Report Title:

Medical Tort Actions; Noneconomic Damages

 

Description:

Limits the amount of noneconomic damages in medical tort actions. Requires insurers to make direct payments to healthcare providers making claims for the payment of benefits.

 


THE SENATE

S.B. NO.

796

TWENTY-FIFTH LEGISLATURE, 2009

 

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO HEALTHCARE.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. Hawaii has a shortage of physicians, and patients are unable to obtain the medical care that they need. This crisis is most acute on our neighbor islands, which are more rural and have a smaller physician workforce. However, symptoms of the crisis are beginning to emerge on Oahu.

The Trauma Center at The Queen's Medical Center on Oahu, the only level two trauma center in the State, has an alarming shortage of doctors willing to volunteer for emergency and trauma call. For at least two years, Queen's Trauma Center has had only two orthopedic surgeons on call. Recently, a third orthopedic surgeon was added, who will take calls one day a week.

In 2007, public forums sponsored by the Hawaii Medical Association in Hilo, Kahului, Kona, and Lihue attracted large audiences of patients eager to express their concerns about the physician shortage and frustrations in trying to find a physician to care for them. Neighbor island hospitals have large gaps in their on-call coverage. As a result, patients who need emergency surgery have been held in neighbor island hospitals for long hours and sometimes days because no local surgeon is available. Transfers of neighbor island patients to The Queen's Trauma Center in Honolulu, are frequently delayed due to the lack of patient beds or lack of available surgeons.

Immediate action is necessary to reverse this trend. Hawaii's high malpractice insurance premiums, coupled with its high cost of living and low reimbursement rates have made it difficult to effectively recruit and retain physicians. A 2004 survey by the Hawaii Chapter of the American College of Obstetricians and Gynecologists found that forty-two per cent of the Hawaii obstetrician/gynecologists surveyed plan to stop providing pregnancy care for women, largely because of malpractice issues. Over the past ten years, Hawaii has lost twenty orthopedic surgeons, a decrease from sixty-eight to forty‑eight orthopedic surgeons. Medical students at the University of Hawaii John A. Burns school of medicine have testified before the legislature that the lack of liability reform has caused them to avoid specialties that pay high medical malpractice premium rates and may cause them to start their practice in another state.

Hawaii's medical malpractice insurance premiums are unstable and have significantly increased in recent years. Unlimited and unpredictable jury awards have led to unlimited and unpredictable risk for liability insurers. Because insurance premiums are set by assessing risk, premiums in states without effective reforms have skyrocketed. In 2004, Hawaii had the third-highest average payment per malpractice claim in the United States. On average, $393,589 was paid per claim in Hawaii compared to $132,696 in California, which has had medical liability reform since 1975.

The American College of Emergency Physicians gave Hawaii a grade of D minus for its medical liability environment in its January 2006 report, The National Report Card on the State of Emergency Medicine, Evaluating the Environment of Emergency Care Systems State by State. It is no longer profitable to offer medical malpractice insurance in Hawaii, where there are no longer any for-profit insurers offering malpractice coverage. Medical Insurance Exchange of California, The Doctors Company, and Hawaii Physicians Indemnity Plan are the remaining malpractice insurers in Hawaii. All are not-for-profit organizations owned and operated by physicians. In Hawaii, annual premiums for Medical Insurance Exchange of California policies increased an average of ninety per cent between 2002 and 2006 for specialists who provide high-risk but life-saving treatment, due to the cost of defending malpractice cases filed in Hawaii. Medical Insurance Exchange of California insures 1,110 physicians, the majority of Hawaii physicians. Specialists such as orthopedic surgeons, neurosurgeons, general surgeons, obstetricians, and anesthesiologists have been hit hardest by steep increases in malpractice insurance premiums. The fear of being sued has caused physicians to stop performing high-risk procedures and volunteering for on-call emergency and trauma care duty.

An improved medical liability environment would help to recruit and retain Hawaii physicians. The legislature has the authority to adopt reforms that would bring malpractice lawsuits and insurance premiums under control. Other states have adopted legislation that balances the need for patient access to care and preserves the patient's right to sue. The Texas model has been deemed successful and is an excellent prototype of what Hawaii should strive to do to fix the access-to-care crisis. In 2003, the Texas Legislature passed sweeping liability reforms to combat health care lawsuit abuse, reverse skyrocketing professional liability insurance premiums, and ensure access to high-quality care. The centerpiece of those reforms was a $750,000 stacked cap on noneconomic damages assessed against physicians and health care facilities in a liability judgment. There is no cap on economic damages. Texas voters then approved Proposition 12, a constitutional amendment, which ratified the legislature's authority to impose the caps. As a result of the reforms, claims and lawsuits in most Texas counties have been cut in half. Texas licensed a record 3,324 new doctors in 2007, 808 doctors more than in 2006, including a net gain of 186 obstetricians, 156 orthopedic surgeons, and 26 neurosurgeons. Texas has improved its national standing from 48th to 42nd in the American Medical Association's measurement of patient-care doctors per capita. Critical specialties have increased in underserved areas such as Rio Grande Valley, which gained 189 physicians.

All major physician liability carriers in Texas have cut their rates since the passage of the reforms, most by double-digits. Texas physicians have seen their liability rates cut 24.3 per cent on average. Two-thirds of Texas doctors have seen their rates slashed a quarter or more. Seventeen rate cuts have occurred in Texas since the passage of the 2003 landmark reforms.

The purpose of this Act is to:

(1) Require insurers, after receiving a claim for the payment of benefits, to make direct payment to the healthcare provider that provided the services; and

(2) Limit the amount of noneconomic damages in medical tort actions.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"237‑   Exemption of insurer payments for healthcare services. There shall be exempted from and excluded from the measure of the taxes imposed by this chapter all insurer payments made to any healthcare provider for the provision of healthcare services pursuant to sections 431:10A-A, 432:1-A, and 432D‑A."

SECTION 3. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10A to be appropriately designated and to read as follows:

"431:10A-A Direct payment for healthcare services. (a) An insurer, after receiving a claim for payment of benefits, shall make the payment directly to the healthcare provider that provided the services, regardless of the healthcare provider's participatory status with the insurer's plan; provided that this subsection shall not require payment for services that are not covered under the plan.

(b) If the insurer makes payment to the insured, the insurer shall remain liable for payment to the healthcare provider. This subsection shall not prohibit the insurer from recovering any amount mistakenly paid to the insured.

(c) This section shall not apply to any entity or situation when their application to the entity or situation would be preempted under the Employee Retirement Income Security Act of 1974, title 29 United States Code section 1001, et seq.

(d) As used in this section, "healthcare provider" means a "provider of services", as defined in title 42 United States Code section 1395x(u), a provider of "medical and other health services", as defined in title 42 United States Code section 1395x(s), and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business."

SECTION 4. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article 1 to be appropriately designated and to read as follows:

"432:1-A Direct payment for healthcare services. (a) A mutual benefit society, after receiving a claim for benefits under this chapter, shall make payment directly to the healthcare provider that provided the services, regardless of the healthcare provider's participatory status with the society's healthcare plan; provided that this subsection shall not require payment for services that are not covered under the plan.

(b) If the society makes payment to the member, the society shall remain liable for payment to the healthcare provider. This subsection shall not prohibit the society from recovering any amount mistakenly paid to the member.

(c) This section shall not apply to any entity or situation when their application to the entity or situation would be preempted under the Employee Retirement Income Security Act of 1974, as amended.

(d) As used in this section, "healthcare provider" means a "provider of services", as defined in title 42 United States Code section 1395x(u), a provider of "medical and other health services," as defined in title 42 United States Code section 1395x(s), and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business."

SECTION 5. Chapter 432D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"432D-A Direct payment for healthcare services. (a) A health maintenance organization, after receiving a claim for benefits under this chapter, shall make payment directly to the healthcare provider that provided the services, regardless of the healthcare provider's participatory status with the health maintenance organization healthcare plan; provided that this subsection shall not require payment for services that are not covered under the plan.

(b) If the health maintenance organization makes payment to the enrollee, the health maintenance organization shall remain liable for payment to the healthcare provider. This subsection shall not prohibit the health maintenance organization from recovering any amount mistakenly paid to the enrollee.

(c) This section shall not apply to any entity or situation when their application to the entity or situation would be preempted under The Employee Retirement Income Security Act of 1974, title 29 United States Code section 1001, et seq.

(d) As used in this section, "healthcare provider" means a "provider of services," as defined in title 42 United States Code section 1395x(u), a provider of "medical and other health services", as defined in title 42 United States Code section 1395x(s), and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business."

SECTION 6. Chapter 671, Hawaii Revised Statutes, is amended by adding five new sections to be appropriately designated and to read as follows:

"671‑   Limitation on noneconomic damages. Notwithstanding section 663-8.7, noneconomic damages as defined in section 663-8.5 shall be limited in medical tort actions to a maximum award of:

(1) $           per health care provider other than institutions;

(2) $           per health care institution, on a per case or occurrence basis; and

(3) $           per each unrelated health care institution on a per case or occurrence basis.

671‑   Assessing percentage of negligence. Upon request of any nonsettling healthcare provider against whom a plaintiff alleges a medical tort causing injury, the trier of fact shall consider, in assessing any percentage of negligence or other fault, the negligence or other fault of all alleged parties, including the negligence or other fault of any person or entity who has entered into a settlement with the plaintiff for the claimed damages, even when the settlement has been determined to have been made in good faith, pursuant to section 663-15.5.

671‑   Economic damages. (a) A trier of fact may render a verdict for the plaintiff in a medical tort action that includes economic damages.

(b) For the purposes of this section, "economic damages" includes but is not limited to:

(1) Past and future medical expenses;

(2) Loss of past and future earnings;

(3) Loss of use of property;

(4) Cost of repair or replacement;

(5) Cost of obtaining domestic services;

(6) Loss of employment; and

(7) Loss of business and employment opportunities.

671‑   Proportionate allocation of economic damages. The amount of economic damages allocated to a healthcare provider in a medical tort action shall be based upon the healthcare provider's proportionate percentage of negligence or other fault.

671‑   Noneconomic damages. (a) If the trier of fact renders a verdict for the plaintiff in a medical tort action, the court shall enter judgment of liability against each defendant healthcare provider in accordance with the percentage of negligence or other fault for compensatory damages that is attributed to the healthcare provider by the trier of fact.

(b) Judgment shall not be entered against any healthcare provider who has not been named a party or has been released, dismissed, or otherwise discharged as a party pursuant to section 663-15.5."

SECTION 7. Section 663-11, Hawaii Revised Statutes, is amended to read as follows:

"663-11 Joint tortfeasors defined. For the purpose of this part, the term "joint tortfeasors" means two or more persons jointly or severally liable in tort for the same injury to person or property, whether or not judgment has been recovered against all or some of them[.], except as provided for healthcare providers in chapter 671."

SECTION 8. Section 671-1, Hawaii Revised Statutes, is amended to read as follows:

"671-1 Definitions. As used in this chapter:

[(1)] "Health care provider" or "healthcare provider" means a physician or surgeon licensed under chapter 453, a physician and surgeon licensed under chapter 460, a podiatrist licensed under chapter 463E, a health care facility as defined in section 323D-2, and the employees and legal representatives of any of them. Health care provider shall not mean any nursing institution or nursing service conducted by and for those who rely upon treatment by spiritual means through prayer alone, or employees of [such] the institution or service.

[(2)] "Medical tort" means [professional negligence, the rendering of professional service without informed consent, or an error or omission in professional practice, by a health care provider, which proximately causes death, injury, or other damage to a patient.] a negligent act or omission to act by a healthcare provider in the rendering of professional services, or the rendering of professional service by a healthcare provider without informed consent, which act or omission or rendering of service without informed consent is the proximate cause of a personal injury or wrongful death; provided that the services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital."

SECTION 9. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 10. In codifying the new sections added by sections 2, 3, 4, 5, and 6 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2009.

 

INTRODUCED BY:

_____________________________