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House Bill 2210: Summary and Analysis

The paragraphs below describe the major provisions in the new medical malpractice bill, HR 2210 (officially known as Act 135 of 1996), as well as some thoughts concerning the impact of the legislation. The material in bold print states in plain language the new provisions, whereas the "bullet points" listed immediately thereunder contain analysis of their impact or questions relating to those provisions. Most of the analysis is offered from the plaintiff's perspective.

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.

  • The first thing to note is that while there are significant changes in the levels of primary and Fund coverage, the increases in primary coverage are "netted out" by the decreases in Fund coverage. As a result, the total available coverage for a single physician remains at the same level it has been for several years, namely, $1.2 million. Given the fact that virtually no physicians carry individual excess coverage above the Fund, for all practical purposes, a plaintiff still has only a total pool of $1.2 million to collect against any one physician. It is surprising that, given the impact of inflation, the total available coverage is the same as it has been for more than a decade.
  • The upshot of these changes will cause a significant shift in control of the "purse strings" for settlement, the shift going away from the CAT Fund and in favor of the primary carriers. Right now, the CAT Fund controls $1 million of the $1.2 million in available money on any given case. That amounts to almost 85% of the available dollars. That circumstance, coupled with the fact that most malpractice cases worth pursuing have a value in excess of $200,000, means that, for all practical purposes, the CAT Fund has had almost exclusive control over the majority of the good medical malpractice cases. That is now going to change as the primary carriers' coverage limits -- and therefore control of settlement dollars -­increases over the next five years.
  • The effect of this change in coverage limits will be even greater in multiple defendant cases since there are more primary carriers with their individual levels of coverage available.
  • This circumstance of the primary carrier having greater control over settlement will mean that only one entity needs to be familiar with the case rather than two. In the past, cases often got bogged down after a tender because the individual claims adjuster at the Fund had to start from "ground zero" to familiarize himself/herself with the case before authority could even be sought from supervisors. Thus, greater control by the primary carriers may speed up certain settlements.
  • It may also mean that defense counsel will stay more involved in settlement negotiations. Currently, defense lawyers often "drop out of the picture" once the Fund gets involved, particularly if the Fund people feel comfortable in talking directly with the plaintiff's lawyer.
  • Also, to the extent there has been a perception over the years by the primary carriers that the Fund "over pays" on cases, that will obviously stop when the primary carrier is controlling the money.
  • Because of late tenders and the general manpower shortage, it has often been my perception that the Fund people are not as familiar with a case -­both its strengths and weaknesses -- as the primary carrier who has been monitoring the case for a longer time and at a more comfortable pace. Obviously, in a good liability case, it will inure to the plaintiff's benefit to have the primary carrier more in control, but in those cases where the plaintiff has weaknesses that may go unnoticed by the Fund, the opposite would be true.
  • All things considered, the shift in control to the primary carriers should speed up certain settlements for the plaintiff, particularly for cases that are not on the eve of trial. While things have improved over the last year or so, it has always been more difficult to settle a case where there is a tender but no trial date on the horizon. Those tenders "tended" to get buried because, in my judgment, the Fund was working on a fixed budget (note the fact that in two consecutive years they spent the identical sum of $165 million), and they were allocating their money to cases of some urgency only. In contrast, regular insurance companies will try more often to settle cases -- even if they are not on the trial list -- if they think they can do so at a good price.

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.

  • This represents some "fine tuning" of the existing 605 law in that it adds the obligation that the primary carrier, within 180 days of receiving notice of the claim, send a written notice to the Fund. Also, the new law now seems to indicate that "split" cases -- those where some of the treatment occurred within the four year period and some of the treatment outside the four year period -- are not going to be 605 cases, i.e., they are going to be the responsibility of the primary carrier.
  • A question that comes to mind is this: In those cases where multiple treatments or consultations took place less than four years such that the primary carrier must defend the action, does that also mean that the only available limits to pay the claim are those of the primary carrier, or does it mean that the primary carrier has to defend the claim, but both its limits and the Fund layer of coverage are available to satisfy the claim? I suspect that the Fund is going to argue the correct interpretation is that the primary carrier has both the duty to defend and the sole duty to pay the claims in these cases. The best argument the plaintiff can make is that the literal language of the statute itself merely says that the primary carrier in these instances has the duty to "defend" the claim, and it does not say anything about who has to pay the claim, whereas in the usual 605 case it says the Fund both defends and pays the claim.
  • Again, as with the changes in primary coverage limits, the effect of these changes is to shift more responsibility to the primary carriers because now the Fund will not have Section 605 responsibility unless substantially all of the treatment was outside the four-year period. Currently, I believe the Fund is taking 605 responsibility where almost any of the treatment, rather than substantially all of the treatment, is outside the four-year period.
  • One may anticipate that there are going to be "dog fights" between the primary carriers and the Fund over what constitutes "multiple treatment or consultations" since that is a vague and relative term. Obviously, such fighting is going to delay these cases to some extent.

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

Approval of the surcharge must be had from the Insurance Commissioner.

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.

  • This provision is helpful to the plaintiffs in that it should result in a substantial increase in the total surcharge because under the former law the surcharge equaled the amount paid in the previous year, plus the finite sum of $15 million. Now, the surcharge becomes the amount paid in the previous year plus fifteen (15%) percent of that amount, and given the fact that the Fund annually pays well over $100 million, fifteen percent of the amount paid in the previous year should far exceed a finite amount of $15 million.
  • The requirement for approval of the Insurance Commissioner seems to be in line with the legislature's apparent desire to put greater supervisory controls on the Fund, witness the fact that they created the Advisory Board [See #6 below].
  • The concept of "prevailing primary premium" and the use of the schedule of occurrence rates should remove some of the inequities that have resulted in recent years in establishing primary rates for certain doctors and hospitals. This may mute some of the outrage over insurance costs which were a major impetus for the doctors' recent "push" for reform.

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.

  • It is unclear what this provisions means. Is it referring to a "dispute" that arises only after multiple carriers have tendered, and they are arguing how much of the Fund's settlement payment should be allocated to each of them? Does it refer to "disputes" where one primary carrier has tendered, and it thinks another primary carrier should also be on board with a tender?

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.

  • This provision on delay damages is consistent with current law.
  • This provision does not answer whether delay damages and post judgment interest will be paid by the Fund if it means that the Fund is paying out more than its layer of coverage. Under current law, the Fund can be made to pay delay damages even if it means that the Fund is paying out more than its current layer of $1 million coverage on any single insured. See Montgomery Hospital, 668 A.2d 221.

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.

  • This represents a major change in existing law for currently there is no such broad oversight of the Fund. It looks like this Advisory Board will have the power to "second guess" the Fund on virtually everything it does.
  • One impact of this will obviously be that the Fund Director will now "run a tighter ship." In some instances, that may inure to the benefit of the plaintiff, whereas in other instances, it may not. Since one of the legislature's concerns is to speed the disposition of claims, I suspect this will aid the plaintiffs, at least to the extent there is pressure on the Fund to be more efficient and speedy in resolving claims. On the other hand, it may make the Fund more wary of being perceived as having "given away the store" on any one settlement.

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.

  • Again, this is another example of more stringent oversight being layered on top of the Fund. The comments in the previous section concerning the impact of the Advisory Board would apply with equal force here.

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.

  • This represents the first time in Pennsylvania we have had a statutory definition of the type of "procedures" to which the doctrine of informed consent applies. Previously, we had common law cases debating what constituted an "invasive procedure", and such cases were not always consistent with one another. In general, the definition contained in the statute is more liberal than that established in the case law. As such, it will expand the number of cases on which plaintiff can proceed with an informed consent theory, although, as noted below, the proof required to win that case will now be greater.
  • One may expect that there will be some "lag time" before doctors and hospitals become familiar with these new requirements and, therefore, there will probably be an influx of informed consent cases over the next two or three years, and, thereafter, we will probably see a leveling off.

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.

  • The first half of this provision incorporating the so-called prudent patient standard simply codifies the existing common law in Pennsylvania. However, the second clause, which permits a doctor to testify as to the risks that he and other physicians usually discuss, represents a major departure from current law. Presently, evidence concerning what those in the profession typically describe as risks attendant to a particular procedure is irrelevant and inadmissible.
  • This new provision has the potential to confuse a jury. If the standard remains that the patient is entitled to know everything that a prudent person would want to know about an operation, what is the relevance of letting the doctor talk about what he, and others like him, typically discuss in connection with the procedure?

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.

  • This merely incorporates existing common law.

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.

  • This represents perhaps House Bill 2210's most significant change in the substantive law. Under well-established case law (the case of Gouse v. Cassel, 615 A.2d 331 (Pa. 1992) being the major decision in the area), Pennsylvania appellate courts had clearly said in the past that, because informed consent was in the nature of a battery, the plaintiff did not have to prove that the failure to inform had an impact on her decision to undergo the procedure. Thus, under the former law, at least in theory, all the plaintiff had to prove was that a prudent patient would want to know certain information and that a doctor did not impart it to the patient. Now, however, the plaintiff is going to have to prove causation.
  • One could argue that the formal incorporation of a causation element does not change informed consent cases from a practical standpoint since jurors would privately consider whether the lack of information is what caused the patient to undergo the procedure. While there may be some merit to that argument, plaintiffs will no doubt lose more in informed consent cases because now the jury will be specifically instructed that the plaintiff must prove causation.
  • It is unclear how the "substantial factor" test will be applied. Clearly the plaintiff does not have to prove "but-for" causation, i.e., that she absolutely would not have undergone the procedure if the doctor had mentioned a particular risk. On the other hand, the plaintiff is clearly going to have to show that the information was in some manner material to the decision to have the surgery.

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 sufficient to support an award of punitive damages.

  • This substantially incorporates the present common law.

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.

  • Again, this merely incorporates existing law.

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 main impact of this provision is going to be to delay the case. First, there is going to have to be a separate hearing in front of the court to get the punitive damage claim reinstated, and secondly, if it is reinstated, the plaintiff now has to do additional discovery against the defendant to gather information concerning net worth.

The trial of a punitive damage case shall be bifurcated, i.e., punitive damages shall be submitted to the jury only after a verdict in favor of the plaintiff has been awarded.

  • Again, this will prolong the case since the jury is going to have to deliberate twice.
  • Defendants no doubt prefer this bifurcation since information on net worth would not come in to the primary case and perhaps taint the jury. Instead, net worth only goes before the jury once liability has been decided.

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.

  • The "cap" on punitive damages at twice compensatory damages is an arbitrary limitation, although others will say that it is in line with the emerging principle that there should be some rational relationship between the amount of compensatory damages and punitive damages. However, it should be noted that, when given the opportunity to specifically make such a holding in the recent BMW class action case, the US Supreme Court refused to do so, and instead simply said that the punitive damage award in that particular case was too high.
  • The second sentence sets a "floor" by saying that punitive damages shall not be less than $100,000 unless the jury returns a compensatory award of less than $100,000.

10. ATTORNEY CERTIFICATION -- All pleadings and motions are to be signed by the attorney and such a signature certifies that the pleading is based on reasonable inquiry, well-grounded in fact, and is warranted by existing law or by a good-faith argument for extension, modification or reversal of existing law.

The attorney's signature on a Complaint constitutes certification that the attorney has a report from a qualified expert which states that the standard of care has been breached. Such certification is unnecessary where: (1) the client first contacts the attorney less than 120 days before expiration of the statute of limitations; (2) the healthcare provider has failed to produce records for more than sixty (60) days; (3) an expert has advised the attorney that no opinion can be rendered without further discovery; (4) expert testimony is not required in the case; or (5) the trial court determines that the requirement should be waived.

  • The requirement concerning certification of motions and pleadings and the like appears not to be very significant and tracks Federal Rule 11 in some measure.
  • The certification on Complaints, however, is a major change in existing law. The first question that comes to mind is whether or not the "report" from an expert must be a written report, or may an oral report suffice?
  • Obviously, this requirement should succeed in "weeding out" baseless and frivolous claims. That may be beneficial to both plaintiffs and defendants.
  • It should be noted that the "reprieve" from providing certification in the five enumerated instances is only a temporary one, for the statute goes on to indicate that, after a certain period of time in each of those instances, the defendant may move to require certification within a certain period of time, typically within ninety (90) days.
  • The most obvious impact of this requirement is that it is going to force plaintiffs to "do their homework" before filing Complaints.

If the defendant wants to confirm that the plaintiff's counsel has fulfilled the certification requirements with regard to Complaints, the matter may be referred to the Disciplinary Board or a motion may be filed with the court to make an in camera inspection.

If the plaintiff indeed is found to have violated the certification requirement, the defense counsel may report that fact to the Disciplinary Board and a trial court may impose sanctions.

  • This mechanism is fraught with potential for abuse, particularly if defense counsel can hold the specter of disciplinary involvement over plaintiff's counsel's head. Also, one must wonder whether or not a request for an in camera inspection may be used as a ruse to discover what plaintiff's trial testimony will be, although it should be noted that the statute says that the in camera proceedings are to keep confidential the identity (and presumably the substance) of the plaintiff's expert.
  • These provisions should be interpreted to mean that the defense counsel can go to the Disciplinary Board only if the court has first determined that, in fact, there has been a violation of the certification requirement by the plaintiff. Nevertheless, the defense lawyer has the unilateral authority to invoke the in camera procedure.
  • One may expect that trial courts around the State will not be too happy with this provision in that it will require the trial court to get involved in disputes between plaintiff and defense counsel, and it will also require trial courts to take enough time to familiarize themselves with the case to know whether the plaintiff's expert report "touches all the bases" to establish liability.

11. TIME LIMITS ON DISCOVERY -- Discovery is to be completed within two (2) years from the date that a claim is commenced, although discovery may be extended for an additional 180 days upon good cause shown.

  • This will probably substantially shorten the discovery period which applies to many medical malpractice cases now.
  • One problem is that, in many local counties, there is a substantial delay between the close of discovery and when a case actually gets to trial. Is this provision to be interpreted in such a way that discovery will not be permitted during that interim time period?
  • Ironically, this provision, which is designed to speed up disposition of claims, may slow them down to the extent that plaintiffs' hold-off from filing a Complaint if they know that they only have two years after such filing to complete discovery.
  • Is this provision to be interpreted to mean that the court has the power to grant only one (1) six-month extension, or is it implicit that the court always retains the power to grant all reasonable extensions as it sees fit?

12. PRODUCTION OF EXPERT REPORTS -- Plaintiff's expert reports are to be filed sixty (60) days after the completion of discovery, and the defense expert reports are due sixty (60) days thereafter. Either side may be excused from this requirement on good cause shown. These provisions do not prohibit the filing of additional or supplemental reports provided there is no delay in the trial of the case.

  • One question that comes to mind is whether the supplemental reports can address issues not addressed in the original report. There is nothing in this language to the contrary, yet some would say that, in fairness, such should be the case.
  • How closely is this rule going to be followed in Allegheny County which already has elaborate and even more detailed rules than these concerning the production of expert reports and the filing of supplemental reports.

13. DISCOVERY CONFERENCE -- The court has the power to convene a discovery conference, or either of the parties has a right to request one. During such a conference, the court is to inquire of the parties whether they are interested in participating in a mediation conference before an attorney experienced in medical malpractice litigation.

  • Since the purpose of these discovery conferences is primarily to set a discovery schedule, it does not seem that many people are going to be requesting them, and the court is not required to hold them. Thus, it is doubtful that this provision is going to substantially change any of the local practices employed by attorneys or courts in their jurisdictions.
  • As far as the mediation is concerned, it is questionable whether such procedure will be often requested, or often effective, based on the experience we have had in Allegheny County with the screening and mediation procedure which was put in place five or six years ago.

14. SETTLEMENT CONFERENCE -- Within ninety (90) days of the completion of discovery the court shall hold a mandatory settlement conference.

Also, either counsel has the right to request such a settlement conference at any time before or after discovery is over.

  • If indeed the mandatory language of this provision is enforced, many of the local courts may not be too happy because they will have to adjust their schedules to hold conciliation conferences within ninety (90) days of the close of discovery, and yet still comply with the mandatory requirement on pre-trial conferences [See #15 below.]
  • The provision concerning the right of counsel to request a conciliation conference can probably be helpful to the plaintiffs in those cases where the defense is perceived as "dragging its feet" on settlement. In other words, if the plaintiff has a good case and needs the court to apply some pressure, this provides a mechanism for the parties to get in front of the court earlier than they otherwise might.

15. PRE-TRIAL CONFERENCE -- At least thirty (30) days prior to trial, the court shall hold a pre-trial conference to discuss issues concerning the trial of a case.

  • Compliance with this provision may cause a major rescheduling in Allegheny County since under current practice we do not have both a conciliation conference and a pre-trial conference. Instead, they are combined into one conference, and it is typically held less than thirty (30) days prior to trial. Again, as with some other provisions concerning procedural matters, I suspect our local courts are not going to be happy with this provision.
  • Again, this only points up the legislature's desire to speed up the disposition of medical malpractice cases. That is not bad from the plaintiff's standpoint at all.

16. 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.

  • This appears to be a minor provision since any plaintiff who has "done his homework" is not going to be mis-identifying defendants. On the other hand, if it is abused by defendants, i.e., they try to equate "lack of involvement" with "lack of liability," then there obviously will be a problem.

17. 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 advisable at trial.

  • It is interesting that the periodic payments provisions applies, at least on its face, only to verdicts and not to settlements.
  • The statute is silent as to attorney's fees, i.e., are we to assume that the plaintiff's share of the recovery can be paid in periodic installments, while the fee is still received in an initial lump sum?

18. 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.

  • This is a major extension of current reporting requirements. Presently, the insurance carriers simply send information concerning the settlement or verdict payment to the federal data bank. Now, however, they will be sending it to the State Licensing Board, and, under the literal language of the statute, the Licensing Board is compelled to conduct an investigation.
  • While the involvement of the Licensing Board and the Bureau of Professional and Occupational Affairs may have some salutary impact in "weeding out" bad doctors, the prospect of a compulsory investigation may act as an even bigger deterrent to physician consent to settlement than the data bank did when it came into being several years ago. Again, this provision provides not only for reporting of information to the Licensing Board, but it compels the Board to conduct an investigation. Are doctors going to be much more reluctant to give consent to settlements?
  • If consent becomes much more difficult to obtain, this provision could prove to be more harmful to the plaintiffs than any other aspect of House Bill 2210.

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