When malpractice lawyers think about things taking place in Harrisburg that impact their practice, they tend to focus on issues such as damage caps, joint and several liability, and the like. But there are two other matters which generate little or no attention that have the potential to significantly impact our day-to-day practice. One is the M-Care abatement program, and the other is the potential statutory elimination of the M-Care Fund in its entirety. Here is what you need to know about both of these stealth issues.
The M-Care abatement program was one of several initiatives undertaken by the Rendell administration to combat the perceived medical malpractice "crisis." Instituted in 2003, this unprecedented program is a direct state subsidy to the medical community for it pays some or all of the M-Care premiums owed by Pennsylvania physicians. As you doubtless know, all physicians are required to purchase primary coverage of $500,000, and an additional $500,000 layer of coverage from M-Care. The premium charged for the M-Care coverage is a percentage of the premium for the primary policy. For high-risk specialists such as neurosurgeons, general surgeons, OB/GYNs and orthopods, the abatement pays their entire M-Care premium. In other words, they get the $500,000 layer of M-Care coverage absolutely free. For all others, the abatement pays fifty percent (50%) of the cost of their M-Care coverage. Sounds like a pretty good deal, right? You better believe it! Thus far, the state has paid out slightly more than 800 million dollars in M-Care premiums. Money to fund the program is generated primarily by an increase in cigarette tax passed a few years ago.
Most members of the public, and even many lawyers, are not aware of the abatement program, and that is a good thing for the doctors. Can you image the outrage if the average citizen realized that hundreds of millions of dollars are being given to some of the wealthier members of society, money that could otherwise be spent on schools, roads, and other projects in their neighborhoods? The abatement program has to be approved each year by the state legislature, and one has to wonder how long it is going to take for the cigarette money to run out or for public pressure to mount to do away with a "welfare for the rich" program.
I don't know the answer to that question, and some may even ask why we as trial lawyers really care. Here is why we care. The docs have gotten very used to the abatement, almost to the point of viewing it as an entitlement. If that subsidy ever ends and the doctors have to resume paying their M-Care premiums, they are going to have a collective case of sticker shock which dwarfs that which they experienced a few years ago. And, as we know all too well, any time there is a significant spike in premiums, the trial lawyers and the civil justice system are immediately made the scapegoats. It does not matter that the doctors got several years of "free" M-Care coverage. All they would see is a new bill on their desk that they did not previously have to pay.
When, and if, that occurs, rest assured that regardless of the trend in verdicts or settlements, the number of doctors in the state, the availability of liability insurance, etc., there will be a veritable onslaught of tort reform measures aimed at dealing with the "new" crisis. In short, the abatement (along with some other measures such as the certificate of merit) may be responsible for holding the medical community at bay right now on tort reform, but that may only be temporary. If the abatement goes away, all hell will break loose on the legislative front.
The other important issue escaping the attention of most lawyers is the potential elimination of the M-Care Fund. Under Section 711 of the M-Care statute, the state Insurance Commissioner, beginning in 2006, is required to make a determination every two years as to whether the private insurance market is sufficiently strong to write $750,000 of primary coverage for all of the doctors and hospitals in the state. As noted above, the primary layer of coverage right now is $500,000. Earlier this year, the Insurance Commissioner, at the urging of the Rendell administration and others, concluded that the private market cannot provide $750,000 of primary coverage across the board. That decision by the Insurance Commissioner is a discretionary one.
Why do we care about it? Because Section 711 goes on say that if the Commissioner determines that the private market can support $750,000 of primary coverage, then automatically three years from that date the CAT Fund is extinguished and primary limits go to $1,000,000 (one million dollars). Thus, an affirmative finding by the Commissioner will be tantamount to a complete elimination of the M-Care Fund, albeit with a three-year warning to the bench, bar and public.
I offer no view on whether the elimination of the Fund would be a good or bad development; that is a debate with too many dimensions to discuss within the confines of this short space. Regardless of your view on that question, however, everyone would acknowledge that, good or bad, the elimination of the Fund, which has been around in one form or another for over 30 years, would be a major change in malpractice litigation in this state.
So when you think about the "goings on" in Harrisburg, understand that your thoughts and concerns should extend beyond the next bill that is being introduced to cap awards, limit attorney's fees or impose a so-called fair share rule. The abatement program and the potential elimination of the M-Care Fund are two other very important things to keep an eye on.