Subject Matter: Indiana Cap proposed changes: Medical Malpractice
Based upon what is suggested in the proposed stair-step
increases in the overall med mal cap in Indiana and the corresponding provider
contribution levels (see below), here is my understanding of the anticipated
increases by corresponding year:
450,000 $ 525,000
Provider % to
Comments: Would these changes be retroactive to
any pending matter, or based upon â€œevent dateâ€? The last time I
commented, I believe I mentioned that over the past couple years we have only a
couple of cases that have settled at what we term the â€œfund limitâ€ of
$250,000. I have no doubt we have several additional cases still
winding through the panel process that, based upon panel outcome, we may
ultimately pay our â€œfund limitâ€. Additionally, a problem in evaluating
the above is that once we pay our â€œfund limitâ€, we have no idea what the state
ultimately paid on any of Kindredâ€™s claims. Therefore we donâ€™t know if
they paid just nickels above our fund limit or if they paid the full million
dollar med mal capâ€¦so itâ€™s difficult to stratify where our claims ultimately
Based upon our current portfolio it might be easy to suggest
that at some point in the future the surcharges levied to participate in the
fund may exceed the value to us being in the fundâ€¦but itâ€™s hard to say not
knowing the average ultimate $ paid on Kindred claims.
Having said that, there are also a couple of business plan
issues that could affect this:
1. As we move more and
more into a Home Health and Hospice focus, do we anticipate lower exposure and
case development costs that could further diminish the value of being a PCF
2. on the flip side,
if we begin to employ more and more physicians and continue to maintain a
robust integrated market in Indiana (hospitals and nursing centers), will PCF
participation continue to be a value.
3. As for the â€œdirect
accessâ€ increase, it will have very little impact on Kindred. We tend to
get these settled anyway whether technically in the PCF or not.
With all of these moving parts, I have also copied Mark
and Nita on this as well as our actuary, Bob Sanders looking for insight that I
may not have included here. (speak up folks!).
I agree that if action isnâ€™t taken at this time through some
sort of legislative agreement to increase the caps, we run the possibility of
having the entire system thrown out by the courtsâ€¦sooner rather than later as I
understand the facts of the St. Maryâ€™s Medical Center case. I think the
jumps between the 2019 and 2013 years will be the critical analysis.
A "deal" has been reached by the Trial Lawyers
(TL) and the Indiana Hospital Assn. (IHA) to push an amendment to change the
med mal caps. Indiana State Medical Assn. (ISMA) is opposed, however Sen. David
Long (Senate Pro Tempore) has authorized action on the issue even though ISMA
is opposed. There is strong belief by Senate leadership that without
action the courts will act negatively on the act in the pending Bobbit v. St.
Mary’s Medical Center case where a full on challenge to the constitutionality
of the act is at issue.
The details are below. Of note the TLs are now opposed
to our language to improve the panel process for nursing facility cases by
requiring 2 physicians to be on the panel, and that if any nurse is on the
panel the nurse must have NF experience in 3 of the past 5 years. This is a
recent development in the past two days. They say we would be stacking the deck
against the plaintiff.
The overall cap on damages would go up from the current
$1.25m, which is broken down with $250k as the provider’s insurance and $1m on
the patient compensation fund for which the provider pays a surcharge
The cap would go to $1.65m in Jan. 2017, ten $1.80m in 2019,
$1.95m in 2023, $2.1m in 2027, and $2.25m in 2031. The increase would be
equally split between the provider’s insurance and the patient compensation
fund. For example, in 2017 the provider’s insurance would be $450k and the PCF
would be $1.2m.
In addition, the amount of damages claimed by which a
plaintiff can skip the medical review panel and go right to court would
increase from $15k to $35k. This is called the direct access amount.
We have expressed concern with the increase to the direct
access amount, in particular, and may be able to get this down to $25k.
that we have no official Board position on this issue, though we have discussed
it many times, I wanted to get this information to you asap. There are some
political nuances to this that are difficult to explain via email. I’ll defer
to your direction on the need for a call to further discuss the issue and
determine if we want to take a formal position
Document Date: March 2015
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