Imposes limitations on awards of noneconomic damages in medical tort actions. Imposes premium rate caps on insurers providing professional liability insurance. Repeals the limitation on noneconomic damages if an insurer does not comply with the premium rate caps. (SD1)

A BILL FOR AN ACT

SECTION 1. The increasing cost of malpractice insurance and the escalating monetary awards in medical malpractice lawsuits are major factors in the current physician shortage experienced by the State of Hawaii and the neighbor islands in particular. Malpractice insurance premiums have increased from forty to two hundred per cent for Hawaii physicians, with physicians in high-risk specialties, such as surgery and obstetrics, experiencing the highest increase. Monetary awards in malpractice lawsuits are escalating, especially with respect to awards for non-economic damages.

As a result of the malpractice situation, many physicians are choosing to retire early, limit their practice, or refrain from practicing in Hawaii. Medical students are avoiding medical specialties that have a high risk of medical malpractice exposure. Defensive medicine may also be practiced, whereby a physician may order tests and procedures to protect themselves from malpractice liability. Access to health care is of particular concern in rural areas, such as the neighbor islands, where relatively few doctors and fewer specialists and sub-specialists continue to practice.

The legislature finds that this critical situation necessitates a balancing of patients' legitimate rights to recover damages for injuries suffered as a result of health care negligence with the State's interest in ensuring access to health care services.

The purpose of this Act is to place a cap on the award of noneconomic damages that may be recovered in medical malpractice actions in Hawaii that is contingent on insurer's compliance with the premium rate limitations for professional liability insurance policies imposed by this Act.

SECTION 2. Chapter 671, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§671- Limitation on non-economic damages in medical tort claims. Non-economic damages recoverable in a medical tort claim against a health care provider shall be limited to a maximum award of $375,000; provided that the health care provider maintains a minimum of $1,000,000 of professional liability coverage; provided further that this section shall be repealed immediately under section 671-15.5(f) if any insurer fails to meet the compliance requirements set forth in section 671-15.5(c),(d), and (e)."

SECTION 3. Section 671-15.5, Hawaii Revised Statutes, is amended to read as follows:

[[]§671-15.5[]] Expungement of records; malpractice insurance rates. (a) Upon a decision by the medical claim conciliation panel finding for the health care provider pursuant to section 671-15(a), the health care provider may apply to the panel for expungement of all records of the related proceedings. The panel shall expunge all records if a majority of the panel finds that the complaint is fraudulent or frivolous.

(b) No insurer providing professional liability insurance for a health care provider shall increase any premium rate for the health care provider on the basis of the filing of a medical tort claim against the health care provider that is determined by the medical claim conciliation panel to be fraudulent or frivolous.

(c) No insurer providing professional liability insurance for a health care provider in the State may increase the professional liability insurance rates between July 1, 2005 and December 31, 2005, unless a rate increase is required to avoid imminent insolvency or provide a fair rate of return.

(d) Commencing on January 1, 2006 all insurers providing professional liability insurance for health care providers in this State shall implement a premium rate that is the lower of the following:

(e) Commencing on January 1, 2007, no insurer providing professional liability insurance for a health care provider may implement any rate increase greater than two and one half per cent in any twelve month period, unless a rate increase greater than two and one half per cent is required to avoid imminent insolvency or provide a fair rate of return.

(f) The limitation on the recovery of noneconomic damages provided in section 671- shall not apply and shall sunset immediately if any insurer does not comply with the rate limitations set forth in subsections (c), (d), and (e).

(g) Any person has standing to seek declaratory judgment for a determination of an insurer's noncompliance with subsections (c), (d), or (e)."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval