The New Med Mal Law: Summary and Analysis

INTRODUCTION

In late January of this year, the most substantial changes in medical malpractice litigation in the past twenty years took effect in Pennsylvania. The new provisions are contained in House Bill 2210, officially known as Act 135 of 1996.

This article explains in plain language the content of the Act, and also offers some analysis of its impact. The material in bold print states the new law, whereas the “bullet points” listed immediately thereunder contain analysis and observation, most of which is offered from the plaintiff’s perspective.

It should be noted that, just days before its effective date, the Supreme Court suspended certain portions of Act 135 which dealt with procedural, rather than substantive, matters. The basis for the Court’s ruling was that, under the Pennsylvania Constitution, only the Court itself has the authority to regulate procedures in the court system. While it suspended these various sections, the Court did request its own Civil Procedural Rules Committee to consider whether some of the matters contained in the suspended sections should nevertheless be incorporated into the Rules of Civil Procedure.

Following is a review of those sections of Act 135 which were not suspended and which are now in effect across the state.

1. INCREASE IN COVERAGE LIMITS — Current primary limits of $200,000 are increased to $300,000 for policies issued in 1997 and 1998; to $400,000 for 1999 and 2000; $500,000 for years 2001 and thereafter.

The CAT Fund layer of coverage decreases correspondingly from its current level of $1,000,000 to $900,000 for 1997 and 1998; to $800,000 for 1999 and 2000; and to $700,000 for year 2001 and thereafter.

2. 605 CASES — Cases that are filed more than four (4) years after the negligence occurred, but for which the statute of limitations has not run, shall be defended by the Fund if the Fund has received a written request within 180 days of when notice of the claim was given to the health care provider or the primary carrier. Where multiple treatments or consultations took place less than four years before notice to the health care provider or carrier, the claim will not be defended by the Fund, but will be the responsibility of the primary carrier.

3. AMOUNT OF SURCHARGE — The surcharge shall be equal to the amount paid by the Fund on all claims during the previous period of September 1 through August 31 plus an additional fifteen (15%) percent of that amount paid.

The surcharge is assessed against each healthcare provider’s “prevailing primary premium” which is based on a schedule of occurrence rates approved by the Insurance Commissioner for the Joint Underwriting Association.

4. BINDING MEDIATION — Where there are disputes between multiple carriers on a case within the Fund coverage limits, any party may request that the Fund provide a mediator to settle the dispute.

5. DELAY DAMAGES AND POST JUDGMENT INTEREST — Both delay damages and post judgment interest shall be paid by the Fund and are not to be charged against the annual aggregate of the insured. The primary carrier shall be responsible for its proportionate share of the delay damages and post judgment interest.

6. ADVISORY BOARD — There is an Advisory Board made up of the Insurance Commissioner, four people appointed by the legislature, and six people appointed by the Governor. This Board will have the power to review the procedures of the Fund, commission audits of the Fund, and most importantly, have the power to adopt standards governing investigation, evaluation, and settlement of claims.

Additionally, the Advisory Board is to conduct a study of the operations of the Fund and report back to the legislature by September 1, 1997, with recommendations concerning the future existence of the Fund, (i.e., its total elimination or an opt-out provision) and an evaluation of its unfunded liabilities.

7. ANNUAL REPORT TO THE INSURANCE COMMISSIONER — Sixty (60) days after the end of the calendar year, the Fund must submit a report to the Insurance Commissioner concerning all vital statistics such as the total amount of claims paid, the total amount of reserves set aside for future claims, the identity of the healthcare provider involved in the case, etc. This report shall also be submitted to certain leaders in the legislature.

8. INFORMED CONSENT — The doctrine applies to: (1) all surgeries, and the related administration of anesthesia; (2) radiation and chemotherapy; (3) a blood transfusion; (4) insertion of surgical device; and (5) experimental drugs/devices.

The doctor is required to inform the patient of all risks and alternative that a reasonably prudent patient would want to know about, although the physician is entitled to present evidence concerning what risks and alternatives are typically discussed by a physician acting in accordance with accepted standards.

Expert testimony is required to establish that the procedure is one which requires informed consent, and also to identify the risks of the procedure and its alternatives.

In order to ultimately win the case, the plaintiff must prove that receiving the unmentioned information would have been a substantial factor in his or her initial decision whether to undergo the procedure, i.e. plaintiff must prove causation.

9. PUNITIVE DAMAGES –They may be awarded if the plaintiff shows that the doctor’s conduct was willful, wanton or recklessly indifferent. However, gross negligence alone is not sufficie
nt to support an award of punitive damages.

Punitive damages may not be recovered against a health care provider who is only vicariously liable for the actions of another person, unless the master knew or allowed the conduct of its agent to occur.

Procedurally, when the plaintiff claims punitive damages, the defendant may move to strike that portion of the Complaint until the close of discovery, at which time the plaintiff can move to reinstate the claim for punitive damages. A Judge rules on this issue, and if reinstated, the jury shall determine whether the evidence is sufficient to support a claim for punitive damages. Only when the claim is reinstated will the plaintiff have the right to discover the defendant’s financial assets.

The amount of punitive damages may not exceed twice the amount of compensatory damages. Punitive damages shall not be less than $100,000 unless a lower compensatory damage verdict amount is returned by the jury.

10. AFFIDAVIT OF NON-INVOLVEMENT — A healthcare provider may file an affidavit setting forth the facts with particularity which show that the provider was misidentified or otherwise not involved in the patient’s care. The filing of such an affidavit tolls the statute of limitations. Furthermore, any party may challenge the affidavit.

11. PERIODIC PAYMENTS AND ADVANCE PAYMENTS — Following any verdict involving future damages, the court, upon motion of any party, may consider that the damages be paid in periodic payments, provided that the terms of such payments are agreed to by all parties. As to advance payment, such payments shall not be construed as an admission of liability and shall not be admissible at trial.

12. MANDATORY REPORTING OF CLAIMS PAID — Each primary carrier or the Fund which makes payment in a case shall provide to the State Licensing Board the same information currently provided to the federal data bank.

Upon receipt of the report, the Licensing Board shall review the report and conduct an investigation, and, if the investigation warrants, the Board shall promptly initiate a disciplinary proceeding against the health care provider.

CONCLUSION

In sum, Act 135, viewed from the plaintiff’s perspective, has some favorable provisions and some unfavorable ones. Those provisions which one might put in the “favorable” column would include:

Shift of greater settlement authority to the primary carriers, to the extent that speeds up settlement in some cases.

Expansion in the type of procedures to which informed consent applies.

More equitable system for establishing malpractice insurance premiums, to the extent that dissipates demands by physicians for additional tort reform.

On the other hand, those provisions which one might place in the “unfavorable” column would include: