AN ACT Relating to medical injury recovery; creating a new section; adding a new chapter to Title 7 RCW; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. LEGISLATIVE FINDINGS. The legislature finds that a large portion of the judgments awarded to persons injured due to the substandard delivery of health care services does not go to the patient. The legislature further finds that awards for pain and suffering, loss of consortium, and other noneconomic portions of plaintiffs' recoveries often fund the judicial system which adjudicates their claims rather than accrue to plaintiffs. The legislature also finds that plaintiffs who do eventually recover often must wait many months or years for their compensation due to delays within the state's trial courts. Finally, the legislature finds that the costs of the judicial process are reflected in recoveries and artificially drive up professional liability insurance premiums which health care consumers ultimately pay.

Therefore, the legislature concludes that a system is desirable which encourages the expedited payment of economic and related losses to a person who has suffered injury or loss because of substandard health care services. Such a system should reduce the costs of adjudication.

The legislature further concludes that in order to induce and justify participation of the parties, the new system must be structured to provide benefits to both the persons claiming the injuries and health care providers accused of causing the injuries.

The legislature lastly concludes that the crisis in health care malpractice calls for bold initiatives which may not be perfect but will result in a net improvement in the system through the amelioration of these problems.

NEW SECTION. Sec. 2. DEFINITIONS. As used in this chapter, the following terms shall have the meanings indicated unless the context clearly indicates otherwise.

(1) "Claimant" means any injured person claiming to have suffered a loss or injury induced by health care. This includes any successor in interest, guardian of the person, or other appropriate entity having standing to assert such a claim.

(2) "Claim expenses" means reasonable attorneys' fees, costs of preparing a claim for submission under this chapter, and other reasonable and necessary expenses incurred by a party pursuant to participation in the system created by this chapter.

(3) "Collateral benefits" means all benefits and advantages received (regardless of any right any other entity has or is entitled to assert for recoupment through subrogation, trust agreement, lien, or otherwise) by a person claiming to have suffered a loss or injury induced by health care as reimbursement because of the loss or injury, payable or required to be paid under the laws of any state or the federal government (other than through a claim for breach of an obligation or duty) or any health or accident insurance, wage or salary continuation plan, or disability income insurance.

(4) "Compensation benefits" means the sum of economic losses and disability losses proximately caused by a loss or injury induced by health care plus claim expenses (if either economic or disability losses are awarded) minus collateral benefits actually received.

(5) "Disability loss" means the amount up to one hundred thousand dollars which compensates the injured person for the deterioration in quality of life which is directly and reasonably attributable to the permanent physical disability suffered by the person as a result of a loss or injury induced by health care.

(6) "Economic losses" means economic detriment suffered by the injured person, excluding noneconomic losses, and includes:

(a) Allowable expenses which include reasonable expenses incurred for products, services and accommodations reasonably needed for medical care, training and other remedial treatment and care of an injured individual, including rehabilitation treatment and occupational training if the treatment or training is reasonable and appropriate under the circumstances, the expenses are reasonable in relation to the probable rehabilitative effects and the compensation benefits otherwise payable, and it is likely to contribute substantially to rehabilitation even though it will not necessarily enhance the injured individual's earning capacity;

(b) Work losses which include one hundred percent of the loss of income, after taxes, from work the injured individual would have performed if the individual had not been injured, reduced by any income from reasonably similar substitute work actually performed or probably available to an individual of similar qualifications and abilities; and

(c) Replacement services losses which include reasonable expenses incurred in obtaining ordinary and necessary services in lieu of those the injured individual would have performed, not for income but for the benefit of the individual or the individual's family if the individual had not been injured.

(7) "Health care provider" means any person, institution, or organized delivery system that provides health care whether or not regulated by the state, but does not include family members of the injured person rendering health care for no charge. The term includes the plural where appropriate.

(8) "Injured person" means a natural person alleging a loss or injury induced by health care provided by a health care provider.

(9) "Loss or injury induced by health care" means sickness, disease, or bodily injury arising in the course of the provision of health care services provided by a health care provider in violation of any legal principle giving rise to recovery by a claimant including negligence of any kind, intentional infliction of harm, strict or absolute liability in tort, breach of express or implied warranty or contract, and failure to discharge a duty to warn or instruct or to obtain consent.

(10) "Noneconomic losses" mean pain, suffering, inconvenience, mental anguish, emotional pain and suffering, punitive or exemplary damages, and all other general damages and loss of any of the following which would have been provided by an injured person to another: Consortium, society, companionship, comfort, protection, marital care, attention, advice, counsel, training, guidance, and education.

(11) "Panel" means the three-person group performing functions pursuant to this chapter.

(12) "Panel expenses" mean those expenses reasonably incurred by the panel including lodging, compensation, clerical assistance, retention of experts, and meeting space necessary for the efficient and effective work of the panel under this chapter.

NEW SECTION. Sec. 3. CLAIMS INVOLVING LESS THAN FIFTY THOUSAND DOLLARS IN ECONOMIC LOSSES. (1) A claimant alleging a loss or injury induced by health care which was inflicted on an injured person by a health care provider which caused less than fifty thousand dollars in economic losses may serve a notice of claim on the health care provider for compensation benefits.

(2) Any health care provider may tender his or her claimed share of the compensation benefits within sixty days of the claim. If the health care provider tenders less than the amount the claimant alleged to be the health provider's responsibility, the claimant may accept it or appeal to a panel for a determination of the appropriate amount of compensation benefits. The appeal shall be treated as filing a legal action under section 4 of this act. Failure to appeal the tender within sixty days of receipt of the written tender shall be deemed an acceptance of the tender as to that health care provider.

(3) Failure of a defendant to make a tender shall be treated the same as such a failure under section 4(4) of this act.

(4) Acceptance of the tender by the claimant shall foreclose a legal action on that claim against the health care provider making the tender.

NEW SECTION. Sec. 4. PROCEDURE FOR OTHER CLAIMS OF MEDICALLY INDUCED INJURIES. (1) A claimant alleging in a legal action against a health care provider that a loss or injury induced by health care was inflicted on an injured person shall be handled as follows:

(a) Whenever such a claim is filed with a court, the clerk or presiding judge thereof shall within ten days notify the claimant and all named health care providers that the claim shall be considered under this chapter. If the claim is joined with other claims not cognizable under this chapter, it shall be severed and treated according to this chapter.

(b) The claimant shall have thirty days to designate one voting member of the panel. Failure to do so shall prevent the process from going forward and bar the claimant from pursuing an action in court. Benefits conferred under section 11 of this act shall be forfeited for the duration of the delay in appointing the member.

(c) The health care provider shall have thirty days to either designate a second voting member of the panel or serve on the court notice that it wishes to join additional health care providers to the action. In the latter case, the court shall notify them pursuant to (a) of this subsection, and they all shall have thirty days to agree on a second member of the panel. In the event the health care providers are unable to agree within that period on a second member, they shall serve on the court notice to that effect. Failure to serve notice on the court of the name of the second member or failure to agree within the specified time shall be considered a failure to agree.

(d) The presiding judge of the county in which the action was appropriately commenced shall appoint a retired or active judge of the superior court to serve as the third voting member of the panel. This third member shall serve as its chair. This third member shall forthwith designate a second member of the panel to represent the health care providers in the event they were unable to agree.

(e) Upon giving notice to the claimant and the health care providers, the court shall also notify the dean of the school of medicine of the University of Washington of the claimant's pleadings, and the dean shall appoint a fourth member who shall be an expert in the underlying clinical subject matter. This member shall participate without vote and on such terms as the third member mentioned in (d) of this subsection shall determine. If the dean fails to do so or is unable to find anyone who will serve, the process shall go on without that member. The dean shall have thirty days to give notice to the court of the identity of the person.

(f) Within twenty days of the appointment of the full panel, the chair shall convene it to begin its deliberations in accordance with section 6 of this act.

(2) The panel shall as promptly as possible make the following findings and determinations, by majority vote, as are appropriate:

(a) Whether the health care provider unlawfully inflicted a loss or injury induced by health care on the injured person;

(b) The degree of fault as between the injured person and the health care providers and among the health care providers where there is more than one;

(c) The compensation benefits to which the injured person is entitled according to applicable legal principles. Claims expenses shall be charged on a pro rata basis among health care providers where more than one person is found liable for other compensation benefits;

(d) A fair and equitable method of payment in accordance with section 5 of this act.

The panel shall also issue findings of fact and conclusions of law supporting its decisions in the matters referred to in this subsection.

(3) The findings required by subsection (2) of this section shall be served by the court immediately on the claimant and the health care provider. Panel expenses shall be prorated among the health care providers found to be liable for compensation benefits, if any, in proportion to each's share of the other compensation benefits. This shall constitute a valid debt to the state of Washington irrespective of whether the provider tenders payment for the compensation benefits.

(4) If the panel concludes that compensation benefits are due the claimant from a health care provider, the health care provider shall have thirty days to tender to the claimant in writing such share of the compensation benefits which the panel has allocated to him or her. If the tender is made, the claimant shall be foreclosed from pursuing any legal remedies against that health care provider growing out of the same subject matter. If the health care provider fails to make the tender, the plaintiff shall have the following options:

(a) To strike any defenses of the health care provider relating to the fault of the injured party;

(b) To pursue noneconomic losses in the subsequent trial; and

(5) If the panel concludes no compensation benefits are due the claimant from a health care provider, the claimant may proceed with the action originally filed against the health care provider. Relevant portions of the panel's findings and decision in such action are admissible in any subsequent action.

(6) Notwithstanding subsection (4) of this section, either the claimant or any health care provider may appeal the decision of the panel to the superior court for review. The appeal in the superior court shall be governed by RCW 51.52.110 to the extent not inconsistent with other provisions of this chapter. The substantially prevailing party or parties shall obtain reasonable attorneys' fees and costs of appeal from the other parties involved in the appeal. Upon completion of the appeals, if any, the health care providers shall proceed as set forth in subsection (4) of this section.

(7) Any health care provider tendering compensation benefits under this chapter shall be immune from any action for contribution by another health care provider in a civil action addressing substantially the same subject matter.

NEW SECTION. Sec. 5. METHOD OF PAYMENT. (1) Actual payment to the claimant shall be made within fifteen days of a tender, but payment of tenders or portions thereof which are the subject of an appeal by the claimant shall be made within fifteen days of the end of the appeal process if the health care provider decides to make a tender.

(2) The panel may, where the interests of justice will be served, formulate a structured payment of compensation benefits which compensates for losses or injuries estimated to be incurred by the injured party more than three years after the date of a health care provider's tender which the provider does not appeal. In the event of a structured compensation payment plan, the panel shall require the health care provider to guarantee the performance of the provider's obligations thereunder in any reasonable fashion including the purchase of an annuity from a reliable source accruing to the benefit of claimant.

NEW SECTION. Sec. 6. PANEL PROCEEDINGS. The panel shall be governed in its deliberations by the contested hearing provisions of chapter 34.04 RCW and the uniform procedural rules adopted under RCW 34.04.022 subject to the following:

(1) The panel shall exercise rigorous control over discovery to the end that the matter shall be expeditiously heard with a minimum of expense and delay;

(2) No expert witnesses may be called except on the call of the panel;

(3) Continuances shall be kept to the absolute minimum necessary to allow both sides to present their cases; and

(4) The attorney general may adopt rules of procedure not inconsistent with this chapter which differ from the uniform procedural rules adopted under RCW 34.04.022 and shall apply only to proceedings held under this chapter.

NEW SECTION. Sec. 7. FUTURE CHANGES. (1) A judgment under this chapter may be modified as to amounts to be paid in the future upon a finding that a material and substantial change in the circumstances (including the prognosis) of the injured individual not attributable to other causes or the person's fault has occurred after the date of the judgment, or that there is newly discovered evidence concerning the injured individual's physical condition, prognosis, losses, or rehabilitation which could not have been known previously or discovered in the exercise of reasonable diligence prior to the judgment.

(2) If the circumstances mentioned in subsection (1) of this section occur within twenty-four months of the judgment, the matter shall be filed with the panel. The health care provider cannot refuse to abide by the changed judgment, if any, but either the claimant or health care provider may appeal the decision in the manner provided in section 4(6) of this act.

(3) If the circumstances mentioned in subsection (2) of this section occur after twenty-four months of the judgment, the matter shall be filed with the superior court in the county in which the original matter was filed or in a county in which all the involved parties reside. The matter shall be treated as a civil action without a right to a jury trial.

(4) In any proceeding, including appeals, conducted under subsection (2) or (3) of this section, the only matter which shall be considered are the new circumstances and the tribunal is to consider itself bound by the allocation of fault findings of the earlier judgment.

(5) Only the claimant may initiate proceedings under this section.

(6) If additional compensation is ordered for the claimant and there is no solvent entity available to make the payments, to the extent consistent with the responsible fiscal management, the compensation fund created by section 14 of this act may be used to make the payments.

(7) No judgment may be found to be inadequate on the basis of changes in inflation or cost-of-living increases.

NEW SECTION. Sec. 8. ENFORCEMENT OF JUDGMENTS. Nothing in this chapter forecloses a claimant or his or her successors in interest from enforcing judgments obtained under this chapter in a court of law. If the claimant substantially prevails, the court shall award him or her reasonable attorneys' fees and costs.

NEW SECTION. Sec. 9. FRAUD. (1) A judgment for compensation benefits may be set aside or modified by a superior court if found to have been procured by fraud. The party which substantially prevails shall be awarded reasonable attorneys' fees and costs.

(2) A health care provider defending a claim for compensation benefits shall be allowed reasonable attorneys' fees and costs in defending such a claim or part thereof that is fraudulent or so clearly excessive in amount as to have no reasonable foundation in fact. The fee or costs may be treated as an offset to any compensation benefits due. The health care provider may recover from the claimant or his or her attorney any part of the fees or costs not offset or otherwise paid.

(3) Fraud or excessive claims shall be proven by clear and convincing evidence.

NEW SECTION. Sec. 10. EFFECT OF PROCEEDINGS ON STATUTE OF LIMITATIONS. The statute of limitations for any action for claims based on losses or injuries induced by health care which are subject to proceedings under this chapter shall be tolled as of the date of serving a claim on a health care provider pursuant to section 3 of this act or filing with a court under section 4 of this act and shall continue to be tolled until sixty days after payment is begun by a health care provider pursuant to a judgment or agreement rendered pursuant to this chapter or the time limit for making tenders has passed. Any appeals provided for under this chapter shall continue to toll the statute of limitations until sixty days after the appeals are completed or payment begins, whichever occurs later.

NEW SECTION. Sec. 11. SUBROGATION RIGHTS. (1) Any entity which has provided an injured person with collateral benefits shall be subrogated to that person's rights against a health care provider in the event the injured person receives compensation benefits. The findings of the panel relating to the collateral benefits and liability of the health care provider shall be admissible at the option of the entity.

(2) A claim for compensation benefits shall be paid without deduction or offset of collateral benefits if the collateral benefits have not been paid to or on the behalf of the injured person incurring expenses included in economic losses.

NEW SECTION. Sec. 12. ASSIGNMENT OF ATTACHMENT OF JUDGMENT PROCEEDS. (1) Compensation benefits for allowable expenses as defined in section 2(6)(a) of this act are exempt from garnishment, attachment, execution, or any other process or claim, except upon a claim of a creditor who has provided products, services, or accommodations to the extent benefits are for allowable expenses for those products, services, or accommodations.

(2) Compensation benefits other than those for allowable expenses are exempt from garnishment, attachment, execution, or any other process or claim to the extent that wages or earnings are exempt under any applicable law exempting wages or earnings from process of claim.

(3) An assignment or an agreement to assign any right to compensation benefits for economic losses accruing in the future is unenforceable except as to benefits for work loss to secure payment of maintenance or child support or allowable expenses to the extent the benefits are for the cost of products, services, or accommodations provided or to be provided in the future.

NEW SECTION. Sec. 13. MEDICAL INJURY COMPENSATION FUND. (1) There is hereby created in the custody of the state treasurer a medical injury compensation fund to be administered by the attorney general. In addition to the other claims against it allowed by this chapter, it shall also be used to fund uncompensated panel expenses.

(2) The fund shall consist of:

(a) Appropriations by the state legislature;

(b) A one percent surcharge on all malpractice premiums paid by health care providers in the state of Washington which shall be imposed and collected by the insurance commissioner;

(c) A surcharge of five percent on all compensation benefits paid pursuant to this chapter which shall be added to the amount of the compensation benefits and paid by the health care provider or the provider's insurance carrier as if it were a loss;

(d) A surcharge of five percent on all judgments and settlements of malpractice lawsuits paid by health care providers in the state of Washington which shall be paid by the health care provider or the provider's insurance carrier as if it were a loss.

(3) Disbursements from the fund shall be on authorization of the attorney general. The fund is subject to the allotment procedure provided under chapter 43.88 RCW, but no appropriation is required for disbursements.

(4) The attorney general may employ such personnel as is necessary to assist in the administration of the fund and may charge their salaries and other necessary expenses against the fund. The total of these charges shall not exceed fifteen percent of the opening balance of the fund in any fiscal year.

(5) The attorney general may adopt rules relating to the administration of the fund, including setting reasonable limits on panel fees and expenses. Panel expenses which are not paid from the medical injury compensation fund shall be paid by separate appropriation.

(6) Any compensation benefits awarded under this chapter which remain uncollected by the claimant after making diligent efforts to obtain them can be paid for by the compensation fund to the extent consistent with its responsible fiscal administration. The state of Washington shall be subrogated to the rights of the claimant against the health care provider to the extent of the payments from the fund.

NEW SECTION. Sec. 14. DOLLAR AMOUNT ADJUSTMENTS. Each year the attorney general may by rule adjust all dollar amounts contained in this chapter by the consumer price index.

NEW SECTION. Sec. 15. REVIEW. The attorney general shall report to the legislature on January 2 of each year on the effectiveness of this chapter in achieving its stated goals and other matters of importance. The status and operation of the compensation fund shall be included in the report.

NEW SECTION. Sec. 16. SHORT TITLE. This chapter may be cited as the Medical Injury Recovery Act.

NEW SECTION. Sec. 17. EXPIRATION. This chapter shall expire on July 1, 1991.

NEW SECTION. Sec. 18. CAPTIONS. As used in this act, captions constitute no part of the law.

NEW SECTION. Sec. 19. LEGISLATIVE DIRECTIVE. Sections 1 through 17 of this act shall constitute a new chapter in Title 7 RCW.