AN ACT ESTABLISHING A HEALTHY CONNECTICUT FUND, A MEDICAL MALPRACTICE REINSURANCE FUND AND A PERSONAL TAX EXEMPTION FOR MEDICAL MALPRACTICE INSURANCE PREMIUM COSTS

AN ACT ESTABLISHING A HEALTHY CONNECTICUT FUND, A MEDICAL MALPRACTICE REINSURANCE FUND AND A PERSONAL TAX EXEMPTION FOR MEDICAL MALPRACTICE INSURANCE PREMIUM COSTS

The bill establishes a Healthy Connecticut Fund to reimburse any portion of a medical malpractice claim, settlement, or judgment that represents the deductible applicable to a provider's coverage. The fund is liable for payment of such deductibles pursuant to claims, settlements, or judgments against licensed health care providers who comply with the bill only where the claim, settlement, or judgment arises from an event that occurs on or after the effective date of the first plan of operation established by the bill. It is also liable for reasonable and necessary expenses incurred in payment of such deductibles and the fund's administrative expenses.

The bill authorizes the insurance commissioner to approve for providers who participate in the Healthy Connecticut Fund, professional liability insurance policies that contain a deductible that does not exceed (1) $ 50,000 for a medical professional and (2) $ 100,000 for a medical entity, including, but not limited to, a hospital. These policies are subject to laws governing insurance policies issued in Connecticut.

The bill also establishes the Medical Malpractice Reinsurance Fund for paying 50% of the portion of each medical malpractice claim, settlement, or judgment of between (1) $ 750,000 and $ 1,750,000 for an individual provider and (2) $ 1,500,000 and $ 2,500,000 for a hospital. Thus, the fund would be liable for a maximum of $ 500,000 for each claim, settlement, or judgment (see COMMENT).

The bill specifies that the provider or hospital remains liable for any other portion of a medical malpractice claim, settlement, or judgment.

The bill requires the insurance commissioner to adopt regulations to establish a plan of operation for the funds.

The bill allows health care providers to deduct from their Connecticut adjusted gross income for state income tax purposes any amount they paid for premiums on a medical malpractice insurance policy. (The bill does not define "health care provider" for this tax provision. )

Finally, the bill requires that money for the funds and to offset the tax losses caused by the deductions come from the Tobacco Settlement Fund.

EFFECTIVE DATE: July 1, 2004, except for the tax provision, which becomes effective from passage and applies to taxable years beginning January 1, 2004.

OPERATION OF THE HEALTHY CONNECTICUT INSURANCE FUND AND THE MEDICAL MALPRACTICE REINSURANCE FUND

The bill establishes the same requirements for both funds. Specifically, the bill allows the funds to contain any money required by law to be deposited in them. The funds must be held by the state treasurer separate and apart from all other money, funds, and accounts. The interest derived from the investment of each fund must be credited to it. Amounts in the funds may be expended only at the insurance commissioner's direction. Any balance remaining in the funds at the end of any fiscal year must be carried forward in them to the next fiscal year.

The bill allows any licensed provider to participate in the funds if (1) its primary place of practice is in Connecticut and (2) it meets the standards outlined in the plan of operation adopted by the Insurance commissioner in regulation.

The bill requires that the Tobacco Settlement Fund pay any deficit in the funds. It specifies the state is not responsible for any costs, expenses, liabilities, judgments, or other obligations of the funds and all books, records, and audits of the funds are public records.

The bill requires that, by December 31 of each year, the auditors of public accounts must audit the records of the funds and furnish an audited financial report to the commissioner, state treasurer, and the general assembly.

By law, disbursements from the Tobacco Settlement Fund are: (1) $ 12 million to the Tobacco and Health Trust Fund, (2) $ 4 million to the Biomedical Research Trust Fund, (3) an amount to the General Fund specified in the General Fund revenue schedule adopted by the General Assembly; and (4) any remainder to the Tobacco and Health Trust Fund.

For FYs 2003-04 and 2004-05, the state budget act transfers from the Tobacco Settlement Fund to the General Fund (1) a $ 12 million annual allocation that otherwise would go to the Tobacco and Health Trust Fund and (2) $ 2 million of the $ 4 million annual allocation that would otherwise go to the Biomedical Research Trust Fund (PA 03-1, June 30 Special Session). For FY 2004-05, this bill appears to eliminate these transfers, and adds, for FY 2004-05 and all subsequent fiscal years, requirements that (1) the disbursement to the General Fund include an amount equal to the total exemptions claimed by health care providers for premiums on medical malpractice insurance under the bill and (2) unspecified annual disbursements to the Healthy Connecticut Fund and the Medical Malpractice Reinsurance Fund. (Because the budget act has a notwithstanding clause, it is not clear whether the transfers are reversed for FY 2004-05. )

The bill defines a "licensed health care provider" or "provider" for purposes of the Medical Malpractice Reinsurance Fund. The definition includes a nursing home. But the provision dealing with the amount the fund can pay appears to exclude nursing homes.

sSB 60 was voted out of the Program Review and Investigations Committee on March 3. It makes numerous changes to tort law; insurance regulation; and the oversight, regulation, and discipline of doctors. It is very similar to sSB 394, except sSB 394 contains provisions for a fund to pay for malpractice insurance deductibles and sSB 60 does not.

SB 141 was voted out of the Program Review and Investigations Committee on March 3, 2004. The bill is based on the committee's investigation and report.

The bill makes numerous changes to tort law, insurance regulation, and disciplining of health care providers. Tort reform provisions deal with such areas as offer of judgments, mediation, attorney's fees, elimination of the screening panel, and establishing a task force to study alternatives to a tort system. Insurance provisions include prior rate approval, data gathering, and captive insurers.

Other provisions deal with investigatory complaints against doctors, the complaint investigation process and standards, data gathering, mandatory continuing education for doctors, and a task force to examine the feasibility of developing a doctor relicensing exam.

sSB 394 was voted out of the Insurance and Real Estate Committee on March 9. The bill makes numerous changes to tort law; insurance regulation; and the oversight, regulation, and discipline of doctors. It is very similar to sSB 60 except it contains a provision for a fund, whereas sSB 60 does not. The insurance provisions relate to prior rate approval, captive insurers, data collection, and the requirement of certain companies to offer malpractice insurance. It establishes surgery protocols, electronic medical records, and investigation of doctors.

Yea

Nay