Governor Rendell vetoes Senate Bill 1280

Bill Needs More Study, Analysis, Public Input

Governor Edward G. Rendell today vetoed Senate Bill 1280 noting the proposed legislation would destabilize the medical malpractice market, affecting physicians, other health care providers and ultimately the quality of care available.

"Senate Bill 1280 fails to recognize the noteworthy progress we have made in Pennsylvania's medical malpractice insurance marketplace," said Governor Rendell.  "The bill would cause extreme swings in the MCare assessment from year to year, which would be detrimental to providers, would destabilize the medical malpractice market, and would create a crisis atmosphere that would undermine the commonwealth's continuing ability to retain and attract physicians and other health care providers to Pennsylvania. None of this is prudent or in the best interests of Pennsylvania or its citizens.  

"Even more disconcerting is the fact that the proposed legislation would bring innovation in the marketplace to a complete halt for the next several years without evidence that this is needed and without an assessment of how this might impact our medical providers."

The bill would amend Act 13 of 2002, the Medical Care Availability and Reduction of Error Act, or MCare, by freezing primary medical malpractice insurance limits for seven years and by adjusting the formula for determining the assessment by which MCare is funded. These actions would destabilize the medical malpractice insurance marketplace and would undermine the commonwealth's ability to attract and retain medical providers to care for its citizens.

"We have worked very hard in the last eight years to get to this new, improved place in which medical malpractice claims are down, insurance coverage is more available and affordable, and the number of medical providers is increasing," said Governor Rendell. "I vetoed Senate Bill 1280 because I do not want to impede that progress or put our doctors at risk. Further study, analysis and public input are warranted before implementing the changes contemplated in this bill."

Media contacts:

Rosanne Placey, Insurance; 717-787-3289

Gary Tuma, Governor's Office; 717-783-1116

Editor's Note: The text of the Governor's veto message and a supporting letter from a physician and former president of the Pennsylvania Medical Society follows:

To the Honorable, the Senate of the Commonwealth of Pennsylvania:

I am returning herewith, without my approval, Senate Bill 1280, Printer's Number 2231, entitled "AN ACT amending the act of March 20, 2002 (P.L.154, No.13), entitled "An act reforming the law on medical professional liability; providing for patient safety and reporting; establishing the Patient Safety Authority and the Patient Safety Trust Fund; abrogating regulations; providing for medical professional liability informed consent, damages, expert qualifications, limitations of actions and medical records; establishing the Interbranch Commission on Venue; providing for medical professional liability insurance; establishing the Medical Care Availability and Reduction of Error Fund; providing for medical professional liability claims; establishing the Joint Underwriting Association; regulating medical professional liability insurance; providing for medical licensure regulation; providing for administration; imposing penalties; and making repeals," further providing for medical professional liability insurance, for Medical Care Availability and Reduction of Error Fund and for actuarial data; and providing for conflict."

Senate Bill 1280 amends Act 13 of 2002, the Medical Care Availability and Reduction of Error (Mcare) Act, by (i) freezing primary medical malpractice insurance limits for seven years, (ii) adjusting the formula for determining the assessment by which the Medical Care Availability and Reduction of Error Fund (Fund) is funded, and (iii) purporting to have no impact on certain litigation.

This bill fails to recognize the significant progress of the Commonwealth's medical malpractice reform and physician retention efforts.  Since the passage of the Mcare Act in 2002, we have seen consistent downward trends in the number of medical malpractice claims paid and the number of medical malpractice lawsuits filed.  As a result, we have also seen a decrease in the cost of primary and Mcare excess insurance and an increase in the number of private carriers in the market.  We also have 39,000 practicing physicians in the marketplace currently versus 32,000 in 2002.  Under the current law, the Insurance Commissioner is required to study these factors and the market in 2011 and determine whether the primary medical malpractice insurance limits should be increased.

To make the significant changes contemplated by Senate Bill 1280 without legislative hearings or other development of public input informing these changes is particularly disconcerting.  For example, no evidence was presented to explain and consider how the change in the assessment formula would impact providers.  Nor was any evidence presented to explain why a seven year freeze in premium limits is needed or appropriate in general or the rationale for that period of time.  A seven year freeze would eliminate the ability of the Commissioner to adjust the primary limits to fairly reflect current and future market conditions at an earlier point in time.  Hearings also would have given an opportunity to consider the ongoing positive results of our medical malpractice reforms, and to evaluate whether it is desirable to prevent the expansion of the private insurance market for an additional seven years.

Further, I cannot support the changes in the assessment formula set forth in Senate Bill 1280.  Rather than maintaining a Fund balance to moderate potential fluctuations in Mcare claim payments and assessments from year to year, Senate Bill 1280 would subtract the entire Fund balance from the aggregate assessment amount each year.  From a Fund perspective, this would result in a Mcare Fund deficit in each year in which actual Mcare claims and operating expenses exceed the projected claims and operating expenses. In order to pay claims in such years, the Fund would be required to borrow money, which would increase the assessment the following year.  More importantly, Senate Bill 1280 would cause extreme swings in the Mcare assessment from year to year, which would be detrimental to providers, would destabilize the medical malpractice market, and would create a crisis atmosphere that would undermine the Commonwealth's continuing ability to retain and attract physicians and other health care providers to Pennsylvania.  None of this is prudent or in the best interests of Pennsylvania or its citizens.   As deliberations on this bill proceeded, we offered alternative approaches to mitigate the potential for future Mcare rate spikes due to artificial reductions funded with the year end fund balance in the Mcare account.  Specifically we recommended that a reasonable balance remain in the account to ameliorate severe swings in Mcare premiums from year-to-year. These reasonable and protective proposals were unheeded.

Finally, the provision in Senate Bill 1280 regarding "proceedings challenging any assessment" is vague and ambiguous, and could itself lead to further litigation to determine what that provision means and how it is to be applied to whatever litigation may be pending.  It is unwise to create ambiguity and spawn litigation where it can be avoided.

For the reasons set forth above, I must withhold my signature from Senate Bill 1280, Printer's Number 2231.

Sincerely,

Edward G. Rendell, Governor

Text of letter from Dr. Mark Piasio, DuBois Regional Medical Center in Clearfield County

Dear Governor Rendell,

It was a pleasure speaking with your staff today. Please extend my regards to Secretary Cooper, and Mr. Crawford. We all worked together from 2005-2007 when I served as president of Pennsylvania Medical Society.

I am aware that a bill, I believe SB1280, has passed both houses and awaits your approval. I spent nearly 7 years consulting with the state on ways to retire MCare, the Cat Fund, or what have you. We all recognize that it is not working as designed, has been unfair at times, and really not the work of the state. The retirement has been very problematic, though I really thought we would have achieved that during my presidency. The liability climate is currently stable, and responsible means for retirement exist. The state should leave this business, as we all know the past politics involved.

We can only achieve real liability reform that treats patients and doctors fairly when we retire these paradigms and implement any of the tort alternatives that promote patient safety and quality care, which MCare does not. Most importantly is the pushing of the responsibility to pay the unfunded liability of MCare onto future generations of physicians which this bill does.  This would be a cowardly act at best, and NOT in the long term interest of the citizens of the Commonwealth or the medical profession. Many claims of calamity have been told, but not supported by any real facts, that this bill is needed.

In the interest of future generations, I implore you to reject this bill, work on retiring MCare as soon as possible, re-establish a vibrant private liability marketplace, and pursue all the tort alternatives that will serve medicine and patients best. We all need to thank Chief Justice Cappy for his work in correcting inequalities as well as the patient safety movement. Perpetuating MCare will not help this cause and will hurt those most important to us, namely our sons and daughters who hope to follow in our footsteps. As an orthopedic surgeon, I know my stance will not be popular, but I believe right in the long run. Despite the cries, we are not suffering economically as are most of our patients.

Sincerely,

Mark A Piasio, MD MBA