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Provisions of the Agreed House and Senate Medical Malpractice Insurance Bill 

August 8, 2003
Source: The Florida House of Representatives

The bill provides a cap on noneconomic damages.  There is no cap on economic damages.

The bill uses a two “silo” structure similar to what was passed in HB 15-C.  Practitioners, such as physicians, are in one “silo”.  Other defendants, such as hospitals, are in the second “silo.”

In routine medical malpractice cases against practitioners:

  • Noneconomic damages shall not exceed $500,000 per claimant and the total noneconomic damages recoverable by all claimants from all practitioners is $1 million.
  • No practitioner is liable for more than $500,000.


The bill provides for “piercing” of the practitioner cap in certain situations:

  • In cases involving wrongful death or permanent vegetative state, all claimants may recover a total of $1 million from all practitioner defendants.
  • If a case does not involve death or permanent vegetative state but catastrophic injury occurs and the trial judge finds that a manifest injustice would occur if the lower cap was imposed, the injured patient may recover up to $1 million from all practitioners.


Under the bill, catastrophic injuries include permanent injuries including severe paralysis, amputations, severe brain injuries, severe burns, blindness, and loss of reproductive organs.

In routine medical malpractice cases against non-practitioners:

Noneconomic damages shall not exceed $750,000 per claimant and the total noneconomic damages recoverable by all claimants from all non-practitioners is $1.5 million.

The bill provides for “piercing” of the non-practitioner cap in certain situations:

  • In cases involving wrongful death or permanent vegetative state, all claimants may recover a total of $1.5 million from all non-practitioner defendants.
  • If a case does not involve death or permanent vegetative state but catastrophic injury occurs and the trial judge finds that a manifest injustice would occur if the lower cap was imposed, the injured patient may recover up to $1.5 million from all non-practitioners.


The bill provides for setoffs for noneconomic damages within each category of defendant, or “silo.”  It does not change current law regarding the setoff of economic damages.

Caps in Emergency Room Situations

The bill provides different caps for practitioners and facilities providing emergency care.

In medical malpractice cases against practitioners providing emergency care:

  • Noneconomic damages shall not exceed $150,000 per claimant and the total noneconomic damages recoverable by all claimants from all practitioners is $300,000.

In medical malpractice cases against non-practitioners providing emergency care:

  • Noneconomic damages shall not exceed $750,000 per claimant and the total noneconomic damages recoverable by all claimants from all non-practitioners is $1.5 million.

There is no “piercing” of the emergency room cap..

Litigation Reform
  • Provides for increased exchange of information during the presuit process.
  • Provides new standards for expert witnesses in presuit and trial.
  • Provides for mandatory mediation.

Bad Faith Reform

Safe harbor: 

  • A medical malpractice insurance company cannot be held in bad faith if it makes a tender of the insured party’s policy limits within the earlier of:
    •  210 days after the claimant’s complaint is served on the defendant, or
    • 60 days after the conclusion of specified actions, including disclosure of witnesses, production of documents, specified depositions, and mediation.
  • The 210-day period can be extended in limited circumstances.
  • If either party is responsible for unnecessary delays, they lose the benefit of the more favorable safe harbor (that is, the insurance company would lose the benefit of the information-driven track and the claimant would lose the benefit of the time-driven track).
  • The failure to make an offer during the safe harbor periods does not create a presumption of bad faith.
  • Current law provides no safe harbor.


Considerations:

In a bad faith action against a medical malpractice insurer, when there was no tender of policy limits during the safe harbor, the court is required to consider a list of specified factors. These include:

  • The insurer’s willingness to negotiate.
  • The propriety of the insurer’s methods of investigating and evaluating the claim.
  • Information provided to the insured.
  • Actions of the insured, including whether the insured denied liability or requested that the case go to trial and whether the insured misrepresented material facts.
  • Actions of the claimant, including whether the claimant provided relevant information on a timely basis and conditions imposed by the claimant on settlements.
  • Whether other defendants were dismissed or settled, and whether multiple claimants were seeking compensation in excess of policy limits.
  • Current law does not specify considerations.


Amount recoverable:
 

The bill retains current law as to the amount that can be recovered in a bad faith action (the entire amount of the excess judgment in the medical malpractice action, regardless of policy limits). 


Malpractice Insurance Rate Reductions

The House and Senate agreement requires all medical malpractice insurers to make rate filings that reflect a rate reduction factor determined by the Florida Office of Insurance Regulation.

  • No later than 60 days after the effective date of the bill, the Office of Insurance Regulation will determine a “presumed factor” that reflects the impact of the bill.
  • No later than 60 days after that, each medical malpractice insurer will make a rate filing that reduces rates by no less than the presumed factor.
  • The rate filing will take effect no later than January 1, 2004 , and will apply to all medical malpractice policies issued or renewed on or after the effective date of the bill.
  • For policies issued or renewed between the effective date of the bill and the effective date of the new rate filing, the insurer must refund the difference between the rate actually charged and the rate as finally approved by the Office of Insurance Regulation.
  • If an insurance company believes that the presumed factor would result in a rate that was unlawful because it was inadequate, excessive, or unfairly discriminatory, it may make a filing that deviates from the presumed factor, but:
    • The insurer must provide specific information justifying the deviation.
    • The insurer has the burden of proof.
    • The deviation cannot go into effect without the approval of the Office of Insurance Regulation.
  • If part of the bill is held to be unconstitutional, the presumed factor will be recalculated to remove the impact of the unconstitutional provision.
  • If the operation of any part of the bill is stayed pending a constitutional challenge, the impact of that provision will not be part of the presumed factor.
  • The regular rate approval process will apply to subsequent rate filings. (Note that under current law the insurer has the burden of proof in justifying its rate filing.)
  • Medical malpractice insurers will be required to make a rate filing once each year.
  • Medical malpractice insurers’ rate filings must be sworn to by two executive officers of the insurer.

Improved Patient Safety  

There are many provisions throughout the bill that encourage the health care industry to improve patient safety and quality of care.

The bill increases self-policing by health care organizations.

  • The bill requires hospitals to establish patient safety plans and committees.
  • It protects hospital efforts to improve safety from law suits.
  • It protects information used to analyze errors from use in lawsuits.
  • The bill requires hospitals and physicians to personally notify patients when they have been harmed. and
  • Hospital medical boards are protected from litigation when they discipline physicians.
  • The bill requires college and university health care training programs to provide instruction in patient safety.
  • It requires doctors to have training in misdiagnosed conditions.


The bill also lays the ground work for a major initiative to address patient safety throughout the state.

The bill requires a study to determining the most cost effective location, structure and funding to build a statewide infrastructure to improve patient safety, through coordinated efforts to identify and correct the sources of medical errors and use new technologies.

  • Such a system might be similar to the work of the Federal Aviation Administration that has improved airline safety for the last 50 years.


The study will provide a business plan that builds on the existing efforts and active participation of the health care industry and make recommendations to the Legislature on effective options:

  • Hospitals have invested heavily in their own patient information systems and quality improvement programs. The proposed initiative needs to be integrated into and support these efforts.
  • Hospitals, doctors and other members of the health care industry need to have buy-in to the effort.
  • The patient safety initiative will not be a burdensome, government mandated reporting requirement that does not help to solve real problems.

The bill also requires a study to determine how to provide consumers with better information to help them choose the safest hospitals with the best quality of care.  

  • This will provide more protection for consumers and increase incentives to improve patient safety.

Physician Discipline

There are many provisions in the bill that improve the discipline of negligent physicians to prevent the terrible harm to patients that leads to law suits and higher insurance costs.

The bill provides for emergency disciplinary proceedings for doctors who commit gross and repeated negligence.  

The bill improves Department of Health access to patient records to investigate discipline cases.

  • The Department of Health will be able to subpoena the physician’s patient records in disciplinary proceedings. 

Specialized Administrative Law Judges with experience in health care will hear discipline cases. 


In addition, health care organizations will be able to police themselves better.

  • The bill requires hospitals and physicians to personally notify patients when they have been harmed.
  • Hospital medical boards will be protected from litigation when they discipline physicians.


The bill also puts in motion efforts that will provide recommendations to further improve physician discipline:

  • The Department of Health is required to convene a workgroup by September 1 to determine ways to improve discipline and report back to the Legislature.
  • The Auditor General and OPPAGA will also carry out a joint study of existing disciplinary process and report their recommendations to the Legislature.

Other Issues

Findings

The bill provides comprehensive findings establishing that an access to health care crisis exists in Florida. It underscores that an overwhelming public necessity requires a strong and reasonable legislative response, which the bill offers.

Villazon

The bill provides that the fact an HMO arranges for the provision of health care services does not create an apparent or actual agency relationship for purposes of vicarious liability.

It also provides that health insurers and HMOs will fall under the same cap as the health care provider and that an HMO or health insurer will not be liable for medical negligence of a health care provider unless it specifically directed and actually controlled the conduct that caused the injury.

These changes help ensure that unnecessary litigation is eliminated and that consumers do not pay higher insurance premiums as a result of that litigation.

Self Insurance Alternatives

The bill provides greater access to liability insurance for health care providers by increasing self insurance options. Specifically, medical malpractice self insurance funds, some of which proved to be very effective in the late 1980s, are reauthorized. Also, the bill allows physicians to form smaller commercial self insurance funds which should make coverage more available.