HB220

SECTION 1. The increasing cost of malpractice insurance and 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 skyrocketed 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, where a physician orders tests and procedures to protect themselves from malpractice liability. Diminishing 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 to address this critical situation, a patient's right to recover non-economic damages for injuries suffered as a result of health care negligence must be balanced against the State's interest in ensuring access to health care services.

The purpose of this Act is to place a cap on the amount of non-economic damages that may be recovered in medical malpractice actions in Hawaii, that is contingent on the compliance of all insurers providing professional liability insurance in Hawaii with the premium rate limitations set 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 $500,000; provided that the health care provider maintains a minimum of $1,000,000 of professional liability coverage."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval; provided that this Act shall be repealed on the earlier of July 1, 2015, or upon the failure of any insurer providing professional liability insurance for a health care provider in the state to meet the following requirements:

(1) Between July 1, 2007 and December 31, 2007, no insurer providing professional liability insurance for a health care provider in the state may increase the professional liability insurance rates unless a rate increase is required to avoid imminent insolvency or provide a fair rate of return.

(2) Beginning January 1, 2008, all insurers providing professional liability insurance for health care providers in the state shall implement a premium rate that is the lower of the following:

(A) Not greater than the rate in effect on January 1, 2005; or

(B) Seventy-five per cent of the lowest rate in effect between January 1, 2005 and December 31, 2007, unless to do so would cause imminent insolvency or fail to provide a fair rate of return.

(3) Beginning January 1, 2009, 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.

Any person may seek a declaratory judgment as to whether an insurer has failed to comply with paragraph 1, 2, or 3 by bringing an action against the insurer in the circuit court of the county in which the petitioner resides or has its principal place of business.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	220
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII