PRINTER'S NO. 1512
No. 980 Session of 2003
INTRODUCED BY BARD, GODSHALL, SCHRODER, LEWIS, CRAHALLA,
REICHLEY, WATSON, CAPPELLI, CREIGHTON AND BENNINGHOFF,
APRIL 29, 2003
REFERRED TO COMMITTEE ON INSURANCE, APRIL 29, 2003
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, for Medical Care
17 Availability and Reduction of Error Fund and for extended
18 claims; providing for filing of rates; and further providing
19 for actuarial data.
20 The General Assembly of the Commonwealth of Pennsylvania
21 hereby enacts as follows:
22 Section 1. Section 711(d) act of March 20, 2002 (P.L.154,
23 No.13), known as the Medical Care Availability and Reduction of
24 Error (Mcare) Act, is amended to read:
25 Section 711. Medical professional liability insurance.
26 * * *
1 (d) Basic coverage limits.--A health care provider shall
2 insure or self-insure medical professional liability in
3 accordance with the following:
4 (1) For policies issued or renewed in the calendar year
5 2002, the basic insurance coverage shall be:
6 (i) $500,000 per occurrence or claim and $1,500,000
7 per annual aggregate for a health care provider who
8 conducts more than 50% of its health care business or
9 practice within this Commonwealth and that is not a
10 hospital.
11 (ii) $500,000 per occurrence or claim and $1,500,000
12 per annual aggregate for a health care provider who
13 conducts 50% or less of its health care business or
14 practice within this Commonwealth.
15 (iii) $500,000 per occurrence or claim and
16 $2,500,000 per annual aggregate for a hospital.
17 (1.1) For policies issued or renewed in the calendar
18 year 2003, the basic insurance coverage shall be:
19 (i) $500,000 per occurrence or claim and $1,500,000
20 per annual aggregate for a participating health care
21 provider that is not a hospital.
22 (ii) $1,000,000 per occurrence or claim and
23 $3,000,000 per annual aggregate for a nonparticipating
24 health care provider.
25 (iii) $500,000 per occurrence or claim and
26 $1,250,000 per annual aggregate for a hospital.
27 (2) For policies issued or renewed in the calendar years
28 [2003, 2004 and 2005,] 2004 and thereafter the basic
29 insurance coverage shall be:
30 (i) $500,000 per occurrence or claim and $1,500,000
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1 per annual aggregate for a participating health care
2 provider that is not a hospital.
3 (ii) [$1,000,000] $500,000 per occurrence or claim
4 and [$3,000,000] $1,500,000 per annual aggregate for a
5 nonparticipating health care provider.
6 (iii) $500,000 per occurrence or claim and
7 $2,500,000 per annual aggregate for a hospital.
8 [(3) Unless the commissioner finds pursuant to section
9 745(a) that additional basic insurance coverage capacity is
10 not available, for policies issued or renewed in calendar
11 year 2006 and each year thereafter subject to paragraph (4),
12 the basic insurance coverage shall be:
13 (i) $750,000 per occurrence or claim and $2,250,000
14 per annual aggregate for a participating health care
15 provider that is not a hospital.
16 (ii) $1,000,000 per occurrence or claim and
17 $3,000,000 per annual aggregate for a nonparticipating
18 health care provider.
19 (iii) $750,000 per occurrence or claim and
20 $3,750,000 per annual aggregate for a hospital.
21 If the commissioner finds pursuant to section 745(a) that
22 additional basic insurance coverage capacity is not
23 available, the basic insurance coverage requirements shall
24 remain at the level required by paragraph (2); and the
25 commissioner shall conduct a study every two years until the
26 commissioner finds that additional basic insurance coverage
27 capacity is available, at which time the commissioner shall
28 increase the required basic insurance coverage in accordance
29 with this paragraph.
30 (4) Unless the commissioner finds pursuant to section
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1 745(b) that additional basic insurance coverage capacity is
2 not available, for policies issued or renewed three years
3 after the increase in coverage limits required by paragraph
4 (3) and for each year thereafter, the basic insurance
5 coverage shall be:
6 (i) $1,000,000 per occurrence or claim and
7 $3,000,000 per annual aggregate for a participating
8 health care provider that is not a hospital.
9 (ii) $1,000,000 per occurrence or claim and
10 $3,000,000 per annual aggregate for a nonparticipating
11 health care provider.
12 (iii) $1,000,000 per occurrence or claim and
13 $4,500,000 per annual aggregate for a hospital.
14 If the commissioner finds pursuant to section 745(b) that
15 additional basic insurance coverage capacity is not
16 available, the basic insurance coverage requirements shall
17 remain at the level required by paragraph (3); and the
18 commissioner shall conduct a study every two years until the
19 commissioner finds that additional basic insurance coverage
20 capacity is available, at which time the commissioner shall
21 increase the required basic insurance coverage in accordance
22 with this paragraph.]
23 * * *
24 Section 2. Section 712(c), (d), (e) and (m) of the act are
25 amended and the section is amended by adding a subsection to
26 read:
27 Section 712. Medical Care Availability and Reduction of Error
28 Fund.
29 * * *
30 (c) Fund liability limits.--
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1 (1) For calendar year 2002, the limit of liability of
2 the fund created in section 701(d) of the former Health Care
3 Services Malpractice Act for each health care provider that
4 conducts more than 50% of its health care business or
5 practice within this Commonwealth and for each hospital shall
6 be $700,000 for each occurrence and $2,100,000 per annual
7 aggregate.
8 [(2) The limit of liability of the fund for each
9 participating health care provider shall be as follows:
10 (i) For calendar year 2003 and each year thereafter,
11 the limit of liability of the fund shall be $500,000 for
12 each occurrence and $1,500,000 per annual aggregate.
13 (ii) If the basic insurance coverage requirement is
14 increased in accordance with section 711(d)(3) and,
15 notwithstanding subparagraph (i), for each calendar year
16 following the increase in the basic insurance coverage
17 requirement, the limit of liability of the fund shall be
18 $250,000 for each occurrence and $750,000 per annual
19 aggregate.
20 (iii) If the basic insurance coverage requirement is
21 increased in accordance with section 711(d)(4) and,
22 notwithstanding subparagraphs (i) and (ii), for each
23 calendar year following the increase in the basic
24 insurance coverage requirement, the limit of liability of
25 the fund shall be zero.]
26 (2) For calendar year 2003, the limit of liability of
27 the fund shall be $500,000 for each occurrence and $1,500,000
28 per annual aggregate.
29 (c.1) Coverage elimination.--The commissioner shall
30 eliminate the liability coverage provided by the fund to health
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1 care providers as defined in section 702 no later than December
2 31, 2003. Upon this action by the commissioner, the limit of
3 liability of the fund shall thereafter be zero for any claims
4 that occur after December 31, 2003.
5 [(d) Assessments.--
6 (1) For calendar year 2003 and for each year thereafter,
7 the fund shall be funded by an assessment on each
8 participating health care provider. Assessments shall be
9 levied by the department on or after January 1 of each year.
10 The assessment shall be based on the prevailing primary
11 premium for each participating health care provider and
12 shall, in the aggregate, produce an amount sufficient to do
13 all of the following:
14 (i) Reimburse the fund for the payment of reported
15 claims which became final during the preceding claims
16 period.
17 (ii) Pay expenses of the fund incurred during the
18 preceding claims period.
19 (iii) Pay principal and interest on moneys
20 transferred into the fund in accordance with section
21 713(c).
22 (iv) Provide a reserve that shall be 10% of the sum
23 of subparagraphs (i), (ii) and (iii).
24 (2) The department shall notify all basic insurance
25 coverage insurers and self-insured participating health care
26 providers of the assessment by November 1 for the succeeding
27 calendar year.
28 (3) Any appeal of the assessment shall be filed with the
29 department.]
30 (e) Discount on surcharges and assessments.--
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1 (1) For calendar year 2002, the department shall
2 discount the aggregate surcharge imposed under section
3 701(e)(1) of the Health Care Services Malpractice Act by 5%
4 of the aggregate surcharge imposed under that section for
5 calendar year 2001 in accordance with the following:
6 (i) Fifty percent of the aggregate discount shall be
7 granted equally to hospitals and to participating health
8 care providers that were surcharged as members of one of
9 the four highest rate classes of the prevailing primary
10 premium.
11 (ii) Notwithstanding subparagraph (i), 50% of the
12 aggregate discount shall be granted equally to all
13 participating health care providers.
14 (iii) The department shall issue a credit to a
15 participating health care provider who, prior to the
16 effective date of this section, has paid the surcharge
17 imposed under section 701(e)(1) of the former Health Care
18 Services Malpractice Act for calendar year 2002 prior to
19 the effective date of this section.
20 [(2) For calendar years 2003 and 2004, the department
21 shall discount the aggregate assessment imposed under
22 subsection (d) for each calendar year by 10% of the aggregate
23 surcharge imposed under section 701(e)(1) of the former
24 Health Care Services Malpractice Act for calendar year 2001
25 in accordance with the following:
26 (i) Fifty percent of the aggregate discount shall be
27 granted equally to hospitals and to participating health
28 care providers that were assessed as members of one of
29 the four highest rate classes of the prevailing primary
30 premium.
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1 (ii) Notwithstanding subparagraph (i), 50% of the
2 aggregate discount shall be granted equally to all
3 participating health care providers.
4 (3) For calendar years 2005 and thereafter, if the basic
5 insurance coverage requirement is increased in accordance
6 with section 711(d)(3) or (4), the department may discount
7 the aggregate assessment imposed under subsection (d) by an
8 amount not to exceed the aggregate sum to be deposited in the
9 fund in accordance with subsection (m).]
10 * * *
11 (m) Supplemental funding.--
12 [Notwithstanding the provisions of 75 Pa.C.S. § 6506(b)
13 (relating to surcharge) to the contrary, beginning January 1,
14 2004, and for a period of nine calendar years thereafter, all
15 surcharges levied and collected under 75 Pa.C.S. § 6506(a) by
16 any division of the unified judicial system shall be remitted
17 to the Commonwealth for deposit in the Medical Care
18 Availability and Restriction of Error Fund. These funds shall
19 be used to reduce surcharges and assessments in accordance
20 with subsection (e). Beginning January 1, 2014, and each year
21 thereafter, the surcharges levied and collected under 75
22 Pa.C.S. § 6506(a) shall be deposited into the General Fund.]
23 Revenue collected under section 1206 of the act of March 4, 1971
24 (P.L.6, No.2), known as the Tax Reform Code of 1971, in excess
25 of $.05 per cigarette shall be deposited in the fund. These
26 funds shall be used to reduce surcharges and assessments for
27 calendar year 2003 and thereafter. This subsection shall expire
28 when the fund terminates under subsection (k).
29 * * *
30 Section 3. Sections 715(a) and 745 of the act are amended to
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1 read:
2 Section 715. Extended claims.
3 (a) General rule.--If a medical professional liability claim
4 against a health care provider who was required to participate
5 in the Medical Professional Liability Catastrophe Loss Fund
6 under section 701(d) of the act of October 15, 1975 (P.L.390,
7 No.111), known as the Health Care Services Malpractice Act, is
8 made more than four years after the breach of contract or tort
9 occurred and if the claim is filed within the applicable statute
10 of limitations and statute of repose, the claim shall be
11 defended by the department if the department received a written
12 request for indemnity and defense within 180 days of the date on
13 which notice of the claim is first given to the participating
14 health care provider or its insurer. Where multiple treatments
15 or consultations took place less than four years before the date
16 on which the health care provider or its insurer received notice
17 of the claim, the claim shall be deemed for purposes of this
18 section to have occurred less than four years prior to the date
19 of notice and shall be defended by the insurer in accordance
20 with this chapter.
21 * * *
22 Section 745. Actuarial data.
23 [(a) Initial study.--The following shall apply:
24 (1)] No later than April 1, 2005, each insurer providing
25 medical professional liability insurance in this Commonwealth
26 shall file loss data as required by the commissioner. For
27 failure to comply, the commissioner shall impose an
28 administrative penalty of $1,000 for every day that this data
29 is not provided in accordance with this [paragraph] section.
30 [(2) By July 1, 2005, the commissioner shall conduct a
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1 study regarding the availability of additional basic
2 insurance coverage capacity. The study shall include an
3 estimate of the total change in medical professional
4 liability insurance loss-cost resulting from implementation
5 of this act prepared by an independent actuary. The fee for
6 the independent actuary shall be borne by the fund. In
7 developing the estimate, the independent actuary shall
8 consider all of the following:
9 (i) The most recent accident year and ratemaking
10 data available.
11 (ii) Any other relevant factors within or outside
12 this Commonwealth in accordance with sound actuarial
13 principles.
14 (b) Additional study.--The following shall apply:
15 (1) Three years following the increase of the basic
16 insurance coverage requirement in accordance with section
17 711(d)(3), each insurer providing medical professional
18 liability insurance in this Commonwealth shall file loss data
19 with the commissioner upon request. For failure to comply,
20 the commissioner shall impose an administrative penalty of
21 $1,000 for every day that this data is not provided in
22 accordance with this paragraph.
23 (2) Three months following the request made under
24 paragraph (1), the commissioner shall conduct a study
25 regarding the availability of additional basic insurance
26 coverage capacity. The study shall include an estimate of the
27 total change in medical professional liability insurance
28 loss-cost resulting from implementation of this act prepared
29 by an independent actuary. The fee for the independent
30 actuary shall be borne by the fund. In developing the
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1 estimate, the independent actuary shall consider all of the
2 following:
3 (i) The most recent accident year and ratemaking
4 data available.
5 (ii) Any other relevant factors within or outside
6 this Commonwealth in accordance with sound actuarial
7 principles.]
8 Section 4. This act shall take effect in 60 days.
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