2012 PROFESSIONAL LIABILITY UPDATE - Eckert Seamans

vicariously liable if the plaintiff shows that a “reasonably prudent person in the patient’sposition” would believe that the care was being rendered by the hospital or its agents or that thecare in question was “advertised or otherwise represented” as being care rendered by the hospitalor its agents. 40 P.S. § 1303.516(a). MCARE changes the traditional subjective belief of thepatient to a reasonable prudent person standard.3. Insurance ReformMCARE created the Medical Care Availability and Reduction of Error Fund (“TheMCARE Fund”) which replaced the Pennsylvania Medical Professional Liability Fund (“TheCAT Fund”) as of October 1, 2002. 40 P.S. § 1303.712. Like its predecessor, the MCARE Fundprovides insurance coverage in excess of the basic limits for each eligible health care provider.40 P.S. § 1303.712(a). The MCARE Fund is subsidized through assessments on eachparticipating health care provider. 40 P.S. § 1303.712(d).In 2012, the annual assessment will be 23% applied to the prevailing primarypremium for each participating health care provider. Medical Care Availability &Reduction Of Error Fund Notice Of And Amount Of Assessment Action, PA Notice No.2011-09, WL 5307822 (October 29, 2011). The total assessment cost for 2012 will be$203,824,513. This amount is $26,741,075 greater than what was collected from the 2011assessment to cover claims, expenses, and a 10% buffer. This difference will be paid fromMCARE’s carryover balance. The increase in the assessment percentage for 2012 isattributable to an increase in claims in 2011, as well as a rate reduction by the JointUnderwriting Association.An amendment to the Act, entitled the “Health Care Provider Retention Program”(“HCPR”), allowed eligible healthcare providers to receive an abatement of this assessment uponapplication to the Insurance Department, in exchange for which the health care provider isrequired to attest in writing that he or she will continue to provide health care services inPennsylvania for at least one full year following the year for which he or she receives theabatement. 40 P.S. § 1303.1101-1115 (repealed 2009). However, in 2009, the HCPR wasrepealed. Id.Under MCARE, the minimum required limits of professional liability insurance are thesum of the basic limits (for policies issued or renewed in 2003, $500,000 per occurrence or claimand $1,500,000 per year for a participating provider) and the MCARE fund limits ($500,000 peroccurrence or claim and $1,500,000 per year). 40 P.S. § 1303.711(d); § 1303.712(c). The basiclimits are secured from private commercial insurance carriers, or, upon certain qualifications,through self-insurance. 40 P.S. § 1303.711. The MCARE fund will eventually terminatefollowing satisfaction of all liabilities of the Fund. 40 P.S. § 1303.712(k). The MCARE fundlimits, during the phase-out, will be reallocated to the basic insurance coverage provided by theprivate insurers (or the self-insurers). 40 P.S. § 1303.711(d), 712(c)-(d).The MCARE fund generally functions as excess coverage for medical providers.However, section 715 of the MCARE Act provides an exception, requiring the MCARE fund toact as primary insurer and provide first-dollar indemnity and defense to providers for eligibleclaims. 40 P.S. § 1303.715. To be eligible for this first-dollar indemnity of MCARE, also104