PRIOR PRINTER'S NO. 1488 PRINTER'S NO. 1491
No. 1137 Session of 2007
INTRODUCED BY D. WHITE, RAFFERTY, PILEGGI, ORIE, SCARNATI, ROBBINS, ERICKSON, GORDNER, C. WILLIAMS AND FONTANA, OCTOBER 23, 2007
SENATOR D. WHITE, BANKING AND INSURANCE, AS AMENDED, OCTOBER 24, 2007
AN ACT 1 Amending the act of March 20, 2002 (P.L.154, No.13), entitled 2 "An act reforming the law on medical professional liability; 3 providing for patient safety and reporting; establishing the 4 Patient Safety Authority and the Patient Safety Trust Fund; 5 abrogating regulations; providing for medical professional 6 liability informed consent, damages, expert qualifications, 7 limitations of actions and medical records; establishing the 8 Interbranch Commission on Venue; providing for medical 9 professional liability insurance; establishing the Medical 10 Care Availability and Reduction of Error Fund; providing for 11 medical professional liability claims; establishing the Joint 12 Underwriting Association; regulating medical professional 13 liability insurance; providing for medical licensure 14 regulation; providing for administration; imposing penalties; 15 and making repeals," further providing for medical 16 professional liability insurance and for the Medical Care 17 Availability and Reduction of Error Fund; providing for the 18 Medical Care Availability and Reduction of Error (Mcare) 19 Reserve Fund; and further providing for abatement program, 20 for the Health Care Provider Retention Account and for 21 expiration. 22 The General Assembly of the Commonwealth of Pennsylvania 23 hereby enacts as follows: 24 Section 1. Sections 711 and 712 of the act of March 20, 2002 25 (P.L.154, No.13), known as the Medical Care Availability and 26 Reduction of Error (Mcare) Act, are amended to read:
1 Section 711. Medical professional liability insurance. 2 (a) Requirement.--A health care provider providing health 3 care services in this Commonwealth shall: 4 (1) purchase medical professional liability insurance 5 from an insurer which is licensed or approved by the 6 department; or 7 (2) provide self-insurance. 8 (b) Proof of insurance.--A health care provider required by 9 subsection (a) to purchase medical professional liability 10 insurance or provide self-insurance shall submit proof of 11 insurance or self-insurance to the department within 60 days of 12 the policy being issued. 13 (c) Failure to provide proof of insurance.--If a health care 14 provider fails to submit the proof of insurance or self- 15 insurance required by subsection (b), the department shall, 16 after providing the health care provider with notice, notify the 17 health care provider's licensing authority. A health care 18 provider's license shall be suspended or revoked by its 19 licensure board or agency if the health care provider fails to 20 comply with any of the provisions of this chapter. 21 (d) Basic coverage limits.--A health care provider shall 22 insure or self-insure medical professional liability in 23 accordance with the following: 24 (1) For policies issued or renewed in the calendar year 25 2002, the basic insurance coverage shall be: 26 (i) $500,000 per occurrence or claim and $1,500,000 27 per annual aggregate for a health care provider who 28 conducts more than 50% of its health care business or 29 practice within this Commonwealth and that is not a 30 hospital. 20070S1137B1491 - 2 -
1 (ii) $500,000 per occurrence or claim and $1,500,000 2 per annual aggregate for a health care provider who 3 conducts 50% or less of its health care business or 4 practice within this Commonwealth. 5 (iii) $500,000 per occurrence or claim and 6 $2,500,000 per annual aggregate for a hospital. 7 (2) For policies issued or renewed in the calendar years 8 2003, 2004 and 2005, the basic insurance coverage shall be: 9 (i) $500,000 per occurrence or claim and $1,500,000 10 per annual aggregate for a participating health care 11 provider that is not a hospital. 12 (ii) $1,000,000 per occurrence or claim and 13 $3,000,000 per annual aggregate for a nonparticipating 14 health care provider. 15 (iii) $500,000 per occurrence or claim and 16 $2,500,000 per annual aggregate for a hospital. 17 (3) Unless the commissioner finds pursuant to section 18 745(a) that additional basic insurance coverage capacity is 19 not available, for policies issued or renewed in calendar 20 year 2006 and each year thereafter subject to paragraph (4), 21 the basic insurance coverage shall be: 22 (i) Up to $750,000 per occurrence or claim and 23 $2,250,000 per annual aggregate for a participating 24 health care provider that is not a hospital. 25 (ii) Up to $1,000,000 per occurrence or claim and 26 $3,000,000 per annual aggregate for a nonparticipating 27 health care provider. 28 (iii) Up to $750,000 per occurrence or claim and 29 $3,750,000 per annual aggregate for a hospital. 30 If the commissioner finds pursuant to section 745(a) that 20070S1137B1491 - 3 -
1 additional basic insurance coverage capacity is not 2 available, the basic insurance coverage requirements shall 3 remain at the level required by paragraph (2); and the 4 commissioner shall conduct a study every [two years] year 5 until the commissioner finds that additional basic insurance 6 coverage capacity is available, at which time the 7 commissioner shall increase the required basic insurance 8 coverage in accordance with this paragraph. 9 (4) Unless the commissioner finds pursuant to section 10 745(b) that additional basic insurance coverage capacity is 11 not available, for policies issued or renewed [three] two 12 years after the increase in coverage limits required by 13 paragraph (3) and for each year thereafter, the basic 14 insurance coverage shall be: 15 (i) Up to $1,000,000 per occurrence or claim and 16 $3,000,000 per annual aggregate for a participating 17 health care provider that is not a hospital. 18 (ii) Up to $1,000,000 per occurrence or claim and 19 $3,000,000 per annual aggregate for a nonparticipating 20 health care provider. 21 (iii) Up to $1,000,000 per occurrence or claim and 22 $4,500,000 per annual aggregate for a hospital. 23 If the commissioner finds pursuant to section 745(b) that 24 additional basic insurance coverage capacity is not 25 available, the basic insurance coverage requirements shall 26 remain at the level required by paragraph (3); and the 27 commissioner shall conduct a study every [two years] year 28 until the commissioner finds that additional basic insurance 29 coverage capacity is available, at which time the 30 commissioner shall increase the required basic insurance 20070S1137B1491 - 4 -
1 coverage in accordance with this paragraph. 2 (5) THE AMOUNT OF BASIC INSURANCE COVERAGE PER <-- 3 OCCURRENCE OR CLAIM UNDER PARAGRAPHS (3) AND (4) SHALL BE NO 4 LESS THAN $500,000 AND SHALL BE SET IN $50,000 INCREMENTS. 5 (e) Fund participation.--A participating health care 6 provider shall be required to participate in the fund. 7 (f) Self-insurance.-- 8 (1) If a health care provider self-insures its medical 9 professional liability, the health care provider shall submit 10 its self-insurance plan, such additional information as the 11 department may require and the examination fee to the 12 department for approval. 13 (2) The department shall approve the plan if it 14 determines that the plan constitutes protection equivalent to 15 the insurance required of a health care provider under 16 subsection (d). 17 (g) Basic insurance liability.-- 18 (1) An insurer providing medical professional liability 19 insurance shall not be liable for payment of a claim against 20 a health care provider for any loss or damages awarded in a 21 medical professional liability action in excess of the basic 22 insurance coverage required by subsection (d) unless the 23 health care provider's medical professional liability 24 insurance policy or self-insurance plan provides for a higher 25 limit. 26 (2) If a claim exceeds the limits of a participating 27 health care provider's basic insurance coverage or self- 28 insurance plan, the fund shall be responsible for payment of 29 the claim against the participating health care provider up 30 to the fund liability limits. 20070S1137B1491 - 5 -
1 (h) Excess insurance.-- 2 (1) No insurer providing medical professional liability 3 insurance with liability limits in excess of the fund's 4 liability limits to a participating health care provider 5 shall be liable for payment of a claim against the 6 participating health care provider for a loss or damages in a 7 medical professional liability action except the losses and 8 damages in excess of the fund coverage limits. 9 (2) No insurer providing medical professional liability 10 insurance with liability limits in excess of the fund's 11 liability limits to a participating health care provider 12 shall be liable for any loss resulting from the insolvency or 13 dissolution of the fund. 14 (i) Governmental entities.--A governmental entity may 15 satisfy its obligations under this chapter, as well as the 16 obligations of its employees to the extent of their employment, 17 by either purchasing medical professional liability insurance or 18 assuming an obligation as a self-insurer, and paying the 19 assessments under this chapter. 20 (j) Exemptions.--The following participating health care 21 providers shall be exempt from this chapter: 22 (1) A physician who exclusively practices the specialty 23 of forensic pathology. 24 (2) A participating health care provider who is a member 25 of the Pennsylvania military forces while in the performance 26 of the member's assigned duty in the Pennsylvania military 27 forces under orders. 28 (3) A retired licensed participating health care 29 provider who provides care only to the provider or the 30 provider's immediate family members. 20070S1137B1491 - 6 -
1 Section 712. Medical Care Availability and Reduction of Error 2 Fund. 3 (a) Establishment.--There is hereby established within the 4 State Treasury a special fund to be known as the Medical Care 5 Availability and Reduction of Error Fund. Money in the fund 6 shall be used to pay claims against participating health care 7 providers for losses or damages awarded in medical professional 8 liability actions against them in excess of the basic insurance 9 coverage required by section 711(d), liabilities transferred in 10 accordance with subsection (b) and for the administration of the 11 fund. 12 (b) Transfer of assets and liabilities.-- 13 (1) (i) The money in the Medical Professional Liability 14 Catastrophe Loss Fund established under section 701(d) of 15 the former act of October 15, 1975 (P.L.390, No.111), 16 known as the Health Care Services Malpractice Act, is 17 transferred to the fund. 18 (ii) The rights of the Medical Professional 19 Liability Catastrophe Loss Fund established under section 20 701(d) of the former Health Care Services Malpractice Act 21 are transferred to and assumed by the fund. 22 (2) The liabilities and obligations of the Medical 23 Professional Liability Catastrophe Loss Fund established 24 under section 701(d) of the former Health Care Services 25 Malpractice Act are transferred to and assumed by the fund. 26 (c) Fund liability limits.-- 27 (1) For calendar year 2002, the limit of liability of 28 the fund created in section 701(d) of the former Health Care 29 Services Malpractice Act for each health care provider that 30 conducts more than 50% of its health care business or 20070S1137B1491 - 7 -
1 practice within this Commonwealth and for each hospital shall 2 be $700,000 for each occurrence and $2,100,000 per annual 3 aggregate. 4 (2) The limit of liability of the fund for each 5 participating health care provider shall be as follows: 6 (i) For calendar year 2003 and each year thereafter, 7 the limit of liability of the fund shall be $500,000 for 8 each occurrence and $1,500,000 per annual aggregate. 9 (ii) If the basic insurance coverage requirement is 10 increased in accordance with section 711(d)(3) or (4) 11 and, notwithstanding subparagraph (i), for each calendar 12 year following the increase in the basic insurance 13 coverage requirement, the limit of liability of the fund 14 shall be [$250,000 for each occurrence and $750,000 per 15 annual aggregate. 16 (iii) If the basic insurance coverage requirement is 17 increased in accordance with section 711(d)(4) and, 18 notwithstanding subparagraphs (i) and (ii), for each 19 calendar year following the increase in the basic 20 insurance coverage requirement, the limit of liability of 21 the fund shall be zero] $1,000,000 per occurrence and 22 $3,000,000 per annual aggregate, except hospitals which 23 shall be $1,000,000 per occurrence and $4,500,000 per 24 annual aggregate, minus the amount the commissioner 25 determines for basic insurance coverage under section 26 711(d)(3) and (4). 27 (d) Assessments.-- 28 (1) For calendar year 2003 and for each year thereafter, 29 the fund shall be funded by an assessment on each 30 participating health care provider. Assessments shall be 20070S1137B1491 - 8 -
1 levied by the department on or after January 1 of each year. 2 The assessment shall be based on the prevailing primary 3 premium for each participating health care provider and 4 shall, in the aggregate, produce an amount sufficient to do 5 all of the following: 6 (i) Reimburse the fund for the payment of reported 7 claims which became final during the preceding claims 8 period. 9 (ii) Pay expenses of the fund incurred during the 10 preceding claims period. 11 (iii) Pay principal and interest on moneys 12 transferred into the fund in accordance with section 13 713(c). 14 (iv) Provide a reserve that shall be 10% of the sum 15 of subparagraphs (i), (ii) and (iii). 16 (2) The department shall notify all basic insurance 17 coverage insurers and self-insured participating health care 18 providers of the assessment by November 1 for the succeeding 19 calendar year. The department shall bill and collect the 20 assessment from all participating health care providers. 21 (3) Any appeal of the assessment shall be filed with the 22 department. 23 (e) Discount on surcharges and assessments.-- 24 (1) For calendar year 2002, the department shall 25 discount the aggregate surcharge imposed under section 26 701(e)(1) of the Health Care Services Malpractice Act by 5% 27 of the aggregate surcharge imposed under that section for 28 calendar year 2001 in accordance with the following: 29 (i) Fifty percent of the aggregate discount shall be 30 granted equally to hospitals and to participating health 20070S1137B1491 - 9 -
1 care providers that were surcharged as members of one of 2 the four highest rate classes of the prevailing primary 3 premium. 4 (ii) Notwithstanding subparagraph (i), 50% of the 5 aggregate discount shall be granted equally to all 6 participating health care providers. 7 (iii) The department shall issue a credit to a 8 participating health care provider who, prior to the 9 effective date of this section, has paid the surcharge 10 imposed under section 701(e)(1) of the former Health Care 11 Services Malpractice Act for calendar year 2002 prior to 12 the effective date of this section. 13 (2) For calendar years 2003 and 2004, the department 14 shall discount the aggregate assessment imposed under 15 subsection (d) for each calendar year by 10% of the aggregate 16 surcharge imposed under section 701(e)(1) of the former 17 Health Care Services Malpractice Act for calendar year 2001 18 in accordance with the following: 19 (i) Fifty percent of the aggregate discount shall be 20 granted equally to hospitals and to participating health 21 care providers that were assessed as members of one of 22 the four highest rate classes of the prevailing primary 23 premium. 24 (ii) Notwithstanding subparagraph (i), 50% of the 25 aggregate discount shall be granted equally to all 26 participating health care providers. 27 (3) For calendar years 2005 and thereafter, if the basic 28 insurance coverage requirement is increased in accordance 29 with section 711(d)(3) or (4), the department may discount 30 the aggregate assessment imposed under subsection (d) by an 20070S1137B1491 - 10 -
1 amount not to exceed the aggregate sum to be deposited in the 2 fund in accordance with subsection (m). 3 (f) Updated rates.--The joint underwriting association shall 4 file updated rates for all health care providers with the 5 commissioner by May 1 of each year. The department shall review 6 and may adjust the prevailing primary premium in line with any 7 applicable changes which have been approved by the commissioner. 8 (g) Additional adjustments of the prevailing primary 9 premium.--The department shall adjust the applicable prevailing 10 primary premium of each participating health care provider in 11 accordance with the following: 12 (1) The applicable prevailing primary premium of a 13 participating health care provider which is not a hospital 14 may be adjusted through an increase in the individual 15 participating health care provider's prevailing primary 16 premium not to exceed 20%. Any adjustment shall be based upon 17 the frequency of claims paid by the fund on behalf of the 18 individual participating health care provider during the past 19 five most recent claims periods and shall be in accordance 20 with the following: 21 (i) If three claims have been paid during the past 22 five most recent claims periods by the fund, a 10% 23 increase shall be charged. 24 (ii) If four or more claims have been paid during 25 the past five most recent claims periods by the fund, a 26 20% increase shall be charged. 27 (2) The applicable prevailing primary premium of a 28 participating health care provider which is not a hospital 29 and which has not had an adjustment under paragraph (1) may 30 be adjusted through an increase in the individual 20070S1137B1491 - 11 -
1 participating health care provider's prevailing primary 2 premium not to exceed 20%. Any adjustment shall be based upon 3 the severity of at least two claims paid by the fund on 4 behalf of the individual participating health care provider 5 during the past five most recent claims periods. 6 (3) The applicable prevailing primary premium of a 7 participating health care provider not engaged in direct 8 clinical practice on a full-time basis may be adjusted 9 through a decrease in the individual participating health 10 care provider's prevailing primary premium not to exceed 10%. 11 Any adjustment shall be based upon the lower risk associated 12 with the less-than-full-time direct clinical practice. 13 (4) The applicable prevailing primary premium of a 14 hospital may be adjusted through an increase or decrease in 15 the individual hospital's prevailing primary premium not to 16 exceed 20%. Any adjustment shall be based upon the frequency 17 and severity of claims paid by the fund on behalf of other 18 hospitals of similar class, size, risk and kind within the 19 same defined region during the past five most recent claims 20 periods. 21 (h) Self-insured health care providers.--A participating 22 health care provider that has an approved self-insurance plan 23 shall be assessed an amount equal to the assessment imposed on a 24 participating health care provider of like class, size, risk and 25 kind as determined by the department. 26 (i) Change in basic insurance coverage.--If a participating 27 health care provider changes the term of its medical 28 professional liability insurance coverage, the assessment shall 29 be calculated on an annual basis and shall reflect the 30 assessment percentages in effect for the period over which the 20070S1137B1491 - 12 -
1 policies are in effect. 2 (j) Payment of claims.--Claims which became final during the 3 preceding claims period shall be paid on or before December 31 4 following the August 31 on which they became final. 5 (k) Termination.--Upon satisfaction of all liabilities of 6 the fund, the fund shall terminate. Any balance remaining in the 7 fund upon such termination shall be returned by the department 8 to the participating health care providers who participated in 9 the fund in proportion to their assessments in the preceding 10 calendar year. 11 (l) Sole and exclusive source of funding.--Except as 12 provided in subsection (m), the surcharges imposed under section 13 701(e)(1) of the Health Care Services Malpractice Act and 14 assessments on participating health care providers and any 15 income realized by investment or reinvestment shall constitute 16 the sole and exclusive sources of funding for the fund. Nothing 17 in this subsection shall prohibit the fund from accepting 18 contributions from nongovernmental sources. A claim against or a 19 liability of the fund shall not be deemed to constitute a debt 20 or liability of the Commonwealth or a charge against the General 21 Fund. 22 (m) Supplemental funding.--Notwithstanding the provisions of 23 75 Pa.C.S. § 6506(b) (relating to surcharge) to the contrary, 24 beginning January 1, 2004, and for a period of nine calendar 25 years thereafter, all surcharges levied and collected under 75 26 Pa.C.S. § 6506(a) by any division of the unified judicial system 27 shall be remitted to the Commonwealth for deposit in the Medical 28 Care Availability and Restriction of Error Fund. These funds 29 shall be used to reduce surcharges and assessments in accordance 30 with subsection (e). Beginning January 1, 2014, and each year 20070S1137B1491 - 13 -
1 thereafter, the surcharges levied and collected under 75 Pa.C.S. 2 § 6506(a) shall be deposited into the General Fund. 3 (n) Waiver of right to consent to settlement.--A 4 participating health care provider may maintain the right to 5 consent to a settlement in a basic insurance coverage policy for 6 medical professional liability insurance upon the payment of an 7 additional premium amount. 8 Section 2. Chapter 7 of the act is amended by adding 9 subchapters to read: 10 SUBCHAPTER E 11 MEDICAL CARE AVAILABILITY AND REDUCTION OF ERROR 12 (MCARE) RESERVE FUND 13 Section 751. Establishment. 14 There is established within the State Treasury a special fund 15 to be known as the Medical Care Availability and Reduction of 16 Error (Mcare) Reserve Fund. 17 Section 752. Allocation. 18 Money in the Medical Care Availability and Reduction of Error 19 (Mcare) Reserve Fund shall be allocated annually as follows: 20 (1) Fifty percent of the total amount in the Medical 21 Care Availability and Reduction of Error (Mcare) Reserve Fund 22 shall remain in the Medical Care Availability and Reduction 23 of Error (Mcare) Reserve Fund for the sole purpose of 24 reducing the unfunded liability of the fund. 25 (2) Twenty-five percent of the total amount in the 26 Medical Care Availability and Reduction of Error (Mcare) 27 Reserve Fund shall be transferred to the Patient Safety Trust 28 Fund for use by the Department of Public Welfare for 29 implementing section 407. 30 (3) Twenty-five percent of the total amount in the 20070S1137B1491 - 14 -
1 Medical Care Availability and Reduction of Error (Mcare) 2 Reserve Fund shall be transferred to the Medical Safety 3 Automation Fund. 4 SUBCHAPTER F 5 MEDICAL SAFETY AUTOMATION FUND 6 Section 762. Medical Safety Automation Fund established. 7 There is established within the State Treasury a special fund 8 to be known as the Medical Safety Automation Fund. No money in 9 the Medical Safety Automation Fund shall be used until 10 legislation is enacted for the purpose of providing medical 11 safety automation system grants to health care providers under 12 the act of July 19, 1979 (P.L.130, No.48), known as the Health 13 Care Facilities Act, a group practice or a community-based 14 health care provider. 15 Section 3. Section 1102 of the act, amended October 27, 2006 16 (P.L.1198, No.128), is amended to read: 17 Section 1102. Abatement program. 18 (a) Establishment.--There is hereby established within the 19 Insurance Department a program to be known as the Health Care 20 Provider Retention Program. The Insurance Department, in 21 conjunction with the Department of Public Welfare, shall 22 administer the program. The program shall provide assistance in 23 the form of assessment abatements to health care providers for 24 calendar years 2003, 2004, 2005, 2006 [and], 2007 and 2008, 25 except that licensed podiatrists shall not be eligible for 26 calendar years 2003 and 2004, and nursing homes shall not be 27 eligible for calendar years 2003, 2004 and 2005. 28 (b) Other abatement.--Emergency physicians not employed full 29 time by a trauma center or working under an exclusive contract 30 with a trauma center shall retain eligibility for an abatement 20070S1137B1491 - 15 -
1 pursuant to section 1104(b)(2) for calendar years 2003, 2004, 2 2005 and 2006. Commencing in calendar year 2007, these emergency 3 physicians shall be eligible for an abatement pursuant to 4 section 1104(b)(1). 5 Section 4. Section 1112 of the act, added December 22, 2005 6 (P.L.458, No.88), is amended to read: 7 Section 1112. Health Care Provider Retention Account. 8 (a) Fund established.--There is established within the 9 General Fund a special account to be known as the Health Care 10 Provider Retention Account. Funds in the account shall be 11 subject to an annual appropriation by the General Assembly to 12 the Department of Public Welfare. The Department of Public 13 Welfare shall administer funds appropriated under this section 14 consistent with its duties under section 201(1) of the act of 15 June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code. 16 (b) Transfers from Mcare Fund.--By December 31 of each year, 17 the Secretary of the Budget may transfer from the Medical Care 18 Availability and Reduction of Error (Mcare) Fund established in 19 section 712(a) to the account an amount equal to the difference 20 between the amount deposited under section 712(m) and the amount 21 granted as discounts under section 712(e)(2) for that calendar 22 year. 23 (c) Transfers from account.--The Secretary of the Budget may 24 annually transfer from the account to the Medical Care 25 Availability and Reduction of Error (MCARE) Fund an amount up to 26 the aggregate amount of abatements granted by the Insurance 27 Department under section 1104(b). 28 (c.1) Transfers to the Medical Care Availability and 29 Reduction of Error (Mcare) Reserve Fund.--If the Secretary of 30 the Budget makes a transfer from the account under subsection 20070S1137B1491 - 16 -
1 (c), the remaining funds in the account shall be transferred to 2 the Medical Care Availability and Reduction of Error (Mcare) 3 Reserve Fund. If the Secretary of the Budget does not make a 4 transfer from the account under subsection (c), all of the funds 5 in the account shall be transferred to the Medical Care 6 Availability and Reduction of Error (Mcare) Reserve Fund. 7 (d) Other deposits.--The Department of Public Welfare may 8 deposit any other funds received by the department which it 9 deems appropriate in the account. 10 (e) Administration assistance.--The Insurance Department 11 shall provide assistance to the Department of Public Welfare in 12 administering the account. 13 Section 5. Section 1115 of the act, amended October 27, 2006 14 (P.L.1198, No.128), is amended to read: 15 Section 1115. Expiration. 16 The Health Care Provider Retention Program established under 17 this chapter shall expire December 31, [2008] 2009. 18 Section 6. Section 5106 of the act is amended to read: 19 Section 5106. Expiration. 20 Section 312 shall expire on December 31, [2007] 2008. 21 Section 7. This act shall take effect in 60 days. J23L40MSP/20070S1137B1491 - 17 -