HB238, sponsored by Representative Larry Flowers (R- Canal Winchester) would establish a Patient Compensation Fund (PCF) to pay for catastrophic medical liability judgment and settlement and would obtain primary coverage of $250,000 from the open market. Any judgment or settlement in excess of that amount up to $1 million would be paid by the PCF.
Sponsor testimony provided last week indicated that a PCF would act as an excess layer of insurance coverage for physicians, but said given the unique nature of Ohio's medical liability insurance crisis, a broader-based funding mechanism will be necessary to ensure meaningful relief for physicians.
This week Ann Womer Benjamin, director of the Ohio Department of Insurance (ODI), gave proponent testimony on the bill. Her agency, as well as a commission studying medical malpractice issues, believes a PCF would help steady the medical malpractice insurance market. A PCF can decrease costs, but the only way an effective PCF can exist is by having a proper balance between the level of a provider's primary insurance and the limits of coverage a PCF provides. Although Womer Benjamin could not recommend a proper ratio, at this time, she said that ODI believes a $250,000 requirement for primary insurance coverage may be too low, and the current upper limit for PCF coverage, which appears to be unlimited, is too high.
The main goal of a PCF is to provide greater stability and greater availability to the market, thereby increasing competition. A PCF also should give insurers greater predictability in writing malpractice insurance. Ms. Womer Benjamin also suggested: liability of the PCF should be capped and that the amount of insurance providers purchase is at a level that assures that insurers will "aggressively" defend against claims. In addition, participation in the PCF should be mandatory and eligibility to participate in the fund should extend to physicians, podiatrists, nurses, emergency medical personnel, hospitals, nursing homes and residential facilities; funding for the PCF would come from a premium surcharge. There is debate about seed money being needed and a source to be identified for that money. The bill provides for the PCF to be operated by a governing board, rather than ODI, who would set rates and the rates, should be uniform across practice areas; and a loss experience factor could be included in the rating. A PCF has helped stabilize medical liability rates in other states and it is hoped that if one were established in Ohio along with other measure that have been passed, that it will have the same effect. The AMC/NOMA legislative committee agrees with many of the points in the legislation, but there is some concern about the funding mechanism in the bill. The AMC/NOMA will continue to monitor the bill's progress and provide information to our membership.