SB2241ham004 93RD GENERAL ASSEMBLY

Rep. Dave Winters

Filed: 5/28/2004

09300SB2241ham004 LRB093 15873 AMC 51880 a

AMENDMENT TO SENATE BILL 2241

AMENDMENT NO. ______. Amend Senate Bill 2241 by replacing everything after the enacting clause with the following:

"Section 1. Findings. The General Assembly finds the following:

(1) Illinois is in the midst of a medical malpractice insurance crisis of unprecedented magnitude.

(2) Illinois is among the states with the highest medical malpractice insurance premiums in the nation.

(3) Medical malpractice insurance in Illinois is unavailable or unaffordable for many hospitals and physicians.

(4) The high and increasing cost of medical malpractice insurance in Illinois is causing health care providers to eliminate or reduce the provision of medical care throughout the State.

(5) The crisis is discouraging medical students from choosing Illinois as the place they will receive their medical education and practice medicine.

(6) The increase in medical malpractice liability insurance rates is forcing physicians to practice medicine without professional liability insurance, to leave Illinois, to not perform high-risk procedures, or to retire early from the practice of medicine.

(7) The high and increasing cost of medical malpractice insurance is due in large part to the inefficiency and unpredictability of adjudicating claims through the civil justice system.

(8) Much of this inefficiency stems from the time and resources needlessly spent on valuing uncertain and unpredictable claims of medical negligence.

(9) The public would benefit by making medical liability coverage for hospitals and physicians more affordable, which would make health care more available.

(10) This health care crisis, which endangers the public health, safety, and welfare of the citizens of Illinois, requires drastic reforms to the civil justice system currently endangering access to the necessary health care for citizens of Illinois.

Section 5. The Illinois Insurance Code is amended by changing Sections 155.18, 155.19, and 1204 and by adding Section 155.18a as follows:

(215 ILCS 5/155.18) (from Ch. 73, par. 767.18)

Sec. 155.18. (a) This Section shall apply to insurance on risks based upon negligence by a physician, hospital or other health care provider, referred to herein as medical liability insurance. This Section shall not apply to contracts of reinsurance, nor to any farm, county, district or township mutual insurance company transacting business under an Act entitled "An Act relating to local mutual district, county and township insurance companies", approved March 13, 1936, as now or hereafter amended, nor to any such company operating under a special charter.

(b) The following standards shall apply to the making and use of rates pertaining to all classes of medical liability insurance:

(1) Rates shall not be excessive or inadequate, as herein defined, nor shall they be unfairly discriminatory. No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided, and a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable.

No rate shall be held inadequate unless it is unreasonably low for the insurance provided and continued use of it would endanger solvency of the company.

(2) Consideration shall be given, to the extent applicable, to past and prospective loss experience within and outside this State, to a reasonable margin for underwriting profit and contingencies, to past and prospective expenses both countrywide and those especially applicable to this State, and to all other factors, including judgment factors, deemed relevant within and outside this State.

Consideration may also be given in the making and use of rates to dividends, savings or unabsorbed premium deposits allowed or returned by companies to their policyholders, members or subscribers.

(3) The systems of expense provisions included in the rates for use by any company or group of companies may differ from those of other companies or groups of companies to reflect the operating methods of any such company or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.

(4) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that have a probable effect upon losses or expenses. Such classifications or modifications of classifications of risks may be established based upon size, expense, management, individual experience, location or dispersion of hazard, or any other reasonable considerations and shall apply to all risks under the same or substantially the same circumstances or conditions. The rate for an established classification should be related generally to the anticipated loss and expense factors of the class.

(c) Every company writing medical liability insurance shall file with the Director of Insurance the rates and rating schedules it uses for medical liability insurance.

(1) This filing shall occur upon a company's commencement of medical liability insurance business in this State at least annually and thereafter as often as the rates are changed or amended.

(2) For the purposes of this Section, any change in premium to the company's insureds as a result of a change in the company's base rates or a change in its increased limits factors shall constitute a change in rates and shall require a filing with the Director. On any filing made pursuant to this Section wherein the company's annual cumulative overall rate increase exceeds 10%, the Director shall convene a public hearing for the purpose of receiving testimony from the company and from any interested persons regarding the company's proposed increase.

(3) It shall be certified in such filing by an officer of the company and a qualified actuary that the company's rates, including any risk management plan discount required by subdivision (g)(2) of this Section along with any other discounts that may be provided by the insurer, are based on sound actuarial principles and are not inconsistent with the company's experience. The Director may request any additional statistical data and other pertinent information necessary to determine the manner the company used to set the filed rates and the reasonableness of those rates.

(d) If, after an administrative a hearing pursuant to subsection (c) of Section 401 of this Code, the Director finds:

(1) that any rate, rating plan or rating system violates the provisions of this Section applicable to it, he shall may issue an order to the company which has been the subject of the hearing specifying in what respects such violation exists and may prohibit stating when, within a reasonable period of time, the further use of such rate or rating system by such company in contracts of insurance made thereafter shall be prohibited;

(2) that the violation of any of the provisions of this Section applicable to it by any company which has been the subject of the hearing was wilful or that any company has repeatedly violated any provision of this Section, he may take either or both of the following actions:

(A) Suspend suspend or revoke, in whole or in part, the certificate of authority of such company with respect to the class of insurance which has been the subject of the hearing.

(B) Impose a penalty of up to $1,000 against the company for each violation. Each day during which a violation occurs constitutes a separate violation.

(e) Every company writing medical liability insurance shall offer deductibles to each of its medical liability insureds in this State. This offer shall be included in the initial offer or in the first policy renewal occurring after the effective date of this amendatory Act of the 93rd General Assembly.

(f) Every company writing medical liability insurance in this State shall offer to each of its medical liability insureds the option to make premium payments in installments as prescribed by and filed with the Director. This offer shall be included in the initial offer or in the first policy renewal occurring after the effective date of this amendatory Act of the 93rd General Assembly.

(g) Medical liability insurance risk management plans.

(1) Each insurer shall develop and establish a risk management plan. The plan shall provide for discounts, not to exceed 25% of the medical liability premium, for insureds who implement risk management techniques specified by the insurer. This offer shall be included in the initial offer or in the first policy renewal occurring after the effective date of this amendatory Act of the 93rd General Assembly.

(2) Prior to initial use and thereafter as often as the risk management plan is changed or amended, each insurer shall file with the Director its risk management plan, including the schedule of discounts.

(Source: P.A. 79-1434.)

(215 ILCS 5/155.18a new)

Sec. 155.18a. Professional Liability Insurance Resource Center. The Director of Insurance shall establish a Professional Liability Insurance Resource Center on the World Wide Web containing the names and telephone numbers of all licensed companies providing medical liability insurance and producers who sell medical liability insurance. Each company and producer shall submit the information to the Department on or before September 30 of each year in order to be listed on the website. The Department is under no obligation to list a company or producer on the website. Hyperlinks to company websites shall be included, if available. The publication of the information on the Department's website shall commence on January 1, 2005. The Department shall update the information on the Professional Liability Insurance Resource Center at least annually.

(215 ILCS 5/155.19) (from Ch. 73, par. 767.19)

Sec. 155.19. All claims filed after December 31, 1976 with any insurer and all suits filed after December 31, 1976 in any court in this State, alleging liability on the part of any physician, hospital or other health care provider for medically related injuries, shall be reported to the Director of Insurance in such form and under such terms and conditions as may be prescribed by the Director. Notwithstanding any other provision of law to the contrary, any insurer, stop loss insurer, captive insurer, risk retention group, religious or charitable risk pooling trust, surplus line insurer, or other entity authorized or permitted by law to provide medical liability insurance in this State shall report to the Director, in such form and under such terms and conditions as may be prescribed by the Director, all claims filed after December 31, 2004 and all suits filed after December 31, 2004 in any court in this State alleging liability on the part of any physician, hospital, or health care provider for medically-related injuries. Each clerk of the circuit court shall provide to the Director such information as the Director may deem necessary to verify the accuracy and completeness of reports made to the Director under this Section. The Director shall maintain complete and accurate records of all such claims and suits including their nature, amount, disposition and other information as he may deem useful or desirable in observing and reporting on health care provider liability trends in this State. The Director shall release to appropriate disciplinary and licensing agencies any such data or information which may assist such agencies in improving the quality of health care or which may be useful to such agencies for the purpose of professional discipline.

With due regard for appropriate maintenance of the confidentiality thereof, the Director shall may release, on an annual basis, from time to time to the Governor, the General Assembly and the general public statistical reports based on such data and information.

If the Director finds that any entity required to report information under this Section has violated any provision of this Section by filing late, incomplete, or inaccurate reports, the Director may fine the entity up to $1,000 for each offense. Each day during which a violation occurs constitutes a separate offense.

The Director may promulgate such rules and regulations as may be necessary to carry out the provisions of this Section.

(Source: P.A. 79-1434.)

(215 ILCS 5/1204) (from Ch. 73, par. 1065.904)

Sec. 1204. (A) The Director shall promulgate rules and regulations which shall require each insurer licensed to write property or casualty insurance in the State and each syndicate doing business on the Illinois Insurance Exchange to record and report its loss and expense experience and other data as may be necessary to assess the relationship of insurance premiums and related income as compared to insurance costs and expenses. The Director may designate one or more rate service organizations or advisory organizations to gather and compile such experience and data. The Director shall require each insurer licensed to write property or casualty insurance in this State and each syndicate doing business on the Illinois Insurance Exchange to submit a report, on a form furnished by the Director, showing its direct writings in this State and companywide.

(B) Such report required by subsection (A) of this Section may include, but not be limited to, the following specific types of insurance written by such insurer:

(1) Political subdivision liability insurance reported separately in the following categories:

(a) municipalities;

(b) school districts;

(c) other political subdivisions;

(2) Public official liability insurance;

(3) Dram shop liability insurance;

(4) Day care center liability insurance;

(5) Labor, fraternal or religious organizations liability insurance;

(6) Errors and omissions liability insurance;

(7) Officers and directors liability insurance reported separately as follows:

(a) non-profit entities;

(b) for-profit entities;

(8) Products liability insurance;

(9) Medical malpractice insurance;

(10) Attorney malpractice insurance;

(11) Architects and engineers malpractice insurance; and

(12) Motor vehicle insurance reported separately for commercial and private passenger vehicles as follows:

(a) motor vehicle physical damage insurance;

(b) motor vehicle liability insurance.

(C) Such report may include, but need not be limited to the following data, both specific to this State and companywide, in the aggregate or by type of insurance for the previous year on a calendar year basis:

(1) Direct premiums written;

(2) Direct premiums earned;

(3) Number of policies;

(4) Net investment income, using appropriate estimates where necessary;

(5) Losses paid;

(6) Losses incurred;

(7) Loss reserves:

(a) Losses unpaid on reported claims;

(b) Losses unpaid on incurred but not reported claims;

(8) Number of claims:

(a) Paid claims;

(b) Arising claims;

(9) Loss adjustment expenses:

(a) Allocated loss adjustment expenses;

(b) Unallocated loss adjustment expenses;

(10) Net underwriting gain or loss;

(11) Net operation gain or loss, including net investment income;

(12) Any other information requested by the Director.

(C-5) Additional information required from medical malpractice insurers.

(1) In addition to the other requirements of this Section, all medical malpractice insurers shall include the following information in the report required by subsection (A) of this Section in such form and under such terms and conditions as may be prescribed by the Director:

(a) paid and incurred losses by county for each of the past 10 policy years; and

(b) earned exposures by ISO code, policy type, and policy year by county for each of the past 10 years.

(2) All information collected by the Director under paragraph (1) of this subsection (C-5) shall be made available, on an aggregate basis only, to the General Assembly and the general public. This provision shall supersede any other provision of law that may otherwise protect such information from public disclosure as confidential. The identity of any plaintiff, defendant, attorney, or insurance company shall not be disclosed.

(D) In addition to the information which may be requested under subsection (C), the Director may also request on a companywide, aggregate basis, Federal Income Tax recoverable, net realized capital gain or loss, net unrealized capital gain or loss, and all other expenses not requested in subsection (C) above.

(E) Violations - Suspensions - Revocations.

(1) Any company or person subject to this Article, who willfully or repeatedly fails to observe or who otherwise violates any of the provisions of this Article or any rule or regulation promulgated by the Director under authority of this Article or any final order of the Director entered under the authority of this Article shall by civil penalty forfeit to the State of Illinois a sum not to exceed $2,000. Each day during which a violation occurs constitutes a separate offense.

(2) No forfeiture liability under paragraph (1) of this subsection may attach unless a written notice of apparent liability has been issued by the Director and received by the respondent, or the Director sends written notice of apparent liability by registered or certified mail, return receipt requested, to the last known address of the respondent. Any respondent so notified must be granted an opportunity to request a hearing within 10 days from receipt of notice, or to show in writing, why he should not be held liable. A notice issued under this Section must set forth the date, facts and nature of the act or omission with which the respondent is charged and must specifically identify the particular provision of this Article, rule, regulation or order of which a violation is charged.

(3) No forfeiture liability under paragraph (1) of this subsection may attach for any violation occurring more than 2 years prior to the date of issuance of the notice of apparent liability and in no event may the total civil penalty forfeiture imposed for the acts or omissions set forth in any one notice of apparent liability exceed $100,000.

(4) All administrative hearings conducted pursuant to this Article are subject to 50 Ill. Adm. Code 2402 and all administrative hearings are subject to the Administrative Review Law.

(5) The civil penalty forfeitures provided for in this Section are payable to the General Revenue Fund of the State of Illinois, and may be recovered in a civil suit in the name of the State of Illinois brought in the Circuit Court in Sangamon County or in the Circuit Court of the county where the respondent is domiciled or has its principal operating office.

(6) In any case where the Director issues a notice of apparent liability looking toward the imposition of a civil penalty forfeiture under this Section that fact may not be used in any other proceeding before the Director to the prejudice of the respondent to whom the notice was issued, unless (a) the civil penalty forfeiture has been paid, or (b) a court has ordered payment of the civil penalty forfeiture and that order has become final.

(7) When any person or company has a license or certificate of authority under this Code and knowingly fails or refuses to comply with a lawful order of the Director requiring compliance with this Article, entered after notice and hearing, within the period of time specified in the order, the Director may, in addition to any other penalty or authority provided, revoke or refuse to renew the license or certificate of authority of such person or company, or may suspend the license or certificate of authority of such person or company until compliance with such order has been obtained.

(8) When any person or company has a license or certificate of authority under this Code and knowingly fails or refuses to comply with any provisions of this Article, the Director may, after notice and hearing, in addition to any other penalty provided, revoke or refuse to renew the license or certificate of authority of such person or company, or may suspend the license or certificate of authority of such person or company, until compliance with such provision of this Article has been obtained.

(9) No suspension or revocation under this Section may become effective until 5 days from the date that the notice of suspension or revocation has been personally delivered or delivered by registered or certified mail to the company or person. A suspension or revocation under this Section is stayed upon the filing, by the company or person, of a petition for judicial review under the Administrative Review Law.

(Source: P.A. 93-32, eff. 7-1-03.)

Section 10. The Clerks of Courts Act is amended by adding Section 27.10 as follows:

(705 ILCS 105/27.10 new)

Sec. 27.10. Director of Insurance. Each clerk of the circuit court shall provide to the Director of Insurance such information as the Director of Insurance requests under Section 155.19 of the Illinois Insurance Code.

Section 15. The Code of Civil Procedure is amended by reenacting and changing Sections 2-1109 and 2-1702, changing Section 2-1704, and adding Section 2-1706.5 as follows:

(735 ILCS 5/2-1109) (from Ch. 110, par. 2-1109)

(Text of Section WITHOUT the changes made by P.A. 89-7, which has been held unconstitutional)

Sec. 2-1109. Itemized verdicts.

(a) In every case where damages for bodily injury or death to the person are assessed by the jury the verdict shall be itemized so as to reflect the monetary distribution, if any, among economic loss and non-economic loss, if any, and, in healing art medical malpractice cases, further itemized so as to reflect the distribution of economic loss by category, such itemization of economic loss by category to include: (a) amounts intended to compensate for reasonable expenses which have been incurred, or which will be incurred, for necessary medical, surgical, x-ray, dental, or other health or rehabilitative services, drugs, and therapy; (b) amounts intended to compensate for lost wages or loss of earning capacity; and (c) all other economic losses claimed by the plaintiff or granted by the jury. Each category of economic loss shall be further itemized into amounts intended to compensate for losses which have been incurred prior to the verdict and amounts intended to compensate for future losses which will be incurred in the future.

(b) In all actions on account of bodily injury or death based on negligence, including healing art malpractice actions, the following terms have the following meanings:

(i) "Economic loss" or "economic damages" means all damages that are tangible, such as damages for past and future medical expenses, loss of income or earnings and other property loss.

(ii) "Non-economic loss" or "non-economic damages" means damages that are intangible, including but not limited to damages for pain and suffering, disability, disfigurement, loss of consortium, and loss of society.

(iii) "Compensatory damages" or "actual damages" are the sum of economic and non-economic damages.

(c) Nothing in this Section shall be construed to create a cause of action.

(d) This amendatory Act of the 93rd General Assembly applies to causes of action filed on or after its effective date.

(Source: P.A. 84-7.)

(735 ILCS 5/2-1702) (from Ch. 110, par. 2-1702)

(Text of Section WITHOUT the changes made by P.A. 89-7, which has been held unconstitutional)

Sec. 2-1702. Economic/Non-Economic Loss. As used in this Part, "economic loss" and "non-economic loss" have the same meanings as in Section 2-1109(b). :

(a) "Economic loss" means all pecuniary harm for which damages are recoverable.

(b) "Non-economic loss" means loss of consortium and all nonpecuniary harm for which damages are recoverable, including, without limitation, damages for pain and suffering, inconvenience, disfigurement, and physical impairment.

(Source: P.A. 84-7.)

(735 ILCS 5/2-1704) (from Ch. 110, par. 2-1704)

Sec. 2-1704. Healing art malpractice Medical Malpractice Action. As used in this Code Part, "healing art medical malpractice action" means any action, whether in tort, contract or otherwise, in which the plaintiff seeks damages for injuries or death by reason of medical, hospital, or other healing art malpractice including but not limited to medical, hospital, nursing home, nursing, dental, or podiatric malpractice. The term "healing art" shall not include care and treatment by spiritual means through prayer in accord with the tenets and practices of a recognized church or religious denomination.

(Source: P.A. 84-7.)

(735 ILCS 5/2-1706.5 new)

Sec. 2-1706.5. Standards for economic and non-economic damages.

(a) In any medical malpractice action in which economic and non-economic damages may be awarded, the following standards shall apply:

(1) In a case of an award against a hospital and its personnel, the total amount of non-economic damages shall not exceed $750,000 awarded to all plaintiffs in any civil action arising out of the care.

(2) In a case of an award against a physician and the physician's business or corporation entity, the total amount of non-economic damages shall not exceed $500,000 awarded to all plaintiffs in any civil action arising out of the care.

(3) In awarding damages in a medical malpractice case, the finder of fact shall render verdicts with a specific award of damages for economic loss, if any, and a specific award of damages for non-economic loss, if any.

(b) In any medical malpractice action where an individual plaintiff earns less than the annual average weekly wage, as determined by the Industrial Commission, at the time the action is filed, any award may include an amount equal to the wage the individual plaintiff earns or the annual average weekly wage.

(c) Any party in a medical malpractice case may introduce annuity evidence to inform the fact finder about the time value of an award and its ability to cover the plaintiff's damages over time.

(d) If any provision of this Section or its application to any person or circumstance is held invalid, the invalidity of that provision or application does not affect other provisions or applications of this Section.

Section 97. Inseverability. The provisions of this Act are mutually dependent and inseverable. If any provision is held invalid other than as applied to a particular person or circumstance, then this entire Act is invalid.

Section 99. Effective date. This Act takes effect upon becoming law.".