INDIANA DEPARTMENT OF INSURANCE DEDICATED FUNDS DIVISION ED

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INDIANA DEPARTMENT OF INSURANCE DEDICATED FUNDS DIVISION ED FUJAWA Deputy General Counsel |Department of

INDIANA DEPARTMENT OF INSURANCE DEDICATED FUNDS DIVISION ED FUJAWA Deputy General Counsel |Department of Insurance

WHAT IS A DEDICATED FUND? DEFINING THE PURPOSE

WHAT IS A DEDICATED FUND? DEFINING THE PURPOSE

§ Money set aside for a particular purpose, separate from the state’s general fund.

§ Money set aside for a particular purpose, separate from the state’s general fund. § Three Dedicated Funds: - Indiana Patient’s Compensation Fund - Indiana Mine Subsidence Fund - Political Subdivision Fund § IDOI personnel oversee and manage the operations of these funds on behalf of the Commissioner. § Actuarial services are retained for review of the finances of the funds, and to determine rates where applicable. § As necessary, outside counsel may be retained to advise or defend a fund.

THE MEDICAL MALPRACTICE ACT A BRIEF HISTORY

THE MEDICAL MALPRACTICE ACT A BRIEF HISTORY

HISTORY + ROLE § Medical Malpractice Act became law in 1975 § The Act

HISTORY + ROLE § Medical Malpractice Act became law in 1975 § The Act was a response to a healthcare crisis in Indiana § Governor Otis “Doc” Bowen was the driving force behind MMA § Introduced several significant changes to medical malpractice in Indiana - Medical Review Panels - Caps on Damages - Creation of the Patient’s Compensation Fund (PCF) § Creates a two-stage system for litigating medical malpractice cases; first, against the healthcare provider; second, against the PCF § Several other states, including Wisconsin, Louisiana, and Virginia have similar systems in place.

CAPPING DAMAGES § From 1975 – 1990: $500, 000; Healthcare Provider Portion $100, 000

CAPPING DAMAGES § From 1975 – 1990: $500, 000; Healthcare Provider Portion $100, 000 § From 1990 – 1999: $750, 000; Healthcare Provider $100, 000 § From 1999 – 2017: $1, 250, 000; Healthcare Provider $250, 000 Legislative changes in 2016 resulted in progressive increases in the applicable caps over the course of several years: § July 1, 2017 - June 30, 2019: $1, 650, 000; Healthcare Provider $400, 000 § After June 30, 2019: $1, 800, 000; Healthcare Provider $500, 000 *Without the caps, the Act is essentially worthless, as the caps, and the resulting limited liability, stabilize the medical malpractice insurance rates paid by healthcare providers. *

MEDICAL MALPRACTICE SECTION OVERVIEW OF SERVICES PROVIDED

MEDICAL MALPRACTICE SECTION OVERVIEW OF SERVICES PROVIDED

IDOI MEDICAL MALPRACTICE SECTION § Responsible for intake of Proposed Complaints, Medical Review Panel

IDOI MEDICAL MALPRACTICE SECTION § Responsible for intake of Proposed Complaints, Medical Review Panel Decisions, and other filings required under the Act. § Monitor and assist with insurers with the e- filing of insurance certificates. § Respond to questions from the public and practitioners regarding the medical malpractice system and their qualification. § Maintain case records for claims filed with the IDOI. § Addressing emergent issues related to qualification or surcharge payment

MEDICAL MALPRACTICE STATISTICS 2016 2017

MEDICAL MALPRACTICE STATISTICS 2016 2017

THE $1, 000 DOLLAR QUESTION: IS A HEALTHCARE PROVIDER QUALIFIED? § In order to

THE $1, 000 DOLLAR QUESTION: IS A HEALTHCARE PROVIDER QUALIFIED? § In order to be covered by the caps, a healthcare provider must be “qualified” under the Act. § To be qualified, a health care provider must have surcharge and proof of financial responsibility i. e. insurance coverage, must be filed with the PCF. -Healthcare provider must also be licensed in the state of Indiana. § Financial responsibility must include policy limits up to the underlying cap (presently $400, 000) as well as an annual aggregate dictated by the Act ($1, 200, 000 for a physician) § In 2012 the PCF went to an e-file system.

SURCHARGE: WHAT FUNDS THE PCF • Surcharge is based upon a healthcare provider’s specialty;

SURCHARGE: WHAT FUNDS THE PCF • Surcharge is based upon a healthcare provider’s specialty; the more risk associated with a specialty, the higher the surcharge. • Hospitals and nursing home surcharges are established based on the number of beds and employees covered under their respective insurance policies. • Surcharges are evaluated annually, and updates issued via bulletins. • See Rule 60 for more information on specialty classes.

PATIENT’S COMPENSATION FUND THE FINAL STEP OF A MEDICAL MALPRACTICE CLAIM

PATIENT’S COMPENSATION FUND THE FINAL STEP OF A MEDICAL MALPRACTICE CLAIM

AN OVERVIEW OF THE PCF § PCF is funded by surcharges paid by the

AN OVERVIEW OF THE PCF § PCF is funded by surcharges paid by the healthcare providers via their insurers. Taxpayers do not contribute to the PCF. § Surcharge rates are reviewed annually by IDOI actuaries. This review includes a consideration of a number of factors, including: - The number of claims filed with the PCF - Funds expended for payment of claims and administration costs - Statutory changes, including increases in the caps on damages - Increased risk associated with certain specialties. § Only qualified healthcare providers are covered by the Fund. A non-qualified healthcare provider is subject to un-capped liability, and the PCF will not provide any excess damages for those claims. § Participation in the PCF is VOLUNTARY. No requirement for a healthcare provider to pay surcharge.

SEEKING EXCESS DAMAGES § Once a patient settles with a healthcare provider, they may

SEEKING EXCESS DAMAGES § Once a patient settles with a healthcare provider, they may Petition the PCF for additional funds. § In 2017, the PCF received ___ petitions, and paid ______ in settlements and judgments. § Liability is established at this stage, so only issue is damages. § PCF trials are held before judges, not juries. § Payouts are statutorily required to be made 60 days after the issuance of a judgment order.

ISSUES FACING THE PCF § Increasing attempts to seek compensation for injuries not resulting

ISSUES FACING THE PCF § Increasing attempts to seek compensation for injuries not resulting from medical malpractice. -Premises liability issues -Intentional acts or abusive behavior -Relationships between patient and healthcare provider § Constitutional challenges § Serial malpractice cases, resulting in hundreds of claims stemming from one physician or practice. § Increased caps for malpractice starting in 2017, with an additional increase in 2019.

TIPS & BEST PRACTICES § Monitor IDOI website for updates on laws and rules

TIPS & BEST PRACTICES § Monitor IDOI website for updates on laws and rules impacting the Patient’s Compensation Fund § While the IDOI maintains medical malpractice filings, we are not a court, and do not possess judicial powers. § After filing a certificate of insurance, pay promptly to avoid penalties. § PCF Annual Reports available on the IDOI website for review. § Submit payment of surcharge to the PCF timely in order to avoid penalties. *Check out the IDOI website for a list of FAQ’s relating to the PCF to help guide you through the qualification process*

THE END ANY QUESTIONS? Ed Fujawa 317 -234 -6064 Ed. Fujawa@idoi. IN. gov Meghann

THE END ANY QUESTIONS? Ed Fujawa 317 -234 -6064 Ed. Fujawa@idoi. IN. gov Meghann Leaird 317 -232 -2401 Me. Leaird@idoi. in. gov