2006 Louisiana Laws - RS 40:1299.44 — Patient\'s compensation fund

§1299.44.  Patient's Compensation Fund

A.(1)  Subject to the exceptions contained in Article VII, Section 9(A) of the Constitution of Louisiana, all funds collected pursuant to the provisions hereof shall be paid into the state treasury and shall be credited to the Bond Security and Redemption Fund.  Out of the funds remaining in the Bond Security and Redemption Fund after a sufficient allocation is allocated from that fund to pay all obligations secured by the full faith and credit of the state due and payable within any fiscal year, the treasurer shall, prior to placing such remaining funds in the state general fund, pay into a special fund, which is hereby created in the state treasury and designated as the "Patient's Compensation Fund", in an amount equal to the total amount of funds paid into the treasury as a result of the voluntary collections from private health care providers provided for hereunder.  The state recognizes and acknowledges that the fund and any income from it are not public monies, but rather are private monies which shall be held in trust as a custodial fund by the state for the use, benefit, and protection of medical malpractice claimants and the fund's private health care provider members, and all of such funds and income earned from investing the private monies comprising the corpus of this fund shall be subject to use and disposition only as provided by this Section.

(2)(a)  In order to provide monies for the fund, an annual surcharge shall be levied on all health care providers in Louisiana qualified under the provisions of this Part.

(b)  The surcharge shall be determined by the Louisiana Insurance Rating Commission based upon actuarial principles and in accordance with an application for rates or rate changes, or both, filed by the Patient's Compensation Fund Oversight Board, established and authorized pursuant to Subsection D of this Section.

(c)  The application for rate changes filed by the board shall be submitted to the Louisiana Insurance Rating Commission at least annually on the basis of an annual actuarial study of the patient's compensation fund.

(d)  The surcharge shall be collected on the same basis as premiums by each insurer, the risk manager, and surplus line agent.

(e)  The board shall collect the surcharge from health care providers qualified as self-insureds.

(f)  The surcharge for self-insureds shall be the amount determined by the board in accordance with regulations promulgated under the Administrative Procedure Act and in accordance with the rate set by the Louisiana Insurance Rating Commission to be the amount of surcharge which the health care provider would reasonably be required to pay were his qualification based upon filing a policy of malpractice liability insurance.

(3)(a)  Such surcharge shall be due and payable to the patient's compensation fund within forty-five days after the premiums for malpractice liability insurance have been received by the agent of the insurer, risk manager, or surplus line agent from the health care provider in Louisiana.

(b)  It shall be the duty of the insurer, risk manager, or surplus line agent to remit the surcharge to the Patient's Compensation Fund within forty-five days of the date of payment by the health care provider.  Failure of the insurer, risk manager, or surplus line agent to remit payment within forty-five days shall subject the insurer, risk manager, or surplus line agent to a penalty, the amount of which will be set by the board on an annual basis, not to exceed a total of twelve percent of the annual surcharge.  Upon the failure of the insurer, risk manager, or surplus line agent to remit as provided herein, the board is authorized to institute legal proceedings if necessary to collect the surcharge, any penalty amount to be assessed, legal interest, and all reasonable attorney fees.

(4)  If the annual premium surcharge is not paid within the time limited above, upon written notice of such nonpayment given by the board concurrently to the commissioner of insurance and the insurer, risk manager, or surplus line agent, the certificate of authority of the insurer, risk manager, and surplus line agent shall be suspended until the annual premium surcharge is paid.

(5)(a)  All expenses of collecting, protecting, and administering the fund shall be paid from the fund.

(b)  The functions of collecting, administering, and protecting the fund, including all matters relating to establishing reserves, the evaluating and settlement of claims, and relating to the defense of the fund, shall be carried out by the board.

(c)  The function of selecting the list of attorney names from which the selection of the attorney chairman of the medical review panels is to be made shall be the responsibility of the office of the clerk of the Louisiana Supreme Court.

(d)  These expenses of the board and office of the clerk of the Louisiana Supreme Court shall be paid from the fund by the state treasurer in accordance with the law.

(e)  The fund shall be a budget unit of this state.

(f)  The legislature shall appropriate from the fund sufficient monies for the carrying out by the board and office of the clerk of the Louisiana Supreme Court of the duties, functions, and responsibilities imposed upon them in this Section and shall also appropriate all remaining monies in the fund for use by the board to pay approved claims based upon final judgments, court-approved settlements, final arbitration awards, and judgments awarding medical care and related benefits rendered pursuant to R.S. 40:1299.43 and vouchers drawn by the board pursuant to a judgment reciting that a patient is in need of future medical and related benefits under the provisions of R.S. 40:1299.43 in accordance with Paragraph (7) of this Subsection and in accordance with Subsection B of this Section.

(g)  Any purchases from the fund of furniture, fixtures, equipment, or other property shall be specifically designated, by such method of identification as is reasonable and practical for each item, as the property of the fund.

(h)  Repealed by Acts 2002, No. 86, §2.

(6)(a)  At all times the fund shall be maintained so as to provide a surplus of thirty percent of the annual surcharge premiums, reserves established for individual claims, reserves established for incurred but not reported claims, and expenses.

(b)  No reduction in the surcharge shall be made unless such surplus is available in the fund.

(7)(a)  Claims from the patient's compensation fund exclusive of those provided for in R.S. 40:1299.43 shall be computed at the time the claim becomes final.

(b)  A final claim shall be paid within forty-five days of the board's receipt of a certified copy of the settlement, judgment, or arbitration award, unless the fund is exhausted and the proration provision contained in Subparagraph (7)(c) applies.

(c)  If the fund would be exhausted by payment in full of all final claims then the amount paid to each claimant shall be prorated.

(d)  Any amounts due and unpaid shall be prorated.

(e)  Any amounts due and unpaid shall be paid in the following semi-annual periods.

B.(1)  Subject to the other provisions of this Section, the board shall issue payment in the amount of each claim submitted to and approved by it, or prorated payment, as the case may be, against the fund within thirty days of receipt of a certified copy of the settlement, judgment, or arbitration award except that payment for claims made pursuant to Subparagraph (2)(d) or (e) of this Subsection, or both, shall be made upon receipt of such certified copy.

(2)  The only claim against the fund shall be a voucher or other appropriate request by the board after it receives:

(a)  A certified copy of a final judgment in excess of one hundred thousand dollars against a health care provider.

(b)  A certified copy of a court approved settlement in excess of one hundred thousand dollars against a health care provider.

(c)  A certified copy of a final award in excess of one hundred thousand dollars in an arbitration proceeding against a health care provider.

(d)  A certified copy of a judgment awarding medical care and related benefits rendered pursuant to R.S. 40:1299.43.

(e)  A voucher drawn by the board through the patient's compensation fund defense counsel pursuant to a judgment reciting that a patient is in need of future medical care and related benefits under the provisions of R.S. 40:1299.43.

C.  If the insurer of a health care provider or a self-insured health care provider has agreed to settle its liability on a claim against its insured and claimant is demanding an amount in excess thereof from the patient's compensation fund for a complete and final release, then the following procedure must be followed:

(1)  A petition shall be filed by the claimant with the court in which the action is pending against the health care provider, if none is pending in the parish where plaintiff or defendant is domiciled seeking (a) approval of an agreed settlement, if any, and/or (b) demanding payment of damages from the patient's compensation fund.

(2)  A copy of the petition shall be served on the board, the health care provider and his insurer, at least ten days before filing and shall contain sufficient information to inform the other parties about the nature of the claim and the additional amount demanded.

(3)  The board and the insurer of the health care provider or the self-insured health care provider as the case may be, may agree to a settlement with the claimant from the patient's compensation fund, or the board and the insurer of the health care provider or the self-insured health care provider as the case may be, may file written objections to the payment of the amount demanded.  The agreement or objections to the payment demanded shall be filed within twenty days after the petition is filed.

(4)  As soon as practicable after the petition is filed in the court the judge shall fix the date on which the petition seeking approval of the agreed settlement and/or demanding payment of damages from the fund shall be heard, and shall notify the claimant, the insurer of the health care provider or the self-insured health care provider as the case may be, and the board thereof as provided by law.

(5)(a)  At the hearing the board, the claimant, and the insurer of the health care provider or the self-insured health care provider, as the case may be, may introduce relevant evidence to enable the court to determine whether or not the petition should be approved if it is submitted on agreement without objections.  If the board, the insurer of the health care provider or the self-insured health care provider, as the case may be, and the claimant cannot agree on the amount, if any, to be paid out of the patient's compensation fund, then the trier of fact shall determine at a subsequent trial which shall take place only after the board shall have been given an adequate opportunity to conduct discovery, identify and retain expert witnesses, and prepare a defense, the amount of claimant's damages, if any, in excess of the amount already paid by the insurer of the health care provider or self-insured health care provider.  The trier of fact shall determine the amount for which the fund is liable and render a finding and judgment accordingly. The board shall have a right to request trial by jury whether or not a jury trial has been requested by the claimant or by any health care provider.

(b)  The board shall not be entitled to file a suit or otherwise assert a claim against any qualified health care provider as defined in R.S. 40:1299.41(A)(1) on the basis that the qualified health care provider failed to comply with the appropriate standard of care in treating or failing to treat any patient.

(c)  The board may apply the provisions of Civil Code Article 2323 or 2324, or both, to assert a credit or offset for the allocated percentage of negligence or fault of a qualified health care provider provided at least one of the following conditions is met:

(i)  A payment has been made to the claimant by, in the name of, or on behalf of the qualified health care provider whose percentage of fault the board seeks to allocate.

(ii)  A payment has been made to the claimant by, in the name of, or on behalf of another qualified health care provider in order to obtain a dismissal or release of liability of the qualified health care provider whose percentage of fault the board seeks to allocate, provided that there shall be no separate credit or offset for the fault of an employer or other vicariously liable entity who was not independently negligent or otherwise at fault and who makes a payment in order to obtain a dismissal or release of liability of a single qualified health care provider for whom the payor is vicariously liable.

(iii)  All or a portion of a payment made by another qualified health care provider, by the insurer of another qualified health care provider, or by the employer of another qualified health care provider has been attributed to or allocated to the qualified health care provider whose percentage of fault the board seeks to allocate, provided that there shall be no separate credit or offset for the fault of an employer or other vicariously liable entity who was not independently negligent or otherwise at fault and who makes a payment in order to obtain a dismissal or release of liability of a single qualified health care provider for whom the payor is vicariously liable.

(iv)  A medical review panel has determined that the qualified health care provider whose percentage of fault the board seeks to allocate failed to comply with the appropriate standard of care and that the failure was a cause of the damage or injury suffered by the patient, or a medical review panel has determined that there is a material issue of fact, not requiring expert opinion, bearing on liability of the qualified health care provider whose percentage of fault the board seeks to allocate for consideration by the trier of fact.

(v)  The qualified health care provider does not object within thirty days after notice of the board's intention to allocate the health care provider's percentage of fault is delivered via certified mail to the plaintiff, the qualified health care provider, and the qualified health care provider's professional liability insurer or to their attorneys.

(vi)  The court determines, after a hearing in which the qualified health care provider whose percentage of fault the board seeks to allocate shall be given an opportunity to appear and participate, that there has been collusion or other improper conduct between the defendant health care providers to the detriment of the interests of the fund.

(d)  Except where the sum of one hundred thousand dollars has been paid by, in the name of, or on behalf of the qualified health care provider whose percentage of fault the board seeks to allocate, in any case in which the board is entitled pursuant to the provisions of Civil Code Article 2323 or 2324, or both, to assert a credit or offset for the allocated percentage of negligence or fault of a qualified health care provider, the board shall have the burden of proving the negligence or fault of the qualified health care provider whose percentage of fault the board seeks to allocate.

(e)  In approving a settlement or determining the amount, if any, to be paid from the patient's compensation fund, the trier of fact shall consider the liability of the health care provider as admitted and established where the insurer has paid its policy limits of one hundred thousand dollars, or where the self-insured health care provider has paid one hundred thousand dollars.

(f)  In each instance in which a claimant seeks to recover any sum from the board, each qualified health care provider or insurer or employer of a qualified health care provider who has made or has agreed to make any payment, including any reimbursement of court costs, medical expenses, or other expenses, to the claimant, the claimant's attorney, or any other person or entity shall be required, not later than ten days after the filing of the petition for approval of the settlement, to file and serve upon the board an answer to the petition for approval of the settlement which sets forth a complete explanation of each such payment, to include the identity of each payee, the identity of each entity by or on whose behalf each payment has been or is to be made, each amount paid or to be paid directly or indirectly by, on behalf of, or which has been or is to be attributed or allocated to any qualified health care provider, the purpose of each such payment, and the precise nature of any collateral agreement which has been made or is to be made in connection with the proposed settlement.

(6)  Any settlement approved by the court shall not be appealed.  Any judgment of the court fixing damages recoverable in any such contested proceeding shall be appealable pursuant to the rules governing appeals in any other civil court case tried by the court.

(7)  For the benefit of both the insured and the patient's compensation fund, the insurer of the health provider shall exercise good faith and reasonable care both in evaluating the plaintiff's claim and in considering and acting upon settlement thereof.  A self-insured health care provider shall, for the benefit of the patient's compensation fund, also exercise good faith and reasonable care both in evaluating the plaintiff's claim and in considering and acting upon settlement thereof.

(8)  The parties may agree that any amounts due from the patient's compensation fund pursuant to R.S. 40:1299.44(B) be paid by annuity contract purchased by the patient's compensation fund for and on behalf of the claimant.

(9)  Notwithstanding any other provision of this Part, any self-insured health care provider who has agreed to settle its liability on a claim and has been released by the claimant for such claim or any other claim arising from the same cause of action shall be removed as a party to the petition, and his name shall be removed from any judgment that is rendered in the proceeding. Such release shall be filed with the clerk of court in the parish in which the petition is filed upon the filing of a properly executed, sworn release and settlement of claim.

D.(1)(a)  The Patient's Compensation Fund Oversight Board is hereby created and established in the office of the governor.  The board shall be comprised of nine members, appointed by the governor subject to Senate confirmation.

(b)  Nine members of the board shall be a representative of and for one or more classes of health care providers enrolled in the fund, and the board's membership shall be apportioned according to the distribution of aggregate surcharges paid to the fund among the several classes of health care providers enrolled with the fund, as follows:

(i)  Four members of the board shall be representatives of the class of health care providers contributing the greatest percentage of the fund's aggregate surcharges.

(ii)  Two members of the board shall be representatives of the class of health care providers contributing the second greatest percentage of the fund's aggregate surcharges.

(iii)  One member of the board shall be a representative of the class of health care providers contributing the third greatest percentage of the fund's aggregate surcharges.

(iv)  One member of the board shall be appointed to represent all other classes of health care providers enrolled with the fund.

(c)  The ninth member of the board shall be appointed from nominees provided by the principal professional organization of insurance executives, and this member must be an executive of a property and casualty insurance company that is licensed in this state which does not sell medical professional liability insurance.

(d)  Appointments of members representing a single class of health care providers shall be made from nominations solicited from the respective principal professional organizations of such health care providers in the state.  The member of the board representing all other classes of health care providers shall be nominated by concurrence of the respective principal professional organizations of such health care providers in the state.  In the absence of such concurrence each such professional organization shall name a representative to an ad hoc committee which shall, from among its number, nominate a representative to the board.

(e)  For the purpose of apportioning representation on the board, the percentage surcharge contribution of each distinct class of health care providers listed by R.S. 40:1299.41 to the aggregate surcharges paid to the fund shall be calculated for each fiscal year of the fund, and apportionment with respect to an initial or subsequent appointment to the board shall be based on such percentage contributions for the fund fiscal year preceding any such appointment.

(f)  Two of the initial members of the board appointed pursuant to Item (1)(b)(i) of this Subsection, one of the initial members appointed pursuant to Item (1)(b)(ii), and the member appointed pursuant to Item (1)(b)(iii) shall serve for terms of three years.  One of the members of the initial board appointed pursuant to Item (1)(b)(i) of this Subsection and one of the initial members appointed pursuant to Item (1)(b)(ii) shall serve for terms of two years.  The remaining members of the initial board shall serve for terms of one year.  Thereafter, each member of the board shall serve for a term of three years, with any vacancy occurring in any such position being filled for the unexpired term of such position in the manner of the original appointment, in accordance with the apportionment of representation provided for by this Subsection.

(g)  The board shall annually elect a chairman and secretary from among its members and shall meet not less frequently than quarterly during the calendar year on the call of the chairman at such times and places as he may designate.

(h)  The members of the board shall receive seventy-five dollars per day while engaged in board business and for attendance at all meetings of the board.  Reasonable expenses incurred by board members in their travel to and attendance at meetings of the board shall be reimbursed by the fund in accordance with applicable laws and administrative regulations.  The members of the board shall not be reimbursed for any expenses incurred for board meetings outside of the state.

(2)(a)  The board shall be responsible, and have full authority under law, for the management, administration, operation and defense of the fund in accordance with the provisions of this Part.

(b)  In addition to such other powers and authority elsewhere expressly or impliedly conferred on the board by this Part, the board shall have the authority, to the extent not inconsistent with the provisions of this Part, to:

(i)  Collect all surcharges and other monies due the fund.

(ii)  Establish and define the standards and forms of financial responsibility required of self-insured health care providers, and the standards and forms of malpractice liability insurance policies issued by admitted insurance companies and the standards, forms, acceptable ratings and other criteria for medical malpractice liability insurance policies issued by non-admitted insurance companies which are acceptable as proof of financial responsibility pursuant to R.S. 40:1299.42, as a condition to initial and continuing enrollment with the fund.

(iii)  Collect, accumulate, and maintain claims experience data from enrolled health care providers and insurance companies providing professional liability insurance coverage to health care providers in this state, in such form as may be necessary or appropriate to permit the fund to develop appropriate surcharge rates for the fund.

(iv)  Employ, or in accordance with the provisions of law applicable to contracting for personal, professional or consulting services, retain the services of a qualified competent actuary to perform the annual actuarial study of the fund required by this Section and to advise the board on all aspects of the fund's administration, operation and defense which require application of the actuarial science.

(v)  Contract for any services necessary or advisable to implement the authority and discharge the responsibilities conferred and imposed on the board by this Part.

(vi)  Employ, in the unclassified service, an appropriately qualified executive director and delegate to such executive director all or any portion of the authority for administration and operation of the fund vested in the board, subject to the superseding authority of the board.

(vii)  Employ, in the unclassified service, an appropriately qualified claims manager and delegate to such claims manager all or any portion of the authority for the protection and defense of the fund vested in the board, subject to the superseding authority of the board.

(viii)  Employ, or contract with, legal counsel to advise and represent the board and represent the fund in proceedings pursuant to this Part.

(ix)  Employ such clerical personnel as may be necessary or appropriate to carry out the responsibilities of the board under this Part.

(x)  Defend the fund from all claims due wholly or in part to the negligence or liability of anyone other than a qualified health care provider regardless of whether a qualified health care provider has settled and paid its statutory maximum or has been adjudged liable or negligent.

(xi)  Defend the fund from all claims arising under R.S. 40:1299.44(D)(2)(b)(x) and obtain indemnity and reimbursement to the fund of all amounts for which anyone other than a qualified health care provider may be held liable.  The right of indemnity and reimbursement to the fund shall be limited to that amount that the fund may be cast in judgment.

(xii)  Intervene as a matter of right, at its discretion, in any civil action or proceeding in which the constitutionality of this Part, R.S. 9:5628, R.S. 9:5628.1 or any other Louisiana law related to medical malpractice as defined in this Part is challenged.

(xiii)  The right to apply the provisions of Civil Code Article 2323 or 2324, or both, to assert a credit or offset for the allocated percentage of negligence or fault of a qualified health care provider shall be governed by the provisions of Subparagraph (C)(5)(c) of this Section.

(3)  The board shall have authority, in accordance with applicable provisions of the Administrative Procedure Act, to adopt and promulgate such rules, regulations and standards as it may deem necessary or advisable to implement the authority and discharge the responsibilities conferred and imposed on the board by this Part.

(4)  All communications made and all documents and records developed by, between or among the attorney general, claims manager, the oversight board, any person or entity contracted to provide services to or on behalf of the fund under this Part, and enrolled health care providers and their insurers, relative to or in anticipation of defense of the fund or enrolled health care providers against, establishment of reserves with respect to, or prospective settlement of, individual malpractice claims shall be confidential and privileged against disclosure to any third party, pursuant to request, subpoena, or otherwise.

(5)  Any meeting of the board or any portion of any meeting of the board which is restricted to consideration of and/or action upon pending or threatened claims against the fund or health care providers with the fund shall not be subject to the provisions of R.S. 42:4.1 or R.S. 42:12.

Added by Acts 1975, No. 817, §1.  Amended by Acts 1976, No. 183, §4; Acts 1977, No. 261, §2; Acts 1979, No. 298, §1, eff. July 10, 1979; Acts 1984, No. 41, §1, eff. June 5, 1984; Acts 1984, No. 435, §4, eff. July 6, 1984; Acts 1986, No. 500, §1; Acts 1986, No. 636, §1; Acts 1988, No. 507, §1; Acts 1990, No. 967, §2, eff. Oct. 1, 1990; Acts 1991, No. 668, §1; Acts 1991, No. 800, §1; Acts 1995, No. 1258, §1; Acts 2001, No. 526, §1; Acts 2001, No. 725, §1, eff. June 25, 2001; Acts 2002, 1st Ex. Sess., No. 86, §§1, 2; Acts 2003, No. 431, §1, eff. June 18, 2003; Acts 2003, No. 882, §1, eff. July 1, 2003; Acts 2004, No. 309, §1.