AN ACT CONCERNING MEDICAL MALPRACTICE INSURANCE REFORM

SUMMARY: This act makes numerous changes to the laws dealing with civil litigation; insurance regulation and oversight; and the regulation, oversight, and disciplining of doctors. It also gives certain physicians a tax credit for a portion of their medical malpractice insurance premiums.

1. establishes a mandatory mediation program for medical malpractice lawsuits filed after the act becomes law, which the parties must use unless they agree to use an alternative dispute resolution program (§ 1);

2. requires, as a condition of filing a medical malpractice lawsuit or an apportionment complaint in such a lawsuit, that the plaintiff attach to his complaint a signed opinion of a similar health care provider showing there is a good faith belief that negligence has occurred (§ 2);

3. reduces the interest rate the court may award the plaintiff on an offer of judgment for medical malpractice causes of action that accrue after the act’s effective date by reducing (a) from 12% to 8% the interest the court must add to the portion of the award up to twice the amount stated in the offer of judgment, and (b) from 12% to 4% the interest the court must add to the portion of the award that exceeds twice the amount stated in the offer of judgment (§ 8); and

4. allows the attorney fee schedule for contingency fees in medical malpractice cases to be waived only after the claimant’s attorney convinces a judge that the case warrants deviation from the schedule, requires that the fee be calculated after any disbursements and costs for which the plaintiff is liable have been deducted, and prohibits fees greater than one-third of the damages awarded (§ 15).

It also (1) requires court review of the evidence in cases of $1 million or more in noneconomic damages to determine if the award is excessive as a matter of law (§ 18); (2) gives plaintiffs more time, 60 days instead of 10, to accept a defendant’s offer of judgment and allows courts to give plaintiffs and defendants up to an additional 120 days to accept an offer of judgment (§§ 8 & 9); and (3) eliminates the Medical Malpractice Screening Panel (§ 23).

1. requires the Insurance Department to approve medical malpractice insurance rate changes for physicians, hospitals, advanced practice registered nurses, and physician assistants before they can take effect and requires the insurers either to offer a discount for those who use an electronic records system or demonstrate that its use does not reduce the risk (§ 13);

2. requires that specified relevant factors that may reduce rates be considered when establishing malpractice rates for physicians and surgeons, hospitals, advanced practice registered nurses, or physician assistants, including any reduction in risk from using electronic health record systems to establish and maintain patient records and verify patient treatment (§ 14);

3. beginning June 1, 2005, requires insurers give the insurance commissioner a closed claim report on each malpractice claim that they close that includes details about the insured and insurer, the injury or loss, the claims process, and the amount paid, excluding confidential information (§ 16);

4. requires the commissioner to compile and analyze the reported data and annually report on it to the Insurance and Real Estate Committee and the public (§ 16); and

5. requires each captive insurer that offers, renews, or continues insurance in Connecticut to provide certain information to the insurance commissioner in the same manner required for risk retention groups (§§ 21 and 22).

1. requires medical malpractice litigants to provide certain information to the Insurance Department and the Department of Public Health (DPH) and requires these agencies to make the information available to the public (§§ 3 & 4);

2. requires DPH and the Medical Examining Board to adopt guidelines for investigating complaints against physicians, and requires DPH to notify the physician and complainant when it decides not to investigate because of a lack of probable cause (§§ 3, 4, 5, and 10);

3. makes liability releases invalid until the attorney representing the paying party files an affidavit with the court that he has provided DPH and the insurance commissioner with the required information (§ 3);

4. requires DPH’s annual report to the governor and Public Health Committee to include additional information such as the number of complaints filed against doctors and the number of malpractice lawsuit notices DPH received and did not investigate and why (§ 6);

5. requires DPH to develop protocols for accurate identification procedures hospitals and outpatient surgical facilities must use before surgery (§ 7);

6. requires doctors annually to provide certain information to DPH, including their malpractice insurer, policy number, area of specialization, and disciplinary actions and malpractice payments made in other jurisdictions, which they can do by including such information in their physician profile (§ 11);

7. requires DPH to report annually the number of doctors, by specialty, actively providing patient care (§ 12); and

8. requires the DPH commissioner to develop and implement a process to ensure DPH’s continuing and coordinated focus on patient safety programs (§ 17).

The act gives a physician who resides in the state a state income tax credit for part of the medical malpractice insurance premiums he paid during the taxable year. The credit is applicable to tax years beginning January 1, 2004. The act funds the credit for FY 2004-05 by allocating funds from $2 million being transferred to the General Fund from the Biomedical Research Trust Fund (§§ 19 & 20).

EFFECTIVE DATE: Upon passage, except the provision dealing with the duty of captive insurers to provide certain information to the insurance commissioner takes effect July 1, 2004; the tax credit provision takes effect July 1, 2004 and applies to taxable years beginning January 1, 2004; and the provision requiring data on closed cases takes effect January 1, 2005.

The act establishes a mandatory mediation program for all medical malpractice lawsuits filed after the act becomes law to:

A medical malpractice case must be referred to mandatory mediation unless the parties have agreed to refer the case to an alternative dispute resolution program. The court clerk must refer it to a Superior Court judge for mediation when the defendant files his answer. The mediation must occur as soon as is practicable but no later than 30 days after the answer is filed. The act specifies that mediation does not stay or delay the lawsuit or delay discovery.

At the mediation, the court must review the good faith certificate to determine if there are grounds for a good faith belief that the defendant was negligent in the claimant’s care or treatment. If the court determines that the certificate is inadequate to permit such a determination, it may order the complainant to file a supplemental certificate within 30 days.

If the court determines that the certificate or supplemental certificate is inadequate to support a determination that there are grounds for a good faith belief that there has been negligence, it must order the party asserting the claim to post a $5,000 cash or surety bond as a condition of continuing the case. The bond must be used to pay the other party’s taxable costs if the case is not successfully prosecuted.

The act requires all parties to the case, together with a representative of each insurer that may be liable, to attend the mediation in person, unless the parties agree to a telephone conference or the court orders it.

If the mediation does not settle or conclude the case, the court must enter whatever orders are necessary to narrow the issues, expedite discovery, and help the parties prepare the case for trial.

The mediation requirement applies to all DPH-licensed health care providers (individuals or institutions) including doctors, surgeons, dentists, pharmacists, psychologists, and emergency medical technicians (see BACKGROUND for detailed list).

The law prohibits filing malpractice lawsuits unless the attorney or claimant has made a reasonable inquiry as permitted by the circumstances to determine that there are grounds for a good faith belief that the claimant received negligent care or treatment. The complaint or initial pleading must contain a certificate of the attorney or claimant that such reasonable inquiry resulted in a good faith belief that grounds exist for a lawsuit against each named defendant.

Under prior law, a good faith belief could be shown if the claimant or his attorney received a written opinion from a similar health care provider that there appeared to be evidence of medical negligence . But it also could be shown in some other way. The act instead requires a written signed opinion from a similar health care provider in order to show the existence of good faith. The opinion must include the reasons for concluding that medical negligence had occurred.

The act requires the claimant or his attorney to retain the original written opinion and attach a copy of it to the complaint, with the health care provider’s name and signature removed.

The act imposes the same good faith certificate requirement on defendants who file an apportionment complaint against another health care provider as applies to the plaintiff. (An apportionment complaint is a defendant’s claim in a medical malpractice lawsuit that another health care provider who the plaintiff did not make a defendant committed malpractice and partially or totally caused the plaintiff’s damages. By filing the apportionment complaint, the defendant in essence makes the other health care provider a party to the plaintiff's lawsuit. ) Under the act, if a plaintiff asserts a claim against a party added to the case by an apportionment complaint, he is not required to submit a certificate of good faith regarding that person.

The act makes the health care provider who provides the opinion immune from liability unless it is shown he acted with malice.

By law, the court may impose sanctions if a certificate was not made in good faith.

The act requires that upon filing a medical malpractice case against certain health care providers, the plaintiff or his attorney mail a copy of the complaint to DPH and the Insurance Department. The requirement applies to lawsuits filed against licensed physicians, chiropractors, natureopaths, dentists, podiatrists, optometrists, and psychologists. The receipt or review of a copy of a complaint may not be considered an investigation of the licensee by DPH or any examining board.

By law, anyone who pays damages in a medical malpractice case must notify DPH of the terms of the award or settlement and provide a copy of it and the underlying complaint and answer, if any. The act requires that the notification specify the portion attributable to economic damages and, if determined by the parties, the portion attributable to noneconomic damages. It also requires that (1) if there are multiple defendants, the information include how the award must be allocated and (2) the portion of the award attributable to the offer of judgment law.

The act requires that (1) the person who pays damages also provide this information to the Insurance Department without identifying the parties to the claim and (2) DPH send this information to the state board of examiners that oversees the health care provider who was a defendant in the lawsuit.

By law, DPH must review all medical malpractice awards and settlements to determine whether further investigation or disciplinary action against the providers involved is warranted. The act requires DPH to review all malpractice complaints as well. It requires that, beginning October 1, 2004, DPH conduct its reviews according to guidelines it adopts to determine the basis for further investigation or disciplinary action.

The act requires the public health and insurance commissioners to develop systems in their respective agencies to collect, store, use, interpret, report, and provide public access to the information. It requires each commissioner to report the details of these systems to the Public Health and Insurance and Real Estate committees by October 1, 2004.

By law and practice, people receiving a settlement in a malpractice claim sign a liability release to the person or entity paying the settlement. The act makes such releases in connection with settlements with health care providers invalid until the attorney for the entity making payment or, if no such entity exists, the attorney for the party, files with the court an affidavit stating that he has provided the information the act and law require to DPH and the Insurance Department. The requirement applies to claims against licensed physicians, chiropractors, natureopaths, dentists, podiatrists, optometrists, and psychologists.

By law, the DPH commissioner, with the Connecticut Medical Examining Board's advice and assistance, may establish regulations to carry out its oversight and regulatory duties. The act requires the commissioner, by July 1, 2004, to adopt regulations that establish:

1. guidelines for screening complaints that physicians may be unable to practice medicine with reasonable skill and safety to determine which complaints it will investigate;

2. guidelines to determine the order in which complaints will be investigated;

3. a system for conducting investigations to ensure prompt action when it appears necessary;

4. guidelines to determine when an investigation should be broadened to include sampling patient records to identify patterns of care, reviewing office practices and procedures, reviewing performance and discharge data from hospitals and managed care organizations, and additional interviews of patients and peers; and

5. guidelines to protect and ensure the confidentiality of patient and provider identifiable information when an investigation is broadened.

The 15-member Connecticut Medical Examining Board may restrict, suspend, or revoke the license of a physician or limit his right to practice for certain misconduct. The act requires that, by July 1, 2004, the board, with DPH’s assistance, adopt regulatory guidelines for use in the disciplinary process. The guidelines must include, but need not be limited to (1) identification of each type of violation; (2) a range of penalties for each type of violation; (3) additional optional conditions that the board may impose; (4) identification of factors the board must consider to determine if the maximum or minimum penalty should apply; (5) conditions, such as mitigating factors or other facts, that the board may consider in allowing deviations from the guidelines; and (6) a requirement that the reason for any deviation from the guidelines must be identified.

By law, the board must refer all statements of charges DPH files with it to a hearing panel within 60 days of receiving them. Under prior law, the three-member medical hearing panel had to include a board member and a public member. The act requires instead that one member must be a similar health care provider to the person who is the subject of the complaint and two must be public members. It also requires that at least one of the three members be a Medical Examining Board Member. The public members may be board members or selected from the list of 18 people established by the DPH commissioner.

By law, the panel must conduct a hearing on contested cases. It must file a proposed final decision with the board within 120 days of receiving the case from the board. The board may, for good cause, vote to extend this deadline. The act requires the DPH commissioner to conduct the hearing if the panel has not done so within 60 days of the date the board refers the statement of charges. The hearing must be conducted according to DPH regulations governing contested cases. The act requires the commissioner to file a proposed final decision with the board within 60 days after the hearing. The board, for good cause, may vote to extend the filing deadlines. The act does not specify whether the board must accept the commissioner’s decision.

By law, DPH must file with the governor and Public Health Committee an annual report of its disciplinary activities, which must include certain information. The act requires that the report specify (1) the number of petitions and lawsuit notices not investigated and the reasons why, (2) the outcome of the hearings held on petitions and notices DPH investigated, and (3) the timeliness of action taken on petitions and notices considered to be a priority.

The act requires DPH to develop protocols for accurate identification procedures that hospitals and outpatient surgical facilities must use before surgery. The protocols must include (1) procedures to identify the patient, surgical procedure to be performed, and body part on which it is to be performed and (2) alternative identification procedures in urgent or emergency circumstances or where the patient cannot speak or is comatose, incompetent, or a child. After October 1, 2004, no hospital or outpatient surgical facility may anesthetize a patient or perform surgery unless the protocols have been followed.

The act requires that, by October 1, 2004, DPH must report to the Public Health Committee on the protocols it develops.

By law, the plaintiff in a contract case or a case seeking money damages may, up to 30 days before trial, file with the court clerk a written “offer of judgment” to settle the claim for a specific amount. After trial, the court must examine the record to determine whether the plaintiff made an offer of judgment that the defendant failed to accept. If it determines that the plaintiff recovered an amount equal to or greater than the sum stated in his offer of judgment, the court must add 12% annual interest.

By law, a defendant has 60 days to file with the clerk an acceptance of the offer. The act allows the court to grant the defendant one or more extensions of up to 120 additional days to file an acceptance.

The act changes the interest rate the court may award with respect to an offer of judgment for medical malpractice cases that accrue after its effective date. It does so by reducing (1) from 12% to 8% the interest the court must add to the portion of the award up to twice the amount stated in the offer of judgment and (2) from 12% to 4% the interest the court must add to the portion of the award that exceeds twice the amount stated in the offer.

This change applies to medical malpractice lawsuits against any person, corporation, facility, or institution licensed by Connecticut to provide health care or professional services or an officer, employee, or agent thereof acting in the course and scope of his employment.

By law, in any contract case or case seeking money damages, the defendant may, up to 30 days before trial, file a written offer of judgment with the court clerk to settle the case for a specific amount. The act gives the plaintiff 60 instead of 10 days after being notified by the defendant of his offer to accept it. It also authorizes the court to grant the plaintiff one or more extensions up to 120 additional days for good cause. By law, if the plaintiff recovers less than the offer of judgment, he must pay the defendant’s costs accruing after he received the offer, including reasonable attorney’s fees up to $300.

The law requires DPH to investigate each complaint petition filed with it to determine if probable cause exists to institute proceedings against the physician. The act requires DPH to notify the physician and the person who filed the petition or his legal representative when it makes a finding of no probable cause. It must include the reason for such finding.

By law, anyone licensed to practice medicine, surgery, podiatry, chiropractic, or naturopathy must register annually with DPH and provide his name, residence, business address, and other information DPH requests. The act requires the licensee also to provide the name of his malpractice insurer and the policy number, his area of specialization, whether he is actively involved in patient care, and any disciplinary action against him or malpractice payments made on his behalf in any other state or jurisdiction. The act authorizes DPH to compare the information submitted to information contained in the National Practitioner Data Base.

The act allows doctors to fulfill their obligation to report this information by submitting it as part of their statutorily required physician profile. It requires DPH to revise any forms used for physician profiles to incorporate the additional required information.

The act requires DPH, beginning January 1, 2005, to report annually to the General Assembly the number of physicians, by specialty, actively providing patient care in Connecticut.

The act subjects malpractice insurance rates for physicians, hospitals, advanced practice registered nurses, and physician assistants to prior rate approval by the insurance commissioner. On and after the act’s effective date, each insurer or rating organization seeking to change its rates must file a request with the Insurance Department and send written notice to all affected insureds at least 60 days before the change’s effective date.

The act requires the insurer or rating organization to demonstrate to the commissioner’s satisfaction that (1) it offers a premium reduction or a separate reduced rating classification for insureds who submit proof that they and their personnel will use an electronic health record system during the premium period to establish and maintain patient records and verify patient treatment and (2) the premium or rate reduction reflects the reduction in risk related to using such a system.

As an alternative, if the insurer or rating organization does not offer such premium or rate reduction, it must demonstrate to the commissioner’s satisfaction that there is no measurable reduction in risk related to using such a system.

Any request for a rate increase must be filed after notice is sent to insureds and must indicate the date the notice was sent. The notice must indicate that the insured may request a public hearing by submitting a written request to the insurance commissioner within 15 days after the notice date.

The act prohibits the insurance commissioner from approving, modifying, or denying a rate increase until at least 15 days after the date of notice as indicated in the filing. It requires the commissioner to hold a public hearing, if requested, on an increase before acting. The commissioner must approve, modify, or deny the filing within 45 days after its receipt. Her decision may be appealed to Superior Court.

The act requires that insurers and the commissioner consider relevant factors that may reduce rates when establishing malpractice rates for physicians and surgeons, hospitals, or advanced practice registered nurses and physician assistants, including (1) amendments to the offer of judgment law the act makes, (2) other provisions of the act, and (3) any reduction in risk from using electronic patient health record systems.

The law establishes a sliding scale on contingency fees attorneys may charge clients based on the amount of the settlement or judgment. It allows attorneys to collect (1) one-third of the first $300,000, (2) 25% of the next $300,000, (3) 20% of the next $300,000, (4) 15% of the next $300,000, and (5) 10% of amounts exceeding $1,200,000. This sliding scale applies to any lawsuit to recover damages resulting from personal injury, wrongful death, or property damage involving contingency fees, not just to medical malpractice cases. A Superior Court judge interpreted this law to allow clients to waive its protections and agree to pay a higher contingency fee.

The act invalidates a contingency fee arrangement for a medical malpractice case greater than the sliding scale’s percentage limitations unless the court, after hearing the claimant attorney’s application, grants a different arrangement. The act prohibits the court from approving a contingency fee greater than one-third of the damages awarded.

The act requires the claimant’s attorney to attach to the application a copy of the fee arrangement and the proposed unsigned writ, summons, and malpractice complaint. The fee arrangement must provide that (1) the attorney will advance all costs connected to investigating, prosecuting, or settling the case and (2) the claimant will not be liable for reimbursing any such costs if there is no recovery.

The act requires that at the hearing the court address the claimant personally to determine if he understands his rights and has knowingly and voluntarily waived them.

The act requires the court to grant the application if it finds that (1) the case is sufficiently complex, unique, or different from other medical malpractice cases so as to warrant a deviation from the percentage limitations and (2) the claimant knowingly and voluntarily waived his rights to the statutory fee schedule. At the hearing, the claimant's attorney has the burden of showing that the deviation is warranted.

If the court denies the application, it must advise the claimant of his right to seek representation by another attorney willing to abide by the percentage limitations. The court’s decision to grant or deny the application may not be appealed. Filing an application tolls the applicable statute of limitations until 90 days after the court’s decision on it. The act permits only one application to be filed regarding the claimant and his case.

The act requires the chief court administrator to assign a judge or judges with experience in personal injury cases to hear and determine these applications. A hearing transcript must be prepared. It must be sealed and is available for the court’s use only.

The act prohibits an attorney from requiring a claimant to pay interest on the amount of any disbursements and costs the attorney makes in connection with investigating, prosecuting, or settling the malpractice claim.

For medical malpractice contingency fee arrangements, the act requires that the percentages that go to the client and to the attorney be calculated after deducting any disbursements or costs the attorney incurred, other than ordinary office overhead and expenses.

Prior law authorized the insurance commissioner to require all medical malpractice insurers in Connecticut to submit whatever information she deemed necessary to establish a medical malpractice database. The database could include information on all incidents of medical malpractice, all settlements, all awards, other information relative to procedures and specialties involved, and any other information relating to risk management.

The act instead requires, beginning January 1, 2005, each insurer to provide to the commissioner with a closed claim report, on whatever form she requires. A “closed claim” is a claim that has been settled, or otherwise disposed of, where the insurer has paid all claims. The duty to report also applies to a captive insurer or a self-insured person.

The act requires the insurer to submit the report within 10 days after the end of the calendar quarter in which a claim is closed. The report must include information only about claims settled under Connecticut’s laws. It must include details about the insured and insurer, the injury or loss, the claims process, and the amount paid on the claim.

The report must include the (1) insurer’s name; (2) policy limits and whether it was an occurrence policy or was issued on a claims-made basis; (3) insured’s name, address, license number, and specialty coverage; and (4) insured’s policy number and unique claim number.

The report must specify the (1) date of the injury or loss that was the basis of the claim; (2) date the injury or loss was reported to the insurer; (3) name of the institution or location where the injury or loss occurred; (4) type of injury or loss, including a severity of injury rating that corresponds with the injury scale that the commissioner must establish based on the severity of injury scale developed by the National Association of Insurance Commissioners; and (5) name, age, and gender of any injured person covered by the claim.

Any individually identifiable information (as defined in 45 CFR 160. 103) is confidential. The act specifies that reporting of this information is required by law. It requires that if necessary to comply with federal privacy laws, the insured must arrange with the insurer to release the required information.

The act specifies that details about the claims process include (1) whether a lawsuit was filed, and if so, in which court; (2) its outcome; (3) the number of other defendants, if any; (4) the stage in the process when the claim was closed; (5) the trial dates; (6) the date of any judgment or settlement; (7) whether an appeal was filed, and if so, the date filed; (8) the resolution of the appeal and the date it was decided; (9) the date the claim was closed; and (10) the initial and final initial indemnity and expense reserve for the claim.

1. the total amount of the initial judgment rendered by a jury or awarded by the court;

2. the total amount of the settlement if no judgment was rendered or awarded or the claim was settled after judgment was rendered or awarded;

3. the amount of economic and noneconomic damages, or the insurer’s estimate of these amounts in the event of a settlement;

4. the amount of any interest awarded due to failure to accept an offer of judgment;

5. the amount of any remittitur or additur and the amount of final judgment after remittitur or additur;

6. the amount the insurer paid;

7. the amount the defendant paid due to a deductible or a judgment or settlement in excess of policy limits;

8. the amount paid by other insurers or other defendants;

9. whether a structured settlement was used;

10. the expense assigned to and recorded with the claim, including, but not limited to, defense and investigation costs, but not including the actual claim payment; and

11. any other information the commissioner determines necessary to regulate the medical malpractice insurance industry, ensure the industry’s solvency, and ensure that such liability insurance is available and affordable.

The act requires the commissioner to establish a closed claim reports electronic database.

The act requires the insurance commissioner to compile the data included in individual closed claim reports into an aggregated summary and prepare a written annual report of the summary data. The report must analyze the closed claim information, including (1) a minimum of five years of comparative data, when available; (2) trends in frequency and severity of claims; (3) itemization of damages; (4) timeliness of the claims process; and (5) any other descriptive or analytical information that would help interpret the trends in closed claims.

The annual report must include a summary of rate filings for medical malpractice insurance for medical professionals and entities that the department approved for the prior calendar year. The summary must include an analysis of the trend of direct losses, incurred losses, earned premiums, and investment income as compared to prior years. The report must also include base premiums charged by medical malpractice insurers for each specialty and the number of providers insured by specialty for each insurer.

The act requires that, beginning March 15, 2006, and annually thereafter, the commissioner must submit an annual report to the Insurance and Real Estate Committee. She must also (1) make the report available to the public, (2) post it on the department's Internet site, and (3) provide public access to the contents of the electronic database after establishing that the names and other individually identifiable information about claimants and practitioners have been removed.

The act requires the insurance commissioner to provide the DPH commissioner with electronic access to all the closed case information she receives.

The act requires the DPH commissioner to develop and implement a process to ensure a continuing and coordinated focus on patient safety programs in DPH. The process must encompass activities DPH undertakes to (1) coordinate state patient safety initiatives; (2) facilitate ongoing collaborations between the public and private sectors; (3) promote patient safety through educating health care providers and patients; (4) assure coordination in collecting, analyzing, and responding to adverse events reports; (5) coordinate state and federal patient safety programs; (6) participate in the federal Patient Safety Improvement Corps to identify the causes of medical errors; and (7) promote the recommendations of the State Quality of Care Advisory Committee.

The act requires that, beginning January 1, 2005, the commissioner annually submit a report to the governor and the Public Health Committee chairmen describing the process developed, an analysis of its operation and impact, a description of DPH’s patient safety activities, and recommendations for future action.

The act requires the court, in any medical malpractice case in which the jury awards more than $1 million in noneconomic damages, to review the evidence to determine if the amount is excessive as a matter of law. Specifically, the act requires the court to consider whether it so shocks the sense of justice as to compel the conclusion that the jury was influenced by partiality, prejudice, mistake, or corruption. If the court concludes the award was excessive, it must order the plaintiff to remit the excessive amount. If the plaintiff refuses to do so, the court must set aside the verdict and order a new trial.

The act gives any physician who resides in Connecticut the right to an income tax credit for part of the amount of his medical malpractice insurance premiums due and actually paid during the taxable year. The credit applies to tax years beginning January 1, 2004.

The credit equals the amount by which the premiums paid during the taxable year exceed 25% of the physician’s Connecticut taxable income, up to 15% of the premiums. It may be used to reduce the taxpayer's tax liability only for the year for which it applies and may not be used to reduce the tax liability to less than zero. The amount of income tax due must be calculated without regard to this credit.

The act makes any physician who has ever had a medical malpractice judgment entered against him ineligible for the credit.

Prior law transferred $2 million from the Biomedical Research Trust Fund to the General Fund in FY 2004-05. The act offsets the revenue loss attributable to the credit from the transferred amount.

A “captive insurer” is an insurance company owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies. In the case of groups and associations, it is an insurance organization owned by the insureds whose exclusive purpose is to insure risks of member organizations, group members, and their affiliates.

The act requires each captive insurer that offers, renews, or continues insurance in Connecticut to provide the following information to the insurance commissioner in the same manner required for risk retention groups:

1. a copy of the group’s financial statement submitted to its state of domicile, which must be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist;

2. a copy of each examination of the captive as certified by the commissioner or public official conducting the examination;

3. upon request by the commissioner, a copy of any audit performed with respect to the captive; and

4. such information as may be required to verify that it satisfies the definitional requirements of a risk retention group (apparently this requirement only applies if the captive is such a group).

If a captive insurer does not maintain this information in this form, the act permits it to submit the information to the commissioner on whatever form she prescribes. The act specifies that these requirements do not apply to a captive insurer that is otherwise required by law to submit such information to the commissioner.

The act requires the commissioner to act as agent for service of process for risk retention groups domiciled outside the United States and for captive insurers. By law, the commissioner acts as agent for risk retention groups domiciled in another state that offer insurance in Connecticut.

The act eliminates the voluntary Medical Malpractice-Screening Panel. Under prior law, the parties had to consent to use the panel. With their mutual agreement, the insurance commissioner or her designee selected panel members from lists of names submitted by the Connecticut State Medical Society and the Connecticut Bar Association. The panel was composed of two doctors and one attorney with trial experience in personal injury cases who acted as chairman. One of the doctors had to practice in the same specialty as the defendant. Panel members could not be from communities in which the defendant doctor or the parties’ attorneys practice. Panel members were not compensated. The panel held confidential hearings when and where it decided and made transcripts available at cost to either party.

The panel’s conclusion as to liability was outlined in a finding signed by the members and recorded by the insurance commissioner. The panel did not address the issue of damages. Each party received a copy of the panel’s findings. If a subsequent trial was held, only unanimous findings of the panel were admissible. The court or jury determined the weight assigned to such admissible findings. No member could be compelled to testify.

By law, if the defendant health care provider is not certified by the appropriate American board as a specialist, is not trained and experienced in a medical specialty, or does not hold himself out as a specialist, a “similar health care provider” is one who is (1) licensed by the appropriate regulatory agency of this state or another state requiring the same or greater qualifications and (2) trained and experienced in the same discipline or school of practice. Such training and experience must be a result of active involvement in the practice or teaching of medicine within the five-year period before the incident giving rise to the claim.

If the defendant health care provider is certified by the appropriate American board as a specialist, is trained and experienced in a medical specialty, or holds himself out as a specialist, a “similar health care provider” is one who is (1) trained and experienced in the same specialty and (2) certified by the appropriate American board in the same specialty. But, if the defendant health care provider is providing treatment or diagnosis for a condition that is not within his specialty, a similar health care provider is a specialist trained in the treatment or diagnosis of that condition.

By law, the court must impose an appropriate sanction on the person who signed the certificate if it determines, after discovery is completed, that the certificate was not made in good faith and that no valid issue was presented against a health care provider who fully cooperated in providing informal discovery. It may also sanction the claimant. The sanction may include an order to pay to the other party or parties the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee. The court also may submit the matter to the appropriate authority for disciplinary review of a claimant's attorney who submitted the certificate.

Table 1 shows how the law’s formula works for each of four hypothetical awards. It shows the actual amount of fees the statute allows the attorney to collect, the resulting percentage of the total award the attorney's fees constitute, and the amount and percentage the client would receive.

Current statute does not explicitly indicate whether a client can waive the statutory contingency fee limits. One Superior Court case held that tort victims could waive their right to the protections afforded by the contingency fee law. It also decided the plaintiff's waiver was valid, and the fee arrangement the plaintiff entered into with her attorney was reasonable (In re Estate of Salerno, 42 Conn. Supp. 526 (1993)).

The court resolved the case on nonconstitutional grounds, noting that rights granted by statute could be waived unless the statute is meant to protect the general rights of the public rather than private rights. It cited instances where statutes relating to litigation have been construed as conferring a private right that can be waived (e. g. , statute of limitations for tort actions, right to trial by jury, defense of statute of fraud).

It concluded that the fee cap statute clearly confers a private right and does not protect the general rights of the public. It also cited the legislative history in which proponents of the law indicated that the fee limits could be waived.

A person may file a petition against a doctor for the same reasons the Medical Examining Board may discipline a doctor. These include:

1. physical illness or loss of motor skill, including, but not limited to, deterioration through the aging process;

2. emotional disorder or mental illness;

3. abuse or excessive use of drugs or alcohol;

4. illegal, incompetent, or negligent conduct in the practice of medicine;

5. possession, use, prescription for use, or distribution of controlled substances or legend drugs, except for therapeutic or other medically proper purposes;

6. misrepresentation or concealment of a material fact in the obtaining or reinstatement of a license to practice medicine;

7. failure to maintain required professional liability insurance;

8. performing any activity for which accreditation is required by law without the appropriate accreditation; and

9. violation of any law regulating medicine and surgery or any regulation adopted under such laws.

Individually identifiable health information is defined by federal regulation (45 CFR 160. 103) as including demographic information, collected from an individual that:

1. is created or received by a healthcare provider, health plan, employer, or health care clearinghouse; and

2. relates to an individual’s past, present, or future physical or mental health or condition; providing health care to an individual; or paying for the provision of health care to an individual; and that (a) identifies the individual or (b) may lead to a reasonable belief that it could be used to identify the individual.

The mediation requirement applies to the following licensed health care providers:

1. doctors and surgeons,

2. chiropractors,

3. natureopaths,

4. podiatrists,

5. athletic trainers,

6. physical and occupational therapists,

7. substance abuse counselors,

8. radiographers and radiologic technologists,

9. midwifes,

10. nurses and nurses aides,

11. dentists and dental hygienists,

12. optometrists and opticians,

13. respiratory care practitioners,

14. pharmacists,

15. psychologists,

16. marital therapists and professional counselors,

17. clinical social workers,

18. veterinarians,

19. massage therapists,

20. electrologists,

21. hearing instrument specialists and audiologists,

22. ambulance drivers, and

23. emergency medical technicians and communications personnel.

It applies to the following health care institutions: hospitals; outpatient surgical facilities; residential care homes; health care facilities for the handicapped; nursing homes; rest homes; home health and homemaker-home health aide agencies; mental health and substance abuse treatment facilities; college infirmaries; diagnostic and treatment facilities, including those operated and maintained by a state agency, except facilities for the care or treatment of mentally ill or substance abusing people; and intermediate care facilities for the mentally retarded.

PA 04-164 revises the law requiring hospital and outpatient surgical facilities to report adverse events to DPH. It allows DPH to designate as a “patient safety organization” a public or private organization whose primary mission involves patient safety improvement activities.

PA 04-1, May Special Session, requires the Connecticut Health and Educational Facilities Authority (CHEFA) to establish a three-year demonstration program to provide grants to nonprofit hospitals that establish captive insurers, or expand coverage offered by existing captive insurers, to provide medical malpractice insurance coverage to physicians and surgeons who have hospital privileges at the hospitals. CHEFA must use $1. 5 million from its reserves to establish a fund to pay for the grants. The fund may also cover legal, actuarial, consulting, and other insurance or indemnity-related costs.

*Damage Award or Settlement*	*Contingency Fee the Law Allows*	*Percentage of Total Award to Attorney*	*Amount Client Receives*	*Percentage of Total Award to Client*
$100,000	$33,333	33. 3%	$66,667	66. 7%
$500,000	$150,000	30%	$350,000	70%
$1,000,000	$250,000	25%	$750,000	75%
$5,000,000	$660,000	13. 2%	$4,540,000	86. 8%
$10,000,000	$1,160,000	11. 6%	$8,840,000	88. 4%