On Tuesday, July 15, 2003, the Medical Malpractice Commission held its third meeting at the Ohio Department of Insurance (ODI) in Columbus, Ohio.
Robert Walling, FCAS, MAAA of Pinnacle Actuarial Resources, Inc. discussed the Pinnacle report and study on the Patient Compensation Fund. He said that the goal of Senate Bill 281 (124th) was to address the availability and affordability of medical malpractice insurance and the impact on healthcare for residents of Ohio. He said that Senate Bill 281 charged the Ohio Department of Insurance (ODI) to study "the feasibility of a patient compensation fund (PCF) to cover medical malpractice claims." The bill requires the PCF feasibility study to examine:
He said that the Department also asked Pinnacle for information on other PCF approaches and related reforms. Senate Bill 281 required a preliminary report by March 3, 2003. The preliminary report provides information on:
The following is the PCF working definition: "a patient compensation fund is a medical malpractice insurance mechanism, created by state law, designed to increase professional liability coverage availability and/or affordability primarily by providing coverage for a specific type of injury or an excess layer of coverage." He said the American Medical Association views California, Colorado, Indiana, Louisiana, New Mexico and Wisconsin as "currently okay" and they are not having a problem with malpractice insurance for physicians. The common features of these states are broad reform packages including components, such as the following:
Walling explained that Senate Bill 281 capped non-economic damages at $250,000 and allowed unlimited economic damages. The bill has no caps on attorney contingency fees and establishes that a PCF may provide coverage above the caps. He said that the bill does not eliminate medical malpractice costs and there is a significant opportunity for cost shifting between economic and non-economic damages. He said that a PCF would seek balance between availability/affordability and competitive market forces. A PCF would include eligibility for:
He said that participation in the PCF should be voluntary and may improve/reduce market premiums during a market crisis. The PCF would not eliminate system costs during times when the voluntary market is effective. He said that under the PCF, all providers should secure $250,000 per occurrence in coverage. The PCF would then handle coverage above $250,000 per occurrence and there would be unlimited medical benefits and up to the caps under Senate Bill 281 for non-economic damages. The caps on non-economic damages specified under Senate Bill 281 would apply without the PCF providing coverage above the caps. He said that Florida data shows that caps would have reduced total claim costs by 16 percent and have potential to reduce Ohio’s medical malpractice claim costs.
In addition to the PCF, several other recommendations were offered as well. A sliding scale for attorney fees similar to California’s MICRA was recommended with 40 percent of the first $50,000, 33 percent of the next $50,000, 25 percent of the next $500,000, and 15 percent of anything over $600,000. Walling said that such limits could increase payments to patients by 12 percent without adding to total system costs.
The establishment of a medical review board was also recommended to eliminate frivolous claims and create the opportunity for counseling and reduce incidents. In addition, Walling said that data reporting should be expanded to create a statewide claim database (similar to Florida’s) to monitor the effectiveness of Senate Bill 281, evaluate PCF performance, and assess system results.