction of the case. If it is determined in
27 accordance with section 401(g) of that the claim has to be
28 prorated the court shall order a remmitterer of the amount that
29 exceeds the pro rata share.
30 Section 206. A patient's claim for compensation under this
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1 act is not assignable.
2 Section 207. Financial responsibility of a health care
3 provider under this article may be established only by filing
4 with the commissioner proof that the health care provider is
5 insured by a policy of malpractice liability insurance in the
6 amount of at least $100,000 per occurrence.
7 Article III
8 Statute of Limitations
9 Section 301. No claim, whether in contract or tort, may be
10 brought against a health care provider based upon professional
11 services or health care rendered or which should have been
12 rendered unless filed within two years from the date of the
13 alleged act, omission or neglect except that a minor under the
14 full age of six years shall have until his eighth birthday in
15 which to file. This section applies to all persons regardless of
16 minority or other legal disability.
17 Article IV
18 Patient's Compensation Fund
19 Section 401. (a) There is created a Patient's Compensation
20 Fund to be collected and received by the commissioner for
21 exclusive use for the purposes stated in this act. The fund and
22 any income from it, shall be held in trust, deposited in a
23 segregated account, invested and reinvested by the commissioner,
24 and shall not become a part of the General Fund of the State.
25 (b) To create the fund, an annual surcharge shall be levied
26 on all health care providers in the Commonwealth. The surcharge
27 shall be determined by the commissioner based upon actuarial
28 principles and shall not exceed 10% of the cost to each health
29 care provider for maintenance of financial responsibility. The
30 surcharge shall be collected on the same basis as premiums by
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1 each insurer, the risk manager and surplus lines agents.
2 (c) Such surcharge shall be due and payable within 30 days
3 after the premiums for malpractice liability insurance have been
4 received by the insurer, risk manager and surplus lines agents
5 from the health care provider in the Commonwealth. Before July
6 15, 1976, the commissioner shall send to each insurer, the risk
7 manager and surplus lines agents a statement explaining the
8 provisions of this section together with any other information
9 necessary for their compliance with this section.
10 (d) If the annual premium surcharge is not paid within the
11 time limited above the certificate of authority of the insurer,
12 risk manager, and surplus lines agents shall be suspended until
13 the annual premium surcharge is paid.
14 (e) All expenses of collecting, protecting and administering
15 the fund, shall be paid from the fund.
16 (f) If the fund exceeds the sum of $15,000,000 at the end of
17 any calendar year after the payment of all claims and expenses,
18 the commissioner shall reduce the surcharge provided in this
19 section in order to maintain the fund at an approximate level of
20 $15,000,000.
21 (g) All claims from the Patient's Compensation Fund shall be
22 computed on December 31 of the year in which the claim becomes
23 final. All claims shall be paid on or before January 15. If the
24 fund would be exhausted by the payment in full of all claims
25 allowed during a calendar year, then the amount paid to each
26 claimant shall be prorated.
27 Section 402. The State Auditor General shall issue a warrant
28 in the amount of each claim submitted to him against the fund on
29 December 31 of each year. The only claim against the fund shall
30 be a voucher or other appropriate request by the commissioner
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1 after he receives:
2 (1) a certified copy of a final judgment in excess of
3 $100,000 against a health care provider; or
4 (2) a certified copy of a court approved settlement in
5 excess of $100,000 against a health care provider.
6 Section 403. If the insurer of a health care provider has
7 agreed to settle its liability on a claim against its insured by
8 payment of its policy limits of $100,000, and claimant is
9 demanding an amount in excess thereof for a complete and final
10 release, then the following procedure must be followed:
11 (1) A petition shall be filed by the claimant with the
12 court in which the action is pending against the health care
13 provider or, if none is pending, in the court where the
14 health care provider is located,
15 (i) seeking approval of an agreed settlement, if any,
16 or
17 (ii) demanding payment of damages from the Patient's
18 Compensation Fund.
19 (2) A copy of the petition shall be served on the
20 commissioner, the health care provider and his insurer, at
21 least ten days before filing and shall contain sufficient
22 information to inform the other parties about the nature of
23 the claim and the additional amount demanded.
24 (3) The commissioner and the insurer of the health care
25 provider may agree to a settlement with the claimant from the
26 Patient's Compensation Fund, or the commissioner and the
27 insurer of the health care provider may file written
28 objections to the payment of the amount demanded. The
29 agreement or objections to the payment demanded shall be
30 filed within 20 days after the petition is filed.
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1 (4) The judge of the court in which the petition is
2 filed shall set the petition for approval or, if objections
3 have been filed, for hearing, as soon as practicable. The
4 court shall give notice of the hearing to the claimant, the
5 insurer of the health care provider and the commissioner.
6 (5) At the hearing the commissioner, the claimant and
7 the insurer of the health care provider may introduce
8 relevant evidence to enable the court to determine whether or
9 not the petition should be approved if it is submitted on
10 agreement without objections. If the commissioner, the
11 insurer of the health care provider and the claimant cannot
12 agree on the amount, if any, to be paid out of the Patient's
13 Compensation Fund, then the court shall determine the amount
14 of claimant's damages, if any, in excess of the $100,000
15 already paid by the insurer of the health care provider. The
16 court shall determine the amount for which the fund is liable
17 and render a finding and judgment accordingly. In approving a
18 settlement or determining the amount, if any, to be paid from
19 the Patient's Compensation Fund, the court shall consider the
20 liability of the health care provider as admitted and
21 established.
22 (6) Any settlement approved by the court shall not be
23 appealed. Any judgment of the court fixing damages
24 recoverable in any such contested proceeding shall be
25 appealable pursuant to the rules governing appeals in any
26 other civil case tried by the court.
27 Article V
28 Attorney Fees
29 Section 501. (a) When a plaintiff is represented by an
30 attorney in the prosecution of his claim, the plaintiff's
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1 attorney fees from any award made from the first $100,000 may
2 not exceed 25% and the fee from any award made from the
3 Patient's Compensation Fund may not exceed 15% of any recovery
4 from the fund.
5 (b) A patient has the right to elect to pay for the
6 attorney's services on a mutually satisfactory per diem basis.
7 The election, however, must be exercised in written form at the
8 time of employment.
9 Article VI
10 Reporting and Review of Claims
11 Section 601. All malpractice claims settled or adjudicated
12 to final judgment against a health care provider shall be
13 reported to the commissioner by the plaintiff's attorney and by
14 the health care provider or his insurer or risk manager within
15 60 days following final disposition of the claim. The report to
16 the commissioner shall state the following:
17 (1) nature of the claim;
18 (2) damages asserted and alleged injury;
19 (3) attorney's fees and expenses incurred in connection
20 with the claim or defense; and
21 (4) the amount of any settlement or judgment.
22 Section 602. (a) The commissioner shall forward the name of
23 every health care provider, except a hospital, against whom a
24 settlement is made or judgment is rendered under this article to
25 the appropriate board of professional registration and
26 examination for review of the fitness of the health care
27 provider to practice his profession. In each case involving
28 review of a health care provider's fitness to practice under
29 this act, the board shall have the power, in appropriate cases,
30 to take the following disciplinary action:
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1 (1) censure;
2 (2) imposition of probation for a determinate period;
3 (3) suspension of the health care provider's license for
4 a determinate period; or
5 (4) revocation of the license.
6 (b) Review of the health care provider's fitness to practice
7 shall be conducted in accordance with the Administrative Agency
8 Law.
9 Article VII
10 Malpractice Coverage
11 Section 701. Only while malpractice liability insurance
12 remains in force are the health care provider and his insurer
13 liable to a patient, or his representative, for malpractice to
14 the extent and in the manner specified in this act.
15 Section 702. The filing of proof of financial responsibility
16 with the commissioner shall constitute, on the part of the
17 insurer, a conclusive and unqualified acceptance of the
18 provisions of this act.
19 Section 703. Any provision in a policy attempting to limit
20 or modify the liability of the insurer contrary to the
21 provisions of this act is void.
22 Section 704. Every policy issued under this act is deemed to
23 include the following provisions, and any change which may be
24 occasioned by legislation adopted by the General Assembly of the
25 Commonwealth as fully as if it were written therein:
26 (1) the insurer assumes all obligations to pay an award
27 imposed against its insured under the provisions of this act;
28 and
29 (2) any termination of this policy by cancellation is
30 not effective as to patients claiming against the insured
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1 covered hereby, unless at least 30 days before the taking
2 effect of the cancellation, a written notice giving the date
3 upon which termination becomes effective has been received by
4 the insured and the commissioner at their offices.
5 Section 705. If an insurer fails or refuses to pay a final
6 judgment, except during the pendency of an appeal, or fails, or
7 refuses to comply with any provisions of this act, in addition
8 to any other legal remedy, the commissioner may also revoke the
9 approval of its policy form until the insurer pays the award or
10 judgment or has complied with the violated provisions of this
11 act and has resubmitted its policy form and received the
12 approval of the commissioner.
13 Article VIII
14 Risk Management; Authority
15 Section 801. The purpose of this article is to make
16 malpractice liability insurance available to risks as defined in
17 this act.
18 Section 802. There is hereby created the Residual
19 Malpractice Insurance Authority. The Insurance Department is
20 designated as the authority for the purposes of this act. The
21 authority is empowered to engage in writing malpractice
22 liability insurance in the Commonwealth.
23 Section 803. The commissioner shall appoint a risk manager
24 for the authority. The separate, personal or independent assets
25 of the risk manager shall not be liable for or subject to use or
26 expenditure for the purpose of providing insurance by the
27 authority.
28 Section 804. In the administration and provision for
29 malpractice liability insurance by the authority, the risk
30 manager shall:
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1 (1) be subject to all laws and regulations of this
2 Commonwealth which apply to insurance agents;
3 (2) prepare and file appropriate forms with the
4 Insurance Department;
5 (3) prepare and file premium rates with the Insurance
6 Department;
7 (4) perform the underwriting function;
8 (5) dispose of all claims and litigations arising out of
9 insurance policies;
10 (6) maintain adequate books and records;
11 (7) file an annual financial statement regarding its
12 operations under this article with the Insurance Department
13 on forms prescribed by the commissioner;
14 (8) obtain private reinsurance for the authority, if
15 necessary;
16 (9) prepare and file for approval of the commissioner a
17 schedule of agent's compensation; and
18 (10) prepare and file a plan of operations with the
19 commissioner for approval.
20 Section 805. The risk manager shall receive as compensation
21 for its services, a percentage of all premiums received by it
22 under the terms of this article, as determined by the
23 commissioner. The compensation may be adjusted by the
24 commissioner.
25 Section 806. If a risk after diligent effort has been
26 declined by at least two insurers the risk may, together with
27 evidence of the two declinations, forward his application to the
28 risk manager.
29 Section 807. If the risk manager declines to accept the
30 risk, notice of declination, together with the reasons, shall be
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1 sent to the applicant and the commissioner. The applicant shall
2 have ten days from the date of notice to file an appeal for
3 review by the commissioner. On appeal, the commissioner shall
4 review the decision of the risk manager and enter an appropriate
5 order.
6 Section 808. All sums appropriated by the Commonwealth, and
7 any surplus of premiums over losses and expenses received by the
8 authority shall be placed in a segregated fund and shall be
9 invested and reinvested by the commissioner, and investment
10 income generated shall remain in the fund.
11 Article IX
12 Medical Review Panel
13 Section 901. Provision is made for the establishment of
14 medical review panels to review all malpractice claims against
15 health care providers covered by this act.
16 Section 902. No action against a health care provider may be
17 commenced in any court of this Commonwealth before the
18 claimant's proposed complaint has been presented to a medical
19 review panel established pursuant to this article and an opinion
20 is rendered by the panel.
21 Section 903. Except as provided in paragraph (5), the
22 medical review panel shall consist of one attorney and three
23 physicians. The attorney shall act in an advisory capacity and
24 as chairman of the panel, but shall have no vote. The medical
25 review panel shall be selected in the following manner:
26 (1) All physicians engaged in active practice in this
27 Commonwealth, whether in the teaching profession or
28 otherwise, who hold a license to practice, shall be available
29 for selection.
30 (2) Each party to the action shall have the right to
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1 select one physician and upon selection, said physician shall
2 be required to serve. The two physicians thus selected shall
3 select the third physician panelist.
4 (3) Where there are multiple plaintiffs or defendants,
5 there shall be only one physician selected per side. The
6 plaintiff, whether single or multiple, shall have the right
7 to select one physician and the defendant, whether single or
8 multiple, shall have the right to select one physician.
9 (4) A panelist so selected shall serve unless for good
10 cause shown he may be excused. To show good cause for relief
11 from serving, the panelist shall be required to serve an
12 affidavit upon a judge of a court having jurisdiction over
13 the claim. The affidavit shall set out the facts showing that
14 service would constitute an unreasonable burden or undue
15 hardship. The court may excuse the proposed panelist from
16 serving.
17 (5) If there is only one party defendant, other than a
18 hospital, two of the panelists selected shall be from the
19 same class of health care provider as the defendant.
20 (6) Within ten days after notification of a proposed
21 panelist by the plaintiff, the defendant shall select a
22 proposed panelist.
23 (7) Within ten days of any selection, written challenge,
24 without cause, may be made to the panel member. Upon
25 challenge, a party shall select another panelist. If two such
26 challenges are made and submitted, the judge shall appoint a
27 panel consisting of three qualified panelists and each side
28 shall strike one and the remaining member shall serve.
29 (8) The parties may agree on the attorney member of the
30 board, or if no agreement can be reached, then the attorney
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1 member shall be drawn by lot from the list of attorneys
2 qualified to practice and presently on the rolls of the
3 Supreme Court of the Commonwealth of Pennsylvania. Upon
4 request the prothonotary of the Supreme Court shall draw five
5 names at random from the list of attorneys and the parties
6 shall then each strike two names alternately with the
7 claimant striking first until both sides have stricken two
8 names and the remaining name shall be the attorney member of
9 the panel.
10 Section 904. The evidence to be considered by the medical
11 review panel shall be promptly submitted by the respective
12 parties in written form only. The evidence may consist of
13 medical charts, x-rays, laboratory tests, excerpts of treatises,
14 depositions of witnesses including parties and any other form of
15 evidence allowable by the medical review panel. Depositions of
16 parties and witnesses may be taken prior to the convening of the
17 panel. The chairman of the panel shall advise the panel relative
18 to any legal question involved in the review proceeding and
19 shall prepare the opinion of the panel as provided in section
20 907. A copy of the evidence shall be sent to each member of the
21 panel.
22 Section 905. Either party, after submission of all evidence
23 and upon ten days' notice to the other side, shall have the
24 right to convene the panel at a time and place agreeable to the
25 members of the panel. Either party may question the panel
26 concerning any matters relevant to issues to be decided by the
27 panel before the issuance of their report. The chairman of the
28 panel shall preside at all meetings. Meetings shall be informal.
29 Section 906. The panel shall have the right and duty to
30 request all necessary information. The panel may consult with
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1 medical authorities. The panel may examine reports of such other
2 health care providers necessary to fully inform itself regarding
3 the issue to be decided. Both parties shall have full access to
4 any material submitted to the panel.
5 Section 907. The panel shall have the sole duty to express
6 its expert opinion as to whether or not the evidence supports
7 the conclusion that the defendant or defendants acted or failed
8 to act within the appropriate standards of care as charged in
9 the complaint. After reviewing all evidence and after any
10 examination of the panel by counsel representing either party,
11 the panel shall, within 30 days, render one or more of the
12 following expert opinions which shall be in writing and signed
13 by the panelists:
14 (1) The evidence supports the conclusion that the
15 defendant or defendants failed to comply with the appropriate
16 standard of care as charged in the complaint.
17 (2) The evidence does not support the conclusion that
18 the defendant or defendants failed to meet the applicable
19 standard of care as charged in the complaint.
20 (3) That there is a material issue of fact, not
21 requiring expert opinion, bearing on liability for
22 consideration by the court or jury.
23 (4) The conduct complained of was or was not a factor of
24 the resultant damages. If so, whether the plaintiff suffered
25 (i) any disability and the extent and duration of the
26 disability; and
27 (ii) any permanent impairment and the percentage of
28 the impairment.
29 Section 908. The filing of the request for review of a claim
30 shall toll the applicable statute of limitations to and
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1 including a period of 90 days following the issuance of the
2 opinion by the medical review panel. The request for review of a
3 claim under this article shall be deemed filed when a copy of
4 the proposed complaint is delivered or mailed by registered or
5 certified mail to the commissioner, who shall immediately
6 forward a copy to each health care provider named as a defendant
7 at his last and usual place of residence or his office.
8 Section 909. Any report of the expert opinion reached by the
9 medical review panel shall be admissible as evidence in any
10 action subsequently brought by the claimant in a court of law,
11 but such expert opinion shall not be conclusive and either party
12 shall have the right to call, at his cost, any member of the
13 medical review panel as a witness. If called, the witness shall
14 be required to appear and testify. A panelist shall have
15 absolute immunity from civil liability for all communications,
16 findings, opinions and conclusions made in the course and scope
17 of duties prescribed by this act.
18 Section 910. Each member of the medical review panel shall
19 be paid at the rate of $100 per diem, not to exceed a total of
20 $1,000, for all work performed as a member of the panel
21 exclusive of time involved if called as a witness to testify in
22 court, and in addition thereto, reasonable travel expense. Fees
23 of the panel including travel expenses shall be paid by the side
24 in whose favor the majority opinion is written. If there is no
25 majority opinion, then each side shall pay one-half of the cost.
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