PRINTER'S NO. 1687
No. 1242 Session of 2008
INTRODUCED BY HUGHES, COSTA, FONTANA, TARTAGLIONE, O'PAKE,
C. WILLIAMS, STACK, FUMO AND KITCHEN, JANUARY 15, 2008
REFERRED TO BANKING AND INSURANCE, JANUARY 15, 2008
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 the Medical Care
16 Availability and Reduction of Error Fund; providing for the
17 Medical Care Availability for Pennsylvanians (MCAP) Reserve
18 Fund; and further providing for the Health Care Provider
19 Retention Account and for expiration.
20 The General Assembly of the Commonwealth of Pennsylvania
21 hereby enacts as follows:
22 Section 1. Section 712 of the act of March 20, 2002
23 (P.L.154, No.13), known as the Medical Care Availability and
24 Reduction of Error (Mcare) Act, is amended to read:
25 Section 712. Medical Care Availability and Reduction of Error
26 Fund.
1 (a) Establishment.--There is hereby established within the
2 State Treasury a special fund to be known as the Medical Care
3 Availability and Reduction of Error Fund. Money in the fund
4 shall be used to pay claims against participating health care
5 providers for losses or damages awarded in medical professional
6 liability actions against them in excess of the basic insurance
7 coverage required by section 711(d), liabilities transferred in
8 accordance with subsection (b) and for the administration of the
9 fund.
10 (b) Transfer of assets and liabilities.--
11 (1) (i) The money in the Medical Professional Liability
12 Catastrophe Loss Fund established under section 701(d) of
13 the former act of October 15, 1975 (P.L.390, No.111),
14 known as the Health Care Services Malpractice Act, is
15 transferred to the fund.
16 (ii) The rights of the Medical Professional
17 Liability Catastrophe Loss Fund established under section
18 701(d) of the former Health Care Services Malpractice Act
19 are transferred to and assumed by the fund.
20 (2) The liabilities and obligations of the Medical
21 Professional Liability Catastrophe Loss Fund established
22 under section 701(d) of the former Health Care Services
23 Malpractice Act are transferred to and assumed by the fund.
24 (c) Fund liability limits.--
25 (1) For calendar year 2002, the limit of liability of
26 the fund created in section 701(d) of the former Health Care
27 Services Malpractice Act for each health care provider that
28 conducts more than 50% of its health care business or
29 practice within this Commonwealth and for each hospital shall
30 be $700,000 for each occurrence and $2,100,000 per annual
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1 aggregate.
2 (2) The limit of liability of the fund for each
3 participating health care provider shall be as follows:
4 (i) For calendar year 2003 and each year thereafter,
5 the limit of liability of the fund shall be $500,000 for
6 each occurrence and $1,500,000 per annual aggregate.
7 (ii) If the basic insurance coverage requirement is
8 increased in accordance with section 711(d)(3) and,
9 notwithstanding subparagraph (i), for each calendar year
10 following the increase in the basic insurance coverage
11 requirement, the limit of liability of the fund shall be
12 $250,000 for each occurrence and $750,000 per annual
13 aggregate.
14 (iii) If the basic insurance coverage requirement is
15 increased in accordance with section 711(d)(4) and,
16 notwithstanding subparagraphs (i) and (ii), for each
17 calendar year following the increase in the basic
18 insurance coverage requirement, the limit of liability of
19 the fund shall be zero.
20 (d) Assessments.--
21 (1) For calendar year 2003 and for each year thereafter,
22 the fund shall be funded by an assessment on each
23 participating health care provider. Assessments shall be
24 levied by the department on or after January 1 of each year.
25 The assessment shall be based on the prevailing primary
26 premium for each participating health care provider and
27 shall, in the aggregate, produce an amount sufficient to do
28 all of the following:
29 (i) Reimburse the fund for the payment of reported
30 claims which became final during the preceding claims
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1 period.
2 (ii) Pay expenses of the fund incurred during the
3 preceding claims period.
4 (iii) Pay principal and interest on moneys
5 transferred into the fund in accordance with section
6 713(c).
7 (iv) Provide a reserve that shall be 10% of the sum
8 of subparagraphs (i), (ii) and (iii).
9 (2) The department shall notify all basic insurance
10 coverage insurers and self-insured participating health care
11 providers of the assessment by November 1 for the succeeding
12 calendar year. All basic insurance coverage insurers, self-
13 insured participating health care providers and Risk
14 Retention Groups hereinafter in this subparagraph designated
15 as "RRGs" shall bill, collect and remit the fund assessment
16 to the fund within 60 days of the inception or renewal date
17 of the primary professional liability policy. All basic
18 insurance coverage insurers, self-insured participating
19 health care providers and RRGs will be subject to the
20 following:
21 (i) For assessments remitted to the fund in excess
22 of 60 days after the inception or renewal date of the
23 primary policy, the basic insurance coverage insurer,
24 self-insured participating health care provider or RRG
25 shall pay the fund a penalty equal to 10% per annum of
26 each untimely assessment accruing from the 61st day after
27 the inception or renewal date of the primary policy until
28 the remittance is received by the fund.
29 (ii) In addition to the provisions of subparagraph
30 (i), if the department finds that there has been a
20080S1242B1687 - 4 -
1 pattern or practice of not complying with this section
2 the basic insurance coverage insurer, self-insured
3 participating health care provider or RRG shall be
4 subject to the penalties and process set forth in the act
5 of July 22, 1974 (P.L.589, No.205), known as the Unfair
6 Insurance Practices Act.
7 (iii) If the basic insurance coverage insurer, self-
8 insurer or RRG receives the assessment from a health care
9 provider, professional corporation or professional
10 association with less than 30 days to make a timely
11 remittance, the basic insurance coverage insurer, self-
12 insurer or RRG remittance period will be extended by 30
13 days from the date of receipt upon providing reasonable
14 evidence to the fund regarding the date of receipt and
15 will not be subject to the penalties provided under
16 subparagraph (i).
17 (iv) If the basic insurance coverage insurer, self-
18 insurer or RRG receives an assessment after 60 days of
19 the inception or renewal date of the primary professional
20 liability policy and remits the assessment within 30 days
21 from the date of receipt, the basic insurance coverage
22 insurer, self-insurer or RRG will not be subject to the
23 penalties provided for under subparagraph (i).
24 Remittances to the fund beyond the 30-day extension shall
25 be subject to the penalties provided under subparagraph
26 (i).
27 (v) A health care provider or professional
28 corporation, professional association or partnership
29 shall be provided fund coverage from the inception or
30 renewal date of the primary professional liability policy
20080S1242B1687 - 5 -
1 if the billed fund assessment is paid to the basic
2 insurance coverage insurer, self-insurer or RRG within 60
3 days of the inception or renewal date of the primary
4 professional liability policy. A health care provider or
5 professional corporation, professional association or
6 partnership failing to pay the billed fund assessment to
7 its basic insurance coverage insurer, self-insurer or RRG
8 within 60 days of the policy inception or renewal and
9 before receiving notice of a claim will not have fund
10 coverage for that claim. If, however, a health care
11 provider or professional corporation, professional
12 association or partnership is billed by the basic
13 insurance coverage insurer, self-insurer or RRG later
14 than 30 days after the policy inception or renewal date
15 and the health care provider or professional corporation,
16 professional association or partnership pays the basic
17 insurance coverage insurer, self-insurer or RRG within 30
18 days from the date of receipt of the bill and the basic
19 insurance coverage insurer, self-insurer or RRG carrier
20 remits the assessment to the fund within 30 days from the
21 date of receipt, then the health care provider will be
22 provided fund coverage as of the inception or renewal
23 date of the primary policy. Fund coverage will also be
24 provided to the health care provider or professional
25 corporation, professional association or partnership for
26 all professional liability claims made after payment of
27 the assessment.
28 (vi) Except as to provisions in conflict with this
29 paragraph, nothing in this paragraph shall affect
30 existing regulations saved under section 5107(a) and all
20080S1242B1687 - 6 -
1 existing regulations shall remain in full force and
2 effect.
3 (3) Any appeal of the assessment shall be filed with the
4 department.
5 (4) For calendar year beginning January 1, 2008, the
6 department may delay or suspend the collection of assessments
7 until the requirements under section 752(b) are met.
8 (e) Discount on surcharges and assessments.--
9 (1) For calendar year 2002, the department shall
10 discount the aggregate surcharge imposed under section
11 701(e)(1) of the Health Care Services Malpractice Act by 5%
12 of the aggregate surcharge imposed under that section for
13 calendar year 2001 in accordance with the following:
14 (i) Fifty percent of the aggregate discount shall be
15 granted equally to hospitals and to participating health
16 care providers that were surcharged as members of one of
17 the four highest rate classes of the prevailing primary
18 premium.
19 (ii) Notwithstanding subparagraph (i), 50% of the
20 aggregate discount shall be granted equally to all
21 participating health care providers.
22 (iii) The department shall issue a credit to a
23 participating health care provider who, prior to the
24 effective date of this section, has paid the surcharge
25 imposed under section 701(e)(1) of the former Health Care
26 Services Malpractice Act for calendar year 2002 prior to
27 the effective date of this section.
28 (2) For calendar years 2003 and 2004, the department
29 shall discount the aggregate assessment imposed under
30 subsection (d) for each calendar year by 10% of the aggregate
20080S1242B1687 - 7 -
1 surcharge imposed under section 701(e)(1) of the former
2 Health Care Services Malpractice Act for calendar year 2001
3 in accordance with the following:
4 (i) Fifty percent of the aggregate discount shall be
5 granted equally to hospitals and to participating health
6 care providers that were assessed as members of one of
7 the four highest rate classes of the prevailing primary
8 premium.
9 (ii) Notwithstanding subparagraph (i), 50% of the
10 aggregate discount shall be granted equally to all
11 participating health care providers.
12 (3) For calendar years 2005 and thereafter, if the basic
13 insurance coverage requirement is increased in accordance
14 with section 711(d)(3) or (4), the department may discount
15 the aggregate assessment imposed under subsection (d) by an
16 amount not to exceed the aggregate sum to be deposited in the
17 fund in accordance with subsection (m).
18 (f) Updated rates.--The joint underwriting association shall
19 file updated rates for all health care providers with the
20 commissioner by May 1 of each year. The department shall review
21 and may adjust the prevailing primary premium in line with any
22 applicable changes which have been approved by the commissioner.
23 (g) Additional adjustments of the prevailing primary
24 premium.--The department shall adjust the applicable prevailing
25 primary premium of each participating health care provider in
26 accordance with the following:
27 (1) The applicable prevailing primary premium of a
28 participating health care provider which is not a hospital
29 may be adjusted through an increase in the individual
30 participating health care provider's prevailing primary
20080S1242B1687 - 8 -
1 premium not to exceed 20%. Any adjustment shall be based upon
2 the frequency of claims paid by the fund on behalf of the
3 individual participating health care provider during the past
4 five most recent claims periods and shall be in accordance
5 with the following:
6 (i) If three claims have been paid during the past
7 five most recent claims periods by the fund, a 10%
8 increase shall be charged.
9 (ii) If four or more claims have been paid during
10 the past five most recent claims periods by the fund, a
11 20% increase shall be charged.
12 (2) The applicable prevailing primary premium of a
13 participating health care provider which is not a hospital
14 and which has not had an adjustment under paragraph (1) may
15 be adjusted through an increase in the individual
16 participating health care provider's prevailing primary
17 premium not to exceed 20%. Any adjustment shall be based upon
18 the severity of at least two claims paid by the fund on
19 behalf of the individual participating health care provider
20 during the past five most recent claims periods.
21 (3) The applicable prevailing primary premium of a
22 participating health care provider not engaged in direct
23 clinical practice on a full-time basis may be adjusted
24 through a decrease in the individual participating health
25 care provider's prevailing primary premium not to exceed 10%.
26 Any adjustment shall be based upon the lower risk associated
27 with the less-than-full-time direct clinical practice.
28 (4) The applicable prevailing primary premium of a
29 hospital may be adjusted through an increase or decrease in
30 the individual hospital's prevailing primary premium not to
20080S1242B1687 - 9 -
1 exceed 20%. Any adjustment shall be based upon the frequency
2 and severity of claims paid by the fund on behalf of other
3 hospitals of similar class, size, risk and kind within the
4 same defined region during the past five most recent claims
5 periods.
6 (h) Self-insured health care providers.--A participating
7 health care provider that has an approved self-insurance plan
8 shall be assessed an amount equal to the assessment imposed on a
9 participating health care provider of like class, size, risk and
10 kind as determined by the department.
11 (i) Change in basic insurance coverage.--If a participating
12 health care provider changes the term of its medical
13 professional liability insurance coverage, the assessment shall
14 be calculated on an annual basis and shall reflect the
15 assessment percentages in effect for the period over which the
16 policies are in effect.
17 (j) Payment of claims.--Claims which became final during the
18 preceding claims period shall be paid on or before December 31
19 following the August 31 on which they became final.
20 (k) Termination.--Upon satisfaction of all liabilities of
21 the fund, the fund shall terminate. Any balance remaining in the
22 fund upon such termination shall be returned by the department
23 to the participating health care providers who participated in
24 the fund in proportion to their assessments in the preceding
25 calendar year.
26 (l) Sole and exclusive source of funding.--Except as
27 provided in subsection (m), the surcharges imposed under section
28 701(e)(1) of the Health Care Services Malpractice Act and
29 assessments on participating health care providers and any
30 income realized by investment or reinvestment shall constitute
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1 the sole and exclusive sources of funding for the fund. Nothing
2 in this subsection shall prohibit the fund from accepting
3 contributions from nongovernmental sources. A claim against or a
4 liability of the fund shall not be deemed to constitute a debt
5 or liability of the Commonwealth or a charge against the General
6 Fund.
7 (m) Supplemental funding.--Notwithstanding the provisions of
8 75 Pa.C.S. § 6506(b) (relating to surcharge) to the contrary,
9 beginning January 1, 2004, and for a period of nine calendar
10 years thereafter, all surcharges levied and collected under 75
11 Pa.C.S. § 6506(a) by any division of the unified judicial system
12 shall be remitted to the Commonwealth for deposit in the Medical
13 Care Availability and Restriction of Error Fund. These funds
14 shall be used to reduce surcharges and assessments in accordance
15 with subsection (e). Beginning January 1, 2014, and each year
16 thereafter, the surcharges levied and collected under 75 Pa.C.S.
17 § 6506(a) shall be deposited into the General Fund.
18 (n) Waiver of right to consent to settlement.--A
19 participating health care provider may maintain the right to
20 consent to a settlement in a basic insurance coverage policy for
21 medical professional liability insurance upon the payment of an
22 additional premium amount.
23 Section 2. The act is amended by adding a subchapter to
24 read:
25 SUBCHAPTER E
26 MEDICAL CARE AVAILABILITY FOR PENNSYLVANIANS
27 (MCAP) RESERVE FUND
28 Section 751. Establishment.
29 There is established within the State Treasury a special fund
30 to be known as the Medical Care Availability for Pennsylvanians
20080S1242B1687 - 11 -
1 (MCAP) Reserve Fund.
2 Section 752. Allocation.
3 (a) Annual allocation.--Money in the Medical Care
4 Availability for Pennsylvanians (MCAP) Reserve Fund shall be
5 allocated annually as follows:
6 (1) Fifty percent of the total amount in the Medical
7 Care Availability for Pennsylvanians (MCAP) Reserve Fund
8 shall remain in the Medical Care Availability for
9 Pennsylvanians (MCAP) Reserve Fund for the sole purpose of
10 reducing the unfunded liability of the fund.
11 (2) Fifty percent of the total amount in the Medical
12 Care Availability for Pennsylvanians (MCAP) Reserve Fund
13 shall be dedicated to funding the program established under
14 subsection (b).
15 (b) Enactment of legislation.--No money in the Medical Care
16 Availability for Pennsylvanians (MCAP) Reserve Fund shall be
17 used until legislation is enacted that provides both assistance
18 to certain small business employers in covering their low wage
19 uninsured and access to affordable health insurance coverage for
20 uninsured low-income adult Pennsylvanians that shall include all
21 of the following:
22 (1) Subsidies and tax credits for small business health
23 savings accounts.
24 (2) Subsidies and tax credits for incentives for disease
25 management programs.
26 (3) Subsidies and tax credits for wellness and healthy
27 living programs.
28 (4) Funding for low-income health care access to
29 community-based health providers.
30 (5) Collection and disclosure of health care costs by
20080S1242B1687 - 12 -
1 various providers and insurers throughout the health care
2 continuum.
3 (6) Implementation of cost containment measures that
4 expand access while maintaining quality and patient safety.
5 Section 3. Section 1112 of the act is amended by adding a
6 subsection to read:
7 Section 1112. Health Care Provider Retention Account.
8 * * *
9 (c.1) Transfers to the Medical Care Availability for
10 Pennsylvanians (MCAP) Reserve Fund.--If the Secretary of the
11 Budget makes a transfer from the account under subsection (c),
12 the remaining funds in the account shall be transferred to the
13 Medical Care Availability for Pennsylvanians (MCAP) Reserve
14 Fund. If the Secretary of the Budget does not make a transfer
15 from the account under subsection (c), all of the funds in the
16 account shall be transferred to the Medical Care Availability
17 for Pennsylvanians (MCAP) Reserve Fund.
18 * * *
19 Section 4. If the requirements of section 752(b) of the act
20 are not satisfied by June 30, 2008, sections 711, 712(d), (e),
21 (g), (h) and (i) of the act shall expire June 30, 2008. If these
22 sections expire on June 30, 2008, the fund shall continue to be
23 responsible for payment of claims against participating health
24 care providers as of June 30, 2008, up to the fund liability
25 limits as of June 30, 2008, to the extent the fund would have
26 been responsible for payment of such claims if sections 711,
27 712(d), (e), (g), (h) and (i) of the act did not expire June 30,
28 2008.
29 Section 5. This act shall take effect in 60 days.
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