Medical Malpractice-Exemption for Physicians

You asked whether any state has limited a doctor’s liability for a medical malpractice claim.

Six states put a limit on a doctor’s liability for medical malpractice claims. Louisiana sets the limit at $ 100,000, Indiana at $ 250,000, Nebraska and New Mexico at $ 200,000, and Wisconsin at $ 1,000,000. But, these limits apply only if the doctor participates in the state-operated patient compensation fund, and maintains malpractice insurance at the limit the state sets. West Virginia puts a $ 500,000 limit on total damages for any injury or death as a result of health care services rendered in good faith and required by an emergency condition for which the patient enters a heath care facility designated as a trauma center.

Patient compensation funds are created by state law. They collect money from doctors and other health care providers, usually in the form of annual assessments. Providers are required to maintain a specified amount of malpractice insurance as a condition of participating in the fund. The fund pays for settlements and damages above this required amount of insurance. In some states, the fund’s liability is unlimited; in others, it is limited by damage caps or by a limitation on the fund's liability.

Two states with funds, Indiana and Nebraska, have a cap on the total amount of damages that someone can recover. Indiana caps total damages at $ 1,250,000. Nebraska’s caps them at $ 1,750,000. Patients may opt out of the Nebraska law before receiving treatment, in which case there is no limit on damages.

Other states also have patient compensation funds but don’t put a limit on doctor’s liability. These laws are more fully discussed in two recent OLR reports, which are enclosed (OLR 2003-R-0606, and 2003-R-0742).

In every state the fund is financed through assessments or surcharges on qualified health care providers. Assessments or surcharges are typically collected by medical liability insurers and transferred to the fund. To participate in the fund, most states require health care providers to pay the annual surcharge or assessment and file a proof of financial responsibility verifying they have a certain level of medical liability insurance coverage or meet the requirements for self-insurance. In most states the fund is administered by a specifically created board, which is usually composed of health care providers covered by the fund.

Most states hold the fund in an independent trust separate from the state’s general revenue.

Indiana’s Patient Compensation Fund functions as a system of excess insurance for health care providers. To qualify, a provider must file proof of financial responsibility and pay the surcharge the Insurance Commissioner assesses to support the fund (Ind. Code Ann. §§ 34-18-2-24. 5 and 34-18-3). A qualified provider establishes financial responsibility by purchasing malpractice liability insurance. The required limits for physicians are $ 250,000 per occurrence and $ 750,000 in the annual aggregate, while required limits for hospitals are $ 250,000 per occurrence and $ 5,000,000 in the annual aggregate, if the hospital has not more than one hundred beds, or $ 7,500,000 in the annual aggregate, if the hospital has more than one hundred beds. (Other aggregate limits are prescribed for other health care entities (§ 34-18-4-1)).

A qualified provider’s maximum liability for an occurrence is limited to the amount of required insurance. The fund is liable for the excess over what is owed by all the qualified providers, up to an overall damage cap of $ 1,250,000.

The amount of the surcharge is based on the median malpractice liability premium of the three largest malpractice insurers in the state for all physicians in the same specialty. Malpractice insurers are responsible for collecting the surcharge from each qualified health care provider and must forward these to the fund. The fund must distribute payments bi-annually on July 15 and January 15. If the fund does not have enough money to pay all the claims, the claims are prorated and the balance must be paid before claims that become final during the following six-month period.

Louisiana’s Patient Compensation Fund provides coverage for judgments, settlements, and arbitration awards against a health care provider in excess of $ 100,000 (La. Rev. Stat. Ann. § 40: 1299. 44). Private health care providers may join the fund if they file proof that they are covered by a policy of malpractice liability insurance in an amount of at least $ 100,000 per claim or they have deposited with the board $ 125,000 in cash, bonds, or other security the board approves and pay the surcharge the Louisiana Insurance Rating Commission assesses

The Commission determines the surcharge assessed against providers based upon actuarial principles and in accordance with an application for rate or rate changes, or both, the board files.

The law limits the liability of each qualified health care provider to $ 100,000 plus interest per patient per incident (§ 40: 1299. 42). Judgments, settlements, or binding arbitration orders in excess of $ 100,000 per provider are paid out of the fund. The claimant's total recovery is limited to $ 500,000 plus future medical costs. Future medical costs are paid as incurred from the fund (§ 40: 1299. 44).

If the fund would be exhausted by payment in full of all final claims in a given year, then the amount paid to each claimant must be prorated and any amounts due and unpaid must be paid in subsequent semi-annual periods.

Nebraska provides an excess liability fund for qualified health care providers (Neb. Rev. Stat. § 44-2829 (1993)). To qualify a provider must obtain professional liability insurance in the amount of $ 200,000 per occurrence and $ 600,000 in the aggregate and pay a surcharge (§ 44-2824). Hospitals do so by obtaining insurance in the amount of $ 200,000 per occurrence and $ 1,000,000 in the aggregate.

Once a health care provider has qualified under the law, it becomes the exclusive method of recovery, unless the claimant elects in writing before the treatment not to come under the act (§§ 44-2821 and 44-2840).

The total amount recoverable under the act is $ 1,750,000 (§ 44-2825). The liability of a single qualified health care provider is limited to $ 200,000 per patient. The Fund is liable for judgments or settlements in excess of $ 200,000. But the amount paid from the fund plus payments by all health care providers may not exceed $ 1. 25 million.

To create and maintain the fund an annual surcharge is levied on all health care providers. It may not exceed 50 percent of the annual premium paid the health care provider pays for medical malpractice insurance or the amount necessary to maintain it at $ 4. 5 million. If the fund exceeds $ 4. 5 million after all expenses and claims are paid at the end of a given year, the director must reduce the surcharge to maintain the fund at approximately $ 5 million (§ 44-2830). If at any time the director determines the amount in the Fund is inadequate to pay in full all claims in a given year, he may levy a special surcharge on all qualified health care providers sufficient to permit full payment of all claims allowed against the fund during a calendar year (§ 44-2831). The fund’s director may purchase reinsurance for all or a portion of the fund's liability on a fair and reasonable basis (§ 44-2831).

New Mexico’s Patient Compensation Fund provides coverage for damages in excess of $ 200,000 against a health care provider (N. M. Stat. Ann. § 41-5-25).

To qualify, individual health care providers must have at least $ 200,000 in medical liability insurance or deposit $ 600,000 in cash with the superintendent of insurance and pay a surcharge (§ 41-5-5). The defendant or his insurer must notify the fund within 30 days after the lawsuit has been filed.

New Mexico caps malpractice damages at $ 600,000 per occurrence not counting medical care and related benefits or punitive damages (§ 41-5-6). It prohibits the award of monetary damages for future medical expenses.

In all malpractice claims where liability is established, the jury is given a special interrogatory asking if the patient is in need of future medical care and related benefits. No inquiry is made concerning the value of future medical care and related benefits, and evidence relating to the value of future medical care is not admissible. In actions upon malpractice claims tried to the court, where liability is found, the court's findings must specify whether the patient is or is not in need of future medical care and related benefits. The court in a supplemental proceeding estimates the value of the future medical care and related benefits reasonably due the patient on the basis of evidence presented to it. That figure must not be included in any award or judgment but must be included in the record as a separate court finding.

Once a judgment is entered in favor of a patient who is found to be in need of future medical care and related benefits, or a settlement is reached between a patient and health care provider in which the provision of medical care and related benefits is agreed upon, the patient must be provided all medical care and related benefits directly or indirectly made necessary by the health care provider’s malpractice as long as medical or surgical attention is reasonably necessary (§ 41-5-7).

Awards of future medical care and related benefits are not subject to the $ 600,000 limitation. Payment for medical care and related benefits are made as expenses are incurred.

The health care provider is liable for all medical care and related benefit payments until the total payments made by or on his behalf of it for monetary damages and medical care and related benefits combined equals two hundred thousand dollars ($ 200,000), after which the payments are made by the patient compensation fund.

Any health care provider is entitled to have a physical examination of the patient by a physician of the health care provider’s choice from time to time for the purpose of determining the patient's continued need of medical care and related benefits subject to certain requirement (§ 41-5-10).

Payments from the fund must be made in accordance with the court’s payment schedule. If the Fund would be exhausted by payment of all claims in a given year, the amount paid to each must be prorated for that year based on the percentage of each party’s payment to the total outstanding payments with subsequent payments made in the following calendar years.

Wisconsin’s Patient Compensation Fund makes payments for medical malpractice claims in excess of the amount of medical liability insurance coverage which providers must maintain, or the amount of the maximum liability limit for which the provider has coverage, whichever is greater (Wis. Stat. Ann. § 655. 27). Health care providers (principally physicians and hospitals) are required to pay a yearly assessment into the fund and provide proof of financial responsibility to the Insurance Commissioner in the form of insurance, an approved plan of self-insurance, or a surety bond (§ 655. 23). The prescribed limits for malpractice insurance are $ 1,000,000 for each occurrence and $ 3,000,000 in the annual aggregate (§ 55. 23). Health care providers are liable only to the extent of the limits of their insurance. But the fund is not liable if the health care provider is found not to have acted in good faith during those activities and the failure to act in good faith is found by the trier of fact, by clear and convincing evidence, to be both malicious and intentional.

To participate in the fund, providers must pay an annual assessment based on a number of factors, such as the past and prospective loss and expense experience of the provider's practice, the fund, and the individual provider.

A person filing a claim may recover against the fund only if the fund is named as a party in the action. No settlement that could affect the fund is valid unless the fund agrees to it (§ 655. 27(5)3(b)).

Wisconsin imposes a total damage cap for wrongful death cases. For children it is $ 500,000; for adults it is $ 350,000 (§ 895. 04). In addition, Wisconsin imposes an adjustable cap for noneconomic damages for malpractice cases involving injuries but not death. The amount is adjusted each May by the director of state courts to reflect changes in the consumer price index. Currently, the cap is $ 422,632 (§ 893. 55).

In the 1980’s, Wisconsin had imposed a $ 1,000,000 cap on noneconomic damages. The law had a sunset provision that eliminated the cap in 1991. In 1995, Wisconsin reestablished a cap. It established the initial amount at $ 350,000 and made it adjustable annually.

The fund provides coverage for claims against qualified health care providers and their employees, and for reasonable and necessary expenses incurred in payment of claims and fund administrative expenses. Claims filed against the fund must be paid in the order received within 90 days after filing unless the fund appeals. If the amount in the fund is not sufficient to pay all the claims, claims received after the fund is exhausted must be paid in the following year based on the order in which they were received.

The fund is held in trust and may not be used for purposes other than those the law specifies.

West Virginia limits the total amount of damages to $ 500,000 in medical malpractice claims involving emergency medical services provided in trauma centers. The limit only applies if the services were rendered in good faith and required by an emergency condition for which the patient enters a facility designated as a trauma center by the Office of Emergency Medical Services. The limitation applies to any act or omission of a health care provider in rendering continued care or assistance in the event that surgery is required as a result of the emergency condition within a reasonable time after the patient's condition is stabilized (§ 55-7B-9c W. V. C. A. , Acts 2003, c. 147, effective March 8, 2003).

The limitation does not apply to any act or omission in rendering care or assistance that (1) occurs after the patient's condition is stabilized and the patient is capable of receiving medical treatment as a nonemergency patient; or (2) is unrelated to the original emergency condition.

If a physician provides follow-up care to a patient who received emergency medical services and a medical condition arises during the course of the follow-up care that is directly related to the original emergency condition for which care or assistance was rendered, there is rebuttable presumption that the medical condition was the result of the original emergency condition and that the limitation on liability applies.

There is also a rebuttable presumption that a medical condition that arises in the course of follow-up care provided by the designated trauma center health care provider who rendered good faith care or assistance for the original emergency condition is directly related to the original emergency condition where the follow-up care is provided within a reasonable time after the patient's admission to the trauma center.

The limitation on liability dose not apply where health care or assistance for the emergency condition is rendered:

1. In willful and wanton or reckless disregard of a risk of harm to the patient; or

2. In clear violation of established written protocols for triage and emergency health care procedures developed by the office of emergency medical services. If the office of emergency medical services has not developed a written triage or emergency medical protocol, the limitation on liability does not apply where health care or assistance violates nationally recognized standards for triage and emergency health care procedures.


July 15, 2004		2004-R-0541
MEDICAL MALPRACTICE-EXEMPTION FOR PHYSICIANS

By: George Coppolo, Chief Attorney