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Comparison of Benefits of Act 13

While Act 13 does not immediately resolve the long-term damage to Pennsylvania's insurance market, it will provide a significantly improved climate for physicians and hospitals to provide quality medical care in the future. Below is a comparison of the "status quo" versus the changes Act 13 will implement.

Beneficial Professional Liability Tort Reforms in Act 13

	Status Quo	Act 13
Modification of collateral source rule	Claimants can recover damages for medical and other losses paid by a collateral source, such as health insurance. The net result is that claimants can obtain a "double recovery."	Generally prohibits recovery for past losses paid by a collateral source.
Periodic payment of future medicals and reduction to present worth of future work loss	All damages are paid immediately in a lump sum. Future damages are not reduced to present value. The result: claimants often are over-compensated for their future losses.	Future damages for medical and related expenses will be paid in periodic payments if the total award is over $100,000. Future damages for work loss will be reduced to present value.
Remittitur (reduction) of awards to protect access to care	When asked to reduce an excessive award, the court does not consider the impact of the award on access in the health care community.	The court must consider the impact on access to health care in the community and must specify the factors and evidence it considered if it refuses to reduce the award.
Statute of repose(time limit on filing claims)	A statute of limitations generally requires claims to be filed within two years of the alleged malpractice. However, discovery and minor exceptions cancel out the limit, leaving no effective time limitation.	A statute of repose will impose an absolute seven-year time limitation-in addition to the statute of limitations-with exceptions for foreign objects left in the body and minors.
Expert witness qualifications	The standards for allowing someone to testify as an expert witness are very lenient, result in plaintiff verdicts based on misinformation and speculation rather than an informed analysis of the critical facts.	Expert witnesses will be required to satisfy prescribed qualifications. Experts on medical matters generally must be physicians in active clinical practice or teaching. Experts on the standard of care generally must be in the same or similar specialty of the defendant physician, and board-certified if the defendant physician is board-certified.
Inter-branch Venue Commission	The rules for venue (where actions may be filed) are very liberal. Claimants use the wide latitude to file cases in Philadelphia and other counties where juries tend to award higher verdicts, rather than the county where the alleged malpractice occurred.	A newly created Inter-branch Commission on Venue will study the venue problem and make recommendations for appropriate changes in the venue rules by October of 2002.
Limits on ostensible agency	Hospitals can be found vicariously liable for the negligence of a member of their medical staff on the basis of "ostensible agency," (the perception that the staff member is an agent of the hospital) even though the staff member is not employed by the hospital.	A hospital may be held vicariously liable for the negligence of a member of its medical staff on the basis of ostensible agency only if (i) a reasonably prudent person would have believed that the care was being rendered by the hospital, or (ii) the hospital advertised or otherwise represented that the care was being rendered by the hospital.
Limits on appeal bonds	When defendants appeal a verdict, they generally must post a substantial bond to avoid paying the full verdict while the appeal is pending. Large verdicts can require bonds that exceed the available insurance coverage and effectively preclude the defendant from filing an appeal.	A court will be permitted to limit a required appeal bond to the amount of available insurance when a higher bond would effectively deny the defendant the right of appeal.

Additional Future Savings and Short-Term Relief In Act 13

In addition to tort reform benefits, Act 13 provides short-term relief through CAT Fund and other changes. Patient safety reforms, the third "leg" of the bill, provide new guidelines and regulations for Pennsylvania physicians and hospitals.

	Status quo	Act 13
Reduction in required limits	Physicians and other covered health care providers must maintain basic insurance of $500,000 and the CAT Fund provides excess coverage of $700,000-for total mandated coverage of $1.2 million.	Mandated coverage is reduced to $1 million. The reduction applies to MCARE Fund coverage beginning in 2003 and will reduce the burden of meeting the mandatory insurance requirement when the Fund is phased out.
Caps on surcharge	There are no limits on the amount of the annual surcharge.	The aggregate surcharge is capped for 2002 at 95 percent of the 2001 surcharge, and for 2003 and 2004 at 90 percent of the 2001 surcharge. Half of the discount will be allocated to reduce the surcharge for hospitals and high-risk specialists, and the remaining half will be allocated to reduce the surcharge for all participating health care providers.
Auto Fund Subsidy	The CAT Fund is financed exclusively by physicians, hospitals and the other health care providers required to participate in the Fund.	The Auto Catastrophic Loss Fund receipts (from speeding tickets, etc.) will be transferred to the MCARE Fund for a ten-year period beginning in 2004. It is anticipated that the total transfer will be approximately $40+ million per year for a total subsidy of around $400+ million.