BILL REQ. #:  H-2537.5 

Read first time 03/17/2005.   Referred to Committee on Judiciary.

     AN ACT Relating to comprehensive health care liability reform; amending RCW 43.70.110, 43.70.250, 5.64.010, 4.24.260, 43.70.510, 18.130.090, 18.130.160, 18.130.172, 48.18.290, 48.18.2901, 4.16.350, 7.70.070, 7.70.080, 7.70.100, 4.22.070, and 4.22.015; reenacting and amending RCW 69.41.010; adding new sections to chapter 43.70 RCW; adding new sections to chapter 7.70 RCW; adding new sections to chapter 18.130 RCW; adding a new section to chapter 48.19 RCW; adding a new section to chapter 48.18 RCW; adding a new section to chapter 42.17 RCW; adding a new chapter to Title 70 RCW; adding a new chapter to Title 48 RCW; creating new sections; prescribing penalties; and providing for submission of this act to a vote of the people.

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

NEW SECTION.  Sec. 101   (1) The legislature finds that:
     (a) Thousands of patients are injured each year in the United States as a result of medical errors, and that a comprehensive approach is needed to effectively reduce the incidence of medical errors in our health care system. Implementation of proven patient safety strategies can reduce medical errors, and thereby potentially reduce the need for disciplinary actions against licensed health care professionals and facilities, and the frequency and severity of medical malpractice claims; and
     (b) Health care providers, health care facilities, and health carriers can and should be supported in their efforts to improve patient safety and reduce medical errors by encouraging health care facilities and providers to communicate openly with patients regarding medical errors that have occurred and steps that can be taken to prevent errors from occurring in the future, encouraging health care facilities and providers to work cooperatively in their patient safety efforts, and increasing funding available to implement proven patient safety strategies.
     (2)(a) The legislature also finds that the advances in medical technology, diagnosis, and treatment have resulted in great strides in maintaining and improving the health of Washingtonians. Yet those advances substantially increase the complexity of our health care delivery system and increase the risk that medical errors will occur. The legislature further finds that our health care and medical liability systems are not structured to promote disclosure and analysis of medical errors, whether they result in patient harm or not. Each medical error provides an opportunity to learn how to avoid future errors.
     (b) The legislature intends to promote full disclosure of medical errors and adverse health events, and to use the experience and knowledge gained from analysis of those events to advance patient safety in a nonpunitive manner. The legislature further intends to promote full disclosure of medical errors to patients by substantially reducing the risk of liability exposure associated with such disclosure.
     (3) Through the adoption of this act, the legislature intends to positively influence the safety and quality of care provided in Washington state's health care system.

Sec. 102   RCW 43.70.110 and 1993 sp.s. c 24 s 918 are each amended to read as follows:
     (1) The secretary shall charge fees to the licensee for obtaining a license. After June 30, 1995, municipal corporations providing emergency medical care and transportation services pursuant to chapter 18.73 RCW shall be exempt from such fees, provided that such other emergency services shall only be charged for their pro rata share of the cost of licensure and inspection, if appropriate. The secretary may waive the fees when, in the discretion of the secretary, the fees would not be in the best interest of public health and safety, or when the fees would be to the financial disadvantage of the state.
     (2) Except as provided in section 104 of this act, fees charged shall be based on, but shall not exceed, the cost to the department for the licensure of the activity or class of activities and may include costs of necessary inspection.
     (3) Department of health advisory committees may review fees established by the secretary for licenses and comment upon the appropriateness of the level of such fees.

Sec. 103   RCW 43.70.250 and 1996 c 191 s 1 are each amended to read as follows:
     It shall be the policy of the state of Washington that the cost of each professional, occupational, or business licensing program be fully borne by the members of that profession, occupation, or business. The secretary shall from time to time establish the amount of all application fees, license fees, registration fees, examination fees, permit fees, renewal fees, and any other fee associated with licensing or regulation of professions, occupations, or businesses administered by the department. In fixing said fees, the secretary shall set the fees for each program at a sufficient level to defray the costs of administering that program and the patient safety fee established in section 104 of this act. All such fees shall be fixed by rule adopted by the secretary in accordance with the provisions of the administrative procedure act, chapter 34.05 RCW.

NEW SECTION.  Sec. 104   A new section is added to chapter 43.70 RCW to read as follows:
     (1) The secretary shall increase the licensing fee established under RCW 43.70.110 by two dollars for the health care professionals designated in subsection (2) of this section and by two dollars per licensed bed for the health care facilities designated in subsection (2) of this section. Proceeds of the patient safety fee must be deposited into the patient safety account in section 108 of this act and dedicated to patient safety and medical error reduction efforts that have been proven to improve, or have a substantial likelihood of improving the quality of care provided by health care professionals and facilities.
     (2) The health care professionals and facilities subject to the patient safety fee are:
     (a) The following health care professionals licensed under Title 18 RCW:
     (i) Registered nurses and licensed practical nurses licensed under chapter 18.79 RCW;
     (ii) Chiropractors licensed under chapter 18.25 RCW;
     (iii) Dentists licensed under chapter 18.32 RCW;
     (iv) Midwives licensed under chapter 18.50 RCW;
     (v) Naturopaths licensed under chapter 18.36A RCW;
     (vi) Optometrists licensed under chapter 18.53 RCW;
     (vii) Osteopathic physicians licensed under chapter 18.57 RCW;
     (viii) Osteopathic physicians' assistants licensed under chapter 18.57A RCW;
     (ix) Pharmacists and pharmacies licensed under chapter 18.64 RCW;
     (x) Physicians licensed under chapter 18.71 RCW;
     (xi) Physician assistants licensed under chapter 18.71A RCW;
     (xii) Podiatrists licensed under chapter 18.22 RCW; and
     (xiii) Psychologists licensed under chapter 18.83 RCW; and
     (b) Hospitals licensed under chapter 70.41 RCW and psychiatric hospitals licensed under chapter 71.12 RCW.

NEW SECTION.  Sec. 105   A new section is added to chapter 7.70 RCW to read as follows:
     (1) One percent of all attorneys' fees received for representation of claimants or defendants in actions brought under this chapter that result in payment to a claimant shall be paid as a patient safety set aside. Proceeds of the patient safety set aside will be distributed by the department of health in the form of grants, loans, or other appropriate arrangements to support strategies that have been proven to reduce medical errors and enhance patient safety, or have a substantial likelihood of reducing medical errors and enhancing patient safety, as provided in section 104 of this act.
     (2) A patient safety set aside shall be transmitted to the secretary of the department of health by the attorney who receives fees under subsection (1) of this section for deposit into the patient safety account established in section 108 of this act.
     (3) The Washington state supreme court shall by rule adopt procedures to implement this section.

NEW SECTION.  Sec. 106   A new section is added to chapter 43.70 RCW to read as follows:
     (1)(a) Patient safety fee and set aside proceeds shall be administered by the department, after seeking input from health care providers engaged in direct patient care activities, health care facilities, health care provider organizations, and other interested parties. In developing criteria for the award of grants, loans, or other appropriate arrangements under this section, the department shall rely primarily upon evidence-based practices to improve patient safety that have been identified and recommended by governmental and private organizations, including, but not limited to:
     (i) The federal agency for health care quality and research;
     (ii) The institute of medicine of the national academy of sciences;
     (iii) The joint commission on accreditation of health care organizations; and
     (iv) The national quality forum.
     (b) The department shall award grants, loans, or other appropriate arrangements for at least two strategies that are designed to meet the goals and recommendations of the federal institute of medicine's report, "Keeping Patients Safe: Transforming the Work Environment of Nurses."
     (2) Projects that have been proven to reduce medical errors and enhance patient safety shall receive priority for funding over those that are not proven, but have a substantial likelihood of reducing medical errors and enhancing patient safety. All project proposals must include specific performance and outcome measures by which to evaluate the effectiveness of the project. Project proposals that do not propose to use a proven patient safety strategy must include, in addition to performance and outcome measures, a detailed description of the anticipated outcomes of the project based upon any available related research and the steps for achieving those outcomes.
     (3) The department may use a portion of the patient safety fee proceeds for the costs of administering the program.

NEW SECTION.  Sec. 107   A new section is added to chapter 43.70 RCW to read as follows:
     The secretary may solicit and accept grants or other funds from public and private sources to support patient safety and medical error reduction efforts under this act. Any grants or funds received may be used to enhance these activities as long as program standards established by the secretary are followed.

NEW SECTION.  Sec. 108   A new section is added to chapter 43.70 RCW to read as follows:
     The patient safety account is created in the state treasury. All receipts from the fees and set asides created in sections 104 and 105 of this act must be deposited into the account. Expenditures from the account may be used only for the purposes of this act. Moneys in the account may be spent only after appropriation.

NEW SECTION.  Sec. 109   A new section is added to chapter 43.70 RCW to read as follows:
     By December 1, 2008, the department shall report the following information to the governor and the health policy and fiscal committees of the legislature:
     (1) The amount of patient safety fees and set asides deposited to date in the patient safety account;
     (2) The criteria for distribution of grants, loans, or other appropriate arrangements under this act; and
     (3) A description of the medical error reduction and patient safety grants and loans distributed to date, including the stated performance measures, activities, timelines, and detailed information regarding outcomes for each project.

Sec. 110   RCW 5.64.010 and 1975-'76 2nd ex.s. c 56 s 3 are each amended to read as follows:
     (1) In any civil action against a health care provider for personal injuries which is based upon alleged professional negligence ((and which is against:
     (1) A person licensed by this state to provide health care or related services, including, but not limited to, a physician, osteopathic physician, dentist, nurse, optometrist, podiatrist, chiropractor, physical therapist, psychologist, pharmacist, optician, physician's assistant, osteopathic physician's assistant, nurse practitioner, or physician's trained mobile intensive care paramedic, including, in the event such person is deceased, his estate or personal representative;
     (2) An employee or agent of a person described in subsection (1) of this section, acting in the course and scope of his employment, including, in the event such employee or agent is deceased, his estate or personal representative; or
     (3) An entity, whether or not incorporated, facility, or institution employing one or more persons described in subsection (1) of this section, including, but not limited to, a hospital, clinic, health maintenance organization, or nursing home; or an officer, director, employee, or agent thereof acting in the course and scope of his employment, including, in the event such officer, director, employee, or agent is deceased, his estate or personal representative;)), or in any arbitration or mediation proceeding related to such civil action, evidence of furnishing or offering or promising to pay medical, hospital, or similar expenses occasioned by an injury is not admissible ((to prove liability for the injury)).
     (2) In a civil action against a health care provider for personal injuries which is based upon alleged professional negligence, or in any arbitration or mediation proceeding related to such civil action:
     (a) Any and all statements, affirmations, gestures, or conduct expressing apology, fault, sympathy, commiseration, condolence, compassion, or a general sense of benevolence; or
     (b) Any and all statements or affirmations regarding remedial actions that may be taken to address the act or omission that is the basis for the allegation of negligence;
which were in the past or are made by a health care provider to the injured person, a relative of the injured person, or a representative of the injured person and which relate to the discomfort, pain, suffering, injury, or death of the injured person as the result of the alleged professional negligence are not admissible as evidence.
     (3) For the purposes of this section:
     (a) "Health care provider" has the same meaning provided in RCW 7.70.020.
     (b) "Relative" means:
     (i) An injured person's spouse, parent, grandparent, stepfather, stepmother, child, grandchild, brother, sister, half brother, half sister, or spouse's parents;
     (ii) Relationships in (b)(i) of this subsection that are established with an injured person as a result of adoption; and
     (iii) Any person who has a family-type relationship with an injured person.
     (c) "Representative" means a legal guardian, attorney, person designated to make decisions on behalf of a patient under a medical power of attorney, or any person recognized in law or custom as a patient's agent.

Sec. 111   RCW 4.24.260 and 1994 sp.s. c 9 s 701 are each amended to read as follows:
     ((Physicians licensed under chapter 18.71 RCW, dentists licensed under chapter 18.32 RCW, and pharmacists licensed under chapter 18.64 RCW)) Any member of a health profession listed under RCW 18.130.040 who, in good faith, makes a report, files charges, or presents evidence against another member of ((their)) a health profession based on the claimed ((incompetency or gross misconduct)) unprofessional conduct as provided in RCW 18.130.180 or inability to practice with reasonable skill and safety to consumers by reason of any physical or mental condition as provided in RCW 18.130.170 of such person before the ((medical quality assurance commission established under chapter 18.71 RCW, in a proceeding under chapter 18.32 RCW, or to the board of pharmacy under RCW 18.64.160)) agency, board, or commission responsible for disciplinary activities for the person's profession under chapter 18.130 RCW, shall be immune from civil action for damages arising out of such activities. A person prevailing upon the good faith defense provided for in this section is entitled to recover expenses and reasonable attorneys' fees incurred in establishing the defense.

Sec. 112   RCW 43.70.510 and 2004 c 145 s 2 are each amended to read as follows:
     (1)(a) Health care institutions and medical facilities, other than hospitals, that are licensed by the department, professional societies or organizations, health care service contractors, health maintenance organizations, health carriers approved pursuant to chapter 48.43 RCW, and any other person or entity providing health care coverage under chapter 48.42 RCW that is subject to the jurisdiction and regulation of any state agency or any subdivision thereof may maintain a coordinated quality improvement program for the improvement of the quality of health care services rendered to patients and the identification and prevention of medical malpractice as set forth in RCW 70.41.200.
     (b) All such programs shall comply with the requirements of RCW 70.41.200(1) (a), (c), (d), (e), (f), (g), and (h) as modified to reflect the structural organization of the institution, facility, professional societies or organizations, health care service contractors, health maintenance organizations, health carriers, or any other person or entity providing health care coverage under chapter 48.42 RCW that is subject to the jurisdiction and regulation of any state agency or any subdivision thereof, unless an alternative quality improvement program substantially equivalent to RCW 70.41.200(1)(a) is developed. All such programs, whether complying with the requirement set forth in RCW 70.41.200(1)(a) or in the form of an alternative program, must be approved by the department before the discovery limitations provided in subsections (3) and (4) of this section and the exemption under RCW 42.17.310(1)(hh) and subsection (5) of this section shall apply. In reviewing plans submitted by licensed entities that are associated with physicians' offices, the department shall ensure that the exemption under RCW 42.17.310(1)(hh) and the discovery limitations of this section are applied only to information and documents related specifically to quality improvement activities undertaken by the licensed entity.
     (2) Health care provider groups of five or more providers may maintain a coordinated quality improvement program for the improvement of the quality of health care services rendered to patients and the identification and prevention of medical malpractice as set forth in RCW 70.41.200. For purposes of this section, a health care provider group may be a consortium of providers consisting of five or more providers in total. All such programs shall comply with the requirements of RCW 70.41.200(1) (a), (c), (d), (e), (f), (g), and (h) as modified to reflect the structural organization of the health care provider group. All such programs must be approved by the department before the discovery limitations provided in subsections (3) and (4) of this section and the exemption under RCW 42.17.310(1)(hh) and subsection (5) of this section shall apply.
     (3) Any person who, in substantial good faith, provides information to further the purposes of the quality improvement and medical malpractice prevention program or who, in substantial good faith, participates on the quality improvement committee shall not be subject to an action for civil damages or other relief as a result of such activity. Any person or entity participating in a coordinated quality improvement program that, in substantial good faith, shares information or documents with one or more other programs, committees, or boards under subsection (6) of this section is not subject to an action for civil damages or other relief as a result of the activity or its consequences. For the purposes of this section, sharing information is presumed to be in substantial good faith. However, the presumption may be rebutted upon a showing of clear, cogent, and convincing evidence that the information shared was knowingly false or deliberately misleading.
     (4) Information and documents, including complaints and incident reports, created specifically for, and collected, and maintained by a quality improvement committee are not subject to discovery or introduction into evidence in any civil action, and no person who was in attendance at a meeting of such committee or who participated in the creation, collection, or maintenance of information or documents specifically for the committee shall be permitted or required to testify in any civil action as to the content of such proceedings or the documents and information prepared specifically for the committee. This subsection does not preclude: (a) In any civil action, the discovery of the identity of persons involved in the medical care that is the basis of the civil action whose involvement was independent of any quality improvement activity; (b) in any civil action, the testimony of any person concerning the facts that form the basis for the institution of such proceedings of which the person had personal knowledge acquired independently of such proceedings; (c) in any civil action by a health care provider regarding the restriction or revocation of that individual's clinical or staff privileges, introduction into evidence information collected and maintained by quality improvement committees regarding such health care provider; (d) in any civil action challenging the termination of a contract by a state agency with any entity maintaining a coordinated quality improvement program under this section if the termination was on the basis of quality of care concerns, introduction into evidence of information created, collected, or maintained by the quality improvement committees of the subject entity, which may be under terms of a protective order as specified by the court; (e) in any civil action, disclosure of the fact that staff privileges were terminated or restricted, including the specific restrictions imposed, if any and the reasons for the restrictions; or (f) in any civil action, discovery and introduction into evidence of the patient's medical records required by rule of the department of health to be made regarding the care and treatment received.
     (5) Information and documents created specifically for, and collected and maintained by a quality improvement committee are exempt from disclosure under chapter 42.17 RCW.
     (6) A coordinated quality improvement program may share information and documents, including complaints and incident reports, created specifically for, and collected and maintained by a quality improvement committee or a peer review committee under RCW 4.24.250 with one or more other coordinated quality improvement programs maintained in accordance with this section or with RCW 70.41.200 or a peer review committee under RCW 4.24.250, for the improvement of the quality of health care services rendered to patients and the identification and prevention of medical malpractice. The privacy protections of chapter 70.02 RCW and the federal health insurance portability and accountability act of 1996 and its implementing regulations apply to the sharing of individually identifiable patient information held by a coordinated quality improvement program. Any rules necessary to implement this section shall meet the requirements of applicable federal and state privacy laws. Information and documents disclosed by one coordinated quality improvement program to another coordinated quality improvement program or a peer review committee under RCW 4.24.250 and any information and documents created or maintained as a result of the sharing of information and documents shall not be subject to the discovery process and confidentiality shall be respected as required by subsection (4) of this section and RCW 4.24.250.
     (7) The department of health shall adopt rules as are necessary to implement this section.

NEW SECTION.  Sec. 113   The legislature finds that prescription drug errors occur because the pharmacist or nurse cannot read the prescription from the physician or other provider with prescriptive authority. The legislature further finds that legible prescriptions can prevent these errors.

Sec. 114   RCW 69.41.010 and 2003 c 257 s 2 and 2003 c 140 s 11 are each reenacted and amended to read as follows:
     As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise:
     (1) "Administer" means the direct application of a legend drug whether by injection, inhalation, ingestion, or any other means, to the body of a patient or research subject by:
     (a) A practitioner; or
     (b) The patient or research subject at the direction of the practitioner.
     (2) "Community-based care settings" include: Community residential programs for the developmentally disabled, certified by the department of social and health services under chapter 71A.12 RCW; adult family homes licensed under chapter 70.128 RCW; and boarding homes licensed under chapter 18.20 RCW. Community-based care settings do not include acute care or skilled nursing facilities.
     (3) "Deliver" or "delivery" means the actual, constructive, or attempted transfer from one person to another of a legend drug, whether or not there is an agency relationship.
     (4) "Department" means the department of health.
     (5) "Dispense" means the interpretation of a prescription or order for a legend drug and, pursuant to that prescription or order, the proper selection, measuring, compounding, labeling, or packaging necessary to prepare that prescription or order for delivery.
     (6) "Dispenser" means a practitioner who dispenses.
     (7) "Distribute" means to deliver other than by administering or dispensing a legend drug.
     (8) "Distributor" means a person who distributes.
     (9) "Drug" means:
     (a) Substances recognized as drugs in the official United States pharmacopoeia, official homeopathic pharmacopoeia of the United States, or official national formulary, or any supplement to any of them;
     (b) Substances intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or animals;
     (c) Substances (other than food, minerals or vitamins) intended to affect the structure or any function of the body of man or animals; and
     (d) Substances intended for use as a component of any article specified in (a), (b), or (c) of this subsection. It does not include devices or their components, parts, or accessories.
     (10) "Electronic communication of prescription information" means the communication of prescription information by computer, or the transmission of an exact visual image of a prescription by facsimile, or other electronic means for original prescription information or prescription refill information for a legend drug between an authorized practitioner and a pharmacy or the transfer of prescription information for a legend drug from one pharmacy to another pharmacy.
     (11) "In-home care settings" include an individual's place of temporary and permanent residence, but does not include acute care or skilled nursing facilities, and does not include community-based care settings.
     (12) "Legend drugs" means any drugs which are required by state law or regulation of the state board of pharmacy to be dispensed on prescription only or are restricted to use by practitioners only.
     (13) "Legible prescription" means a prescription or medication order issued by a practitioner that is capable of being read and understood by the pharmacist filling the prescription or the nurse or other practitioner implementing the medication order. A prescription must be hand printed, typewritten, or electronically generated.
     (14) "Medication assistance" means assistance rendered by a nonpractitioner to an individual residing in a community-based care setting or in-home care setting to facilitate the individual's self-administration of a legend drug or controlled substance. It includes reminding or coaching the individual, handing the medication container to the individual, opening the individual's medication container, using an enabler, or placing the medication in the individual's hand, and such other means of medication assistance as defined by rule adopted by the department. A nonpractitioner may help in the preparation of legend drugs or controlled substances for self-administration where a practitioner has determined and communicated orally or by written direction that such medication preparation assistance is necessary and appropriate. Medication assistance shall not include assistance with intravenous medications or injectable medications, except prefilled insulin syringes.
     (15) "Person" means individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity.
     (16) "Practitioner" means:
     (a) A physician under chapter 18.71 RCW, an osteopathic physician or an osteopathic physician and surgeon under chapter 18.57 RCW, a dentist under chapter 18.32 RCW, a podiatric physician and surgeon under chapter 18.22 RCW, a veterinarian under chapter 18.92 RCW, a registered nurse, advanced registered nurse practitioner, or licensed practical nurse under chapter 18.79 RCW, an optometrist under chapter 18.53 RCW who is certified by the optometry board under RCW 18.53.010, an osteopathic physician assistant under chapter 18.57A RCW, a physician assistant under chapter 18.71A RCW, a naturopath licensed under chapter 18.36A RCW, a pharmacist under chapter 18.64 RCW, or, when acting under the required supervision of a dentist licensed under chapter 18.32 RCW, a dental hygienist licensed under chapter 18.29 RCW;
     (b) A pharmacy, hospital, or other institution licensed, registered, or otherwise permitted to distribute, dispense, conduct research with respect to, or to administer a legend drug in the course of professional practice or research in this state; and
     (c) A physician licensed to practice medicine and surgery or a physician licensed to practice osteopathic medicine and surgery in any state, or province of Canada, which shares a common border with the state of Washington.
     (17) "Secretary" means the secretary of health or the secretary's designee.

NEW SECTION.  Sec. 115   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Adverse event" means any of the following events or occurrences:
     (a) An unanticipated death or major permanent loss of function, not related to the natural course of a patient's illness or underlying condition;
     (b) A patient suicide while the patient was under care in the hospital;
     (c) An infant abduction or discharge to the wrong family;
     (d) Sexual assault or rape of a patient or staff member while in the hospital;
     (e) A hemolytic transfusion reaction involving administration of blood or blood products having major blood group incompatibilities;
     (f) Surgery performed on the wrong patient or wrong body part;
     (g) A failure or major malfunction of a facility system such as the heating, ventilation, fire alarm, fire sprinkler, electrical, electronic information management, or water supply which affects any patient diagnosis, treatment, or care service within the facility; or
     (h) A fire which affects any patient diagnosis, treatment, or care area of the facility.
     The term does not include an incident.
     (2) "Ambulatory surgical facility" means any distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization, whether or not the facility is certified under Title XVIII of the federal social security act.
     (3) "Childbirth center" means a facility licensed under chapter 18.46 RCW.
     (4) "Correctional medical facility" means a part or unit of a correctional facility operated by the department of corrections under chapter 72.10 RCW that provides medical services for lengths of stay in excess of twenty-four hours to offenders.
     (5) "Department" means the department of health.
     (6) "Health care worker" means an employee, independent contractor, licensee, or other individual who is directly involved in the delivery of health services in a medical facility.
     (7) "Hospital" means a facility licensed under chapter 70.41 RCW.
     (8) "Incident" means an event, occurrence, or situation involving the clinical care of a patient in a medical facility which:
     (a) Results in unanticipated injury to a patient that is less severe than death or major permanent loss of function and is not related to the natural course of the patient's illness or underlying condition; or
     (b) Could have injured the patient but did not either cause an unanticipated injury or require the delivery of additional health care services to the patient.
     The term does not include an adverse event.
     (9) "Medical facility" means an ambulatory surgical facility, childbirth center, hospital, psychiatric hospital, or correctional medical facility.
     (10) "Psychiatric hospital" means a hospital facility licensed as a psychiatric hospital under chapter 71.12 RCW.

NEW SECTION.  Sec. 116   (1) Each medical facility shall report to the department the occurrence of any adverse event. The report must be submitted to the department within forty-five days after occurrence of the event has been confirmed.
     (2) The report shall be filed in a format specified by the department after consultation with medical facilities. It shall identify the facility but shall not include any identifying information for any of the health care professionals, facility employees, or patients involved. This provision does not modify the duty of a hospital to make a report to the department of health or a disciplinary authority if a licensed practitioner has committed unprofessional conduct as defined in RCW 18.130.180.
     (3) Any medical facility or health care worker may report an incident to the department. The report shall be filed in a format specified by the department after consultation with medical facilities and shall identify the facility but shall not include any identifying information for any of the health care professionals, facility employees, or patients involved. This provision does not modify the duty of a hospital to make a report to the department of health or a disciplinary authority if a licensed practitioner has committed unprofessional conduct as defined in RCW 18.130.180.
     (4) If, in the course of investigating a complaint received from an employee of a licensed medical facility, the department determines that the facility has not undertaken efforts to investigate the occurrence of an adverse event, the department shall direct the facility to undertake an investigation of the event. If a complaint related to a potential adverse event involves care provided in an ambulatory surgical facility, the department shall notify the facility and request that they undertake an investigation of the event. The protections of RCW 43.70.075 apply to complaints related to adverse events or incidents that are submitted in good faith by employees of medical facilities.

NEW SECTION.  Sec. 117   The department shall:
     (1) Receive reports of adverse events and incidents under section 116 of this act;
     (2) Investigate adverse events;
     (3) Establish a system for medical facilities and the health care workers of a medical facility to report adverse events and incidents, which shall be accessible twenty-four hours a day, seven days a week;
     (4) Adopt rules as necessary to implement this act;
     (5) Directly or by contract:
     (a) Collect, analyze, and evaluate data regarding reports of adverse events and incidents, including the identification of performance indicators and patterns in frequency or severity at certain medical facilities or in certain regions of the state;
     (b) Develop recommendations for changes in health care practices and procedures, which may be instituted for the purpose of reducing the number and severity of adverse events and incidents;
     (c) Directly advise reporting medical facilities of immediate changes that can be instituted to reduce adverse events and incidents;
     (d) Issue recommendations to medical facilities on a facility-specific or on a statewide basis regarding changes, trends, and improvements in health care practices and procedures for the purpose of reducing the number and severity of adverse events and incidents. Prior to issuing recommendations, consideration shall be given to the following factors: Expectation of improved quality care, implementation feasibility, other relevant implementation practices, and the cost impact to patients, payers, and medical facilities. Statewide recommendations shall be issued to medical facilities on a continuing basis and shall be published and posted on the department's publicly accessible web site. The recommendations made to medical facilities under this section shall not be considered mandatory for licensure purposes unless they are adopted by the department as rules pursuant to chapter 34.05 RCW; and
     (e) Monitor implementation of reporting systems addressing adverse events or their equivalent in other states and make recommendations to the governor and the legislature as necessary for modifications to this chapter to keep the system as nearly consistent as possible with similar systems in other states;
     (6) Report no later than January 1, 2007, and annually thereafter to the governor and the legislature on the department's activities under this act in the preceding year. The report shall include:
     (a) The number of adverse events and incidents reported by medical facilities on a geographical basis and their outcomes;
     (b) The information derived from the data collected including any recognized trends concerning patient safety; and
     (c) Recommendations for statutory or regulatory changes that may help improve patient safety in the state.
The annual report shall be made available for public inspection and shall be posted on the department's web site;
     (7) Conduct all activities under this section in a manner that preserves the confidentiality of documents, materials, or information made confidential by section 119 of this act.

NEW SECTION.  Sec. 118   (1) Medical facilities licensed by the department shall have in place policies to assure that, when appropriate, information about unanticipated outcomes is provided to patients or their families or any surrogate decision makers identified pursuant to RCW 7.70.065. Notifications of unanticipated outcomes under this section do not constitute an acknowledgment or admission of liability, nor can the fact of notification or the content disclosed be introduced as evidence in a civil action.
     (2) Beginning January 1, 2006, the department shall, during the annual survey of a licensed medical facility, ensure that the policy required in subsection (1) of this section is in place.

NEW SECTION.  Sec. 119   When a report of an adverse event or incident under section 116 of this act is made by or through a coordinated quality improvement program under RCW 43.70.510 or 70.41.200, or by a peer review committee under RCW 4.24.250, information and documents, including complaints and incident reports, created specifically for and collected and maintained by a quality improvement committee for the purpose of preparing a report of an adverse event or incident shall be subject to the confidentiality protections of those laws and RCW 42.17.310(1)(hh).

NEW SECTION.  Sec. 201   The legislature finds that professional discipline is a critical function of ensuring quality health care for the people of the state of Washington, and that an alternative disciplinary process for some professions will strengthen that process.

Sec. 202   RCW 18.130.090 and 1993 c 367 s 1 are each amended to read as follows:
     (1) If the disciplining authority determines, upon investigation, that there is reason to believe a violation of RCW 18.130.180 has occurred, a statement of charge or charges shall be prepared and served upon the license holder or applicant at the earliest practical time. The statement of charge or charges shall be accompanied by a notice that the license holder or applicant may request a hearing to contest the charge or charges.
     (2) For license holders and applicants under chapter 18.71 or 18.71A RCW, the disciplining authority shall file the statement of charges with the superior court in the county in which the license holder provided the care or committed the act that is the subject of the complaint. The license holder or applicant must file a request for hearing with the superior court in which the statement of charges has been filed within twenty days after being served the statement of charges. If the twenty-day limit results in a hardship upon the license holder or applicant, he or she may request for good cause an extension not to exceed sixty additional days. If the superior court finds that there is good cause, it shall grant the extension. The failure to request a hearing constitutes a default, whereupon the superior court may enter a decision on the basis of the facts available to it. If a hearing is requested, the hearing shall be held pursuant to section 204 of this act.
     (3) For license holders and applicants not covered by subsection (2) of this section, the license holder or applicant must file a request for hearing with the disciplining authority within twenty days after being served the statement of charges. If the twenty-day limit results in a hardship upon the license holder or applicant, he or she may request for good cause an extension not to exceed sixty additional days. If the disciplining authority finds that there is good cause, it shall grant the extension. The failure to request a hearing constitutes a default, whereupon the disciplining authority may enter a decision on the basis of the facts available to it.
     (((2))) If a hearing is requested, the time of the hearing shall be fixed by the disciplining authority as soon as convenient, but the hearing shall not be held earlier than thirty days after service of the charges upon the license holder or applicant.

NEW SECTION.  Sec. 203   A new section is added to chapter 18.130 RCW to read as follows:
     (1) A complainant dissatisfied with the decision of the disciplining authority regarding a license holder or applicant under chapter 18.71 or 18.71A RCW may appeal that decision to the prosecuting attorney in the county in which the license holder provided the care or committed the act that is the subject of the complaint. If the prosecuting attorney determines, upon investigation, that there is reason to believe a violation of RCW 18.130.180 has occurred, a statement of charge or charges shall be prepared and served upon the license holder or applicant at the earliest practical time. The statement of charge or charges shall be accompanied by a notice that the license holder or applicant may request a hearing to contest the charge or charges. The decision of the prosecuting attorney as to filing charges is final and may not be appealed by the complainant or disciplining authority in any forum.
     (2) The prosecuting attorney shall file the statement of charges with the superior court. The license holder or applicant must file a request for hearing with the superior court in which the statement of charges has been filed within twenty days after being served the statement of charges. If the twenty-day limit results in a hardship upon the license holder or applicant, he or she may request for good cause an extension not to exceed sixty additional days. If the superior court finds that there is good cause, it shall grant the extension. The failure to request a hearing constitutes a default, whereupon the superior court may enter a decision on the basis of the facts available to it. If a hearing is requested, the hearing shall be held pursuant to section 204 of this act.
     (3) If the prosecuting attorney files a statement of charges, he or she shall also serve as the disciplining authority as to the settlement function in RCW 18.130.098. All settlements are subject to the approval of the superior court in which the statement of charges was filed pursuant to this section or RCW 18.130.090.

NEW SECTION.  Sec. 204   A new section is added to chapter 18.130 RCW to read as follows:
     (1) If a disciplinary authority under RCW 18.130.090 or a prosecuting attorney under section 203 of this act files a statement of charges in superior court, the superior court shall serve as the disciplinary authority for purposes of RCW 18.130.160 and shall serve as the hearing authority for purposes of RCW 18.130.170(1).
     (2) The superior court shall hold hearings requested under RCW 18.130.090 or section 203 of this act in accordance with the civil and related rules of the superior courts.
     (3) The superior court shall grant an expedited hearing upon a petition filed by:
     (a) The disciplinary authority or county prosecutor on the grounds of jeopardy to the health and safety of patients caused by delay; or
     (b) The license holder on the grounds of undue prejudice caused by delay.
     (4) Appeals from the decision of the superior court are governed by the court rules governing appeals in civil matters from the superior courts.

NEW SECTION.  Sec. 205   The supreme court may implement sections 201 through 204 of this act through court rule.

Sec. 206   RCW 18.130.160 and 2001 c 195 s 1 are each amended to read as follows:
     Upon a finding, after hearing, that a license holder or applicant has committed unprofessional conduct or is unable to practice with reasonable skill and safety due to a physical or mental condition, the disciplining authority may issue an order providing for one or any combination of the following:
     (1) Revocation of the license;
     (2) Suspension of the license for a fixed or indefinite term;
     (3) Restriction or limitation of the practice;
     (4) Requiring the satisfactory completion of a specific program of remedial education or treatment;
     (5) The monitoring of the practice by a supervisor approved by the disciplining authority;
     (6) Censure or reprimand;
     (7) Compliance with conditions of probation for a designated period of time;
     (8) Payment of a fine for each violation of this chapter, not to exceed five thousand dollars per violation. Funds received shall be placed in the health professions account;
     (9) Denial of the license request;
     (10) Corrective action;
     (11) Refund of fees billed to and collected from the consumer;
     (12) A surrender of the practitioner's license in lieu of other sanctions, which must be reported to the federal data bank.
     Except as otherwise provided in section 208 of this act, any of the actions under this section may be totally or partly stayed by the disciplining authority. In determining what action is appropriate, the disciplining authority must first consider what sanctions are necessary to protect or compensate the public. Only after such provisions have been made may the disciplining authority consider and include in the order requirements designed to rehabilitate the license holder or applicant. All costs associated with compliance with orders issued under this section are the obligation of the license holder or applicant.
     The licensee or applicant may enter into a stipulated disposition of charges that includes one or more of the sanctions of this section, but only after a statement of charges has been issued and the licensee has been afforded the opportunity for a hearing and has elected on the record to forego such a hearing. The stipulation shall either contain one or more specific findings of unprofessional conduct or inability to practice, or a statement by the licensee acknowledging that evidence is sufficient to justify one or more specified findings of unprofessional conduct or inability to practice. The stipulation entered into pursuant to this subsection shall be considered formal disciplinary action for all purposes.

Sec. 207   RCW 18.130.172 and 2000 c 171 s 29 are each amended to read as follows:
     (1) Except for those acts of unprofessional conduct specified in section 208 of this act, prior to serving a statement of charges under RCW 18.130.090 or 18.130.170, the disciplinary authority may furnish a statement of allegations to the licensee or applicant along with a detailed summary of the evidence relied upon to establish the allegations and a proposed stipulation for informal resolution of the allegations. These documents shall be exempt from public disclosure until such time as the allegations are resolved either by stipulation or otherwise.
     (2) The disciplinary authority and the applicant or licensee may stipulate that the allegations may be disposed of informally in accordance with this subsection. The stipulation shall contain a statement of the facts leading to the filing of the complaint; the act or acts of unprofessional conduct alleged to have been committed or the alleged basis for determining that the applicant or licensee is unable to practice with reasonable skill and safety; a statement that the stipulation is not to be construed as a finding of either unprofessional conduct or inability to practice; an acknowledgement that a finding of unprofessional conduct or inability to practice, if proven, constitutes grounds for discipline under this chapter; and an agreement on the part of the licensee or applicant that the sanctions set forth in RCW 18.130.160, except RCW 18.130.160 (1), (2), (6), and (8), may be imposed as part of the stipulation, except that no fine may be imposed but the licensee or applicant may agree to reimburse the disciplinary authority the costs of investigation and processing the complaint up to an amount not exceeding one thousand dollars per allegation; and an agreement on the part of the disciplinary authority to forego further disciplinary proceedings concerning the allegations. A stipulation entered into pursuant to this subsection shall not be considered formal disciplinary action.
     (3) If the licensee or applicant declines to agree to disposition of the charges by means of a stipulation pursuant to subsection (2) of this section, the disciplinary authority may proceed to formal disciplinary action pursuant to RCW 18.130.090 or 18.130.170.
     (4) Upon execution of a stipulation under subsection (2) of this section by both the licensee or applicant and the disciplinary authority, the complaint is deemed disposed of and shall become subject to public disclosure on the same basis and to the same extent as other records of the disciplinary authority. Should the licensee or applicant fail to pay any agreed reimbursement within thirty days of the date specified in the stipulation for payment, the disciplinary authority may seek collection of the amount agreed to be paid in the same manner as enforcement of a fine under RCW 18.130.165.

NEW SECTION.  Sec. 208   A new section is added to chapter 18.130 RCW to read as follows:
     (1) The disciplining authority shall revoke the license of a license holder who is found, in three unrelated orders under RCW 18.130.110 in a ten-year period, to have engaged in three separate courses of unprofessional conduct based upon any combination of the following:
     (a) Any violation of RCW 18.130.180(4) that causes or substantially contributes to the death of or severe injury to a patient or creates a significant risk of harm to the public;
     (b) Any violation of RCW 18.130.180(6) that creates a significant risk of harm to the public;
     (c) Any violation of RCW 18.130.180(7) that causes or substantially contributes to the death of or severe injury to a patient or creates a significant risk of harm to the public;
     (d) Any violation of RCW 18.130.180(9);
     (e) Any violation of RCW 18.130.180(17), except gross misdemeanors;
     (f) Any violation of RCW 18.130.180(23) that causes or substantially contributes to the death of or severe injury to a patient or creates a significant risk of harm to the public;
     (g) Any violation of RCW 18.130.180(24) based upon an act of abuse to a client or patient; and
     (h) Any violation of RCW 18.130.180(24) based upon sexual contact with a client or patient.
     (2) For the purposes of subsection (1) of this section, a ten-year period commences upon the completion of all conditions and obligations imposed for the acts identified in subsection (1)(a) through (h) of this section.
     (3) An order that includes a finding of mitigating circumstances for an act of unprofessional conduct may be issued and, except for (a) of this subsection, applied one time for any license holder or applicant for a license, and if so, that order does not count as one of the three orders that triggers a license revocation for purposes of this section. A finding of mitigating circumstances under (a) of this subsection may be issued and applied as many times as the license holder meets the criteria for such a finding and does not count as one of the three orders that triggers the revocation of a license for the purposes of this section. Except for (a) of this subsection, after a finding of mitigating circumstances is issued and applied, no subsequent orders under this section may consider any mitigating circumstances. The following mitigating circumstances may be considered:
     (a) For subsection (1)(a) of this section, the act involved a high-risk procedure, there was no lower-risk alternative to that procedure, the patient was informed of the risks of the procedure and consented to the procedure anyway, and prior to the institution of disciplinary actions the license holder took appropriate remedial measures;
     (b) There is a strong potential for rehabilitation of the license holder; or
     (c) There is a strong potential for remedial education and training to prevent future harm to the public.
     (4) Nothing in this section limits the ability of the disciplining authority to impose any sanction, including revocation, for a single violation of any subsection of RCW 18.130.180.
     (5) Notwithstanding RCW 9.96A.020(1), revocation of a license under this section is not subject to a petition for reinstatement under RCW 18.130.150.

NEW SECTION.  Sec. 209   The legislature finds that under the Washington Constitution, the legislative branch of government has plenary authority over medical practice and the right to set policy for the disciplining of health care practitioners. While medical professionals have a right to due process before their professional license may be taken away, citizens have equally significant concerns for protection against incompetent or dishonest practitioners. The legislature further finds that in carefully balancing the interests of all concerned, a substantial and significant evidence standard of proof most appropriately calibrates the balance of interests between the practitioner and the public.

NEW SECTION.  Sec. 210   A new section is added to chapter 18.130 RCW to read as follows:
     Except as otherwise provided by statute or the provisions of this section, the burden of proof in all proceedings brought under this chapter is a preponderance of the evidence. In a disciplinary proceeding under this chapter involving the suspension or revocation of the license of a health care professional licensed under chapter 18.57 or 18.71 RCW, the burden of proof is substantial and significant evidence. A substantial and significant evidence standard is a higher standard of proof than a preponderance of the evidence standard and a lower standard of proof than a clear and convincing evidence standard and shall be based on the kind of evidence that reasonably prudent persons are accustomed to relying on in the conduct of their affairs.

NEW SECTION.  Sec. 211   In the event that the Washington supreme court or other court of competent jurisdiction rules or affirms that section 210 of this act is unconstitutional, then the prescribed standard of proof set forth in section 210 of this act takes effect upon the ratification of a state constitutional amendment that empowers the legislature to enact a standard of proof in health care professional disciplinary proceedings or upon the enactment by the United States congress of a law permitting such standard of proof, whichever occurs first.

NEW SECTION.  Sec. 301   A new section is added to chapter 48.19 RCW to read as follows:
     (1) For the purposes of this section, "underwrite" means the process of selecting, rejecting, or pricing a risk, and includes each of these processes:
     (a) Evaluation, selection, and classification of risk;
     (b) Application of rates, rating rules, and classification plans to risks that are accepted; and
     (c) Determining eligibility for:
     (i) Coverage provisions;
     (ii) Providing or limiting the amount of coverage or policy limits; or
     (iii) Premium payment plans.
     (2) Each medical malpractice insurer must file its underwriting rules, guidelines, criteria, standards, or other information the insurer uses to underwrite medical malpractice coverage. However, an insurer is excluded from this requirement if the insurer is ordered into rehabilitation under chapter 48.31 or 48.99 RCW.
     (a) Every filing of underwriting information must identify and explain:
     (i) The class, type, and extent of coverage provided by the insurer;
     (ii) Any changes that have occurred to the underwriting standards; and
     (iii) How underwriting changes are expected to affect future losses.
     (b) The information under (a) of this subsection must be filed with the commissioner at least thirty days before it becomes effective and is subject to public disclosure upon receipt by the commissioner.

NEW SECTION.  Sec. 302   A new section is added to chapter 48.18 RCW to read as follows:
     (1) For the purposes of this section:
     (a) "Adverse action" includes, but is not limited to, the following:
     (i) Cancellation, denial, or nonrenewal of medical malpractice insurance coverage;
     (ii) Charging a higher insurance premium for medical malpractice insurance than would have been charged, whether the charge is by any of the following:
     (A) Application of a rating rule;
     (B) Assignment to a rating tier that does not have the lowest available rates; or
     (C) Placement with an affiliate company that does not offer the lowest rates available to the insured within the affiliate group of insurance companies; or
     (iii) Any reduction or adverse or unfavorable change in the terms of coverage or amount of any medical malpractice insurance, including, but not limited to, the following: Coverage provided to the insured physician is not as broad in scope as coverage requested by the insured physician but is available to other insured physicians of the insurer or any affiliate.
     (b) "Affiliate" has the same meaning as in RCW 48.31B.005(1).
     (c) "Claim" means a demand for payment by an allegedly injured third party under the terms and conditions of an insurance contract.
     (d) "Tier" has the same meaning as in RCW 48.18.545(1)(h).
     (2) When an insurer takes adverse action against an insured, the insurer may consider the following factors only in combination with other substantive underwriting factors:
     (a) An insured has inquired about the nature or scope of coverage under a medical malpractice insurance policy;
     (b) An insured has notified the insurer, pursuant to the provisions of the insurance contract, about a potential claim, which did not ultimately result in the filing of a claim; or
     (c) A claim was closed without payment.

Sec. 303   RCW 48.18.290 and 1997 c 85 s 1 are each amended to read as follows:
     (1) Cancellation by the insurer of any policy which by its terms is cancellable at the option of the insurer, or of any binder based on such policy which does not contain a clearly stated expiration date, may be effected as to any interest only upon compliance with the following:
     (a)(i) For policies other than medical malpractice liability insurance: Written notice of such cancellation, accompanied by the actual reason therefor, must be actually delivered or mailed to the named insured not less than forty-five days prior to the effective date of the cancellation ((except for cancellation of insurance policies for));
     (ii) For policies that provide medical malpractice liability insurance: Written notice of such cancellation, accompanied by the actual reason therefore, must be actually delivered or mailed to the named insured not less than ninety days prior to the effective date of the cancellation;
     (iii) For policies canceled due to nonpayment of premiums, ((which)) written notice ((shall be)) must be actually delivered or mailed to the named insured not less than ten days prior to ((such date and except for cancellation of fire insurance policies)) the effective date of the cancellation; and
     (iv) For fire insurance policies canceled under chapter 48.53 RCW, ((which)) written notice ((shall not be)) must be actually delivered or mailed to the named insured not less than five days prior to ((such date)) the effective date of the cancellation;
     (b) Like notice must also be so delivered or mailed to each mortgagee, pledgee, or other person shown by the policy to have an interest in any loss which may occur thereunder. For purposes of this subsection (1)(b), "delivered" includes electronic transmittal, facsimile, or personal delivery.
     (2) The mailing of any such notice shall be effected by depositing it in a sealed envelope, directed to the addressee at his or her last address as known to the insurer or as shown by the insurer's records, with proper prepaid postage affixed, in a letter depository of the United States post office. The insurer shall retain in its records any such item so mailed, together with its envelope, which was returned by the post office upon failure to find, or deliver the mailing to, the addressee.
     (3) The affidavit of the individual making or supervising such a mailing, shall constitute prima facie evidence of such facts of the mailing as are therein affirmed.
     (4) The portion of any premium paid to the insurer on account of the policy, unearned because of the cancellation and in amount as computed on the pro rata basis, must be actually paid to the insured or other person entitled thereto as shown by the policy or by any endorsement thereon, or be mailed to the insured or such person as soon as possible, and no later than forty-five days after the date of notice of cancellation to the insured for homeowners', dwelling fire, and private passenger auto. Any such payment may be made by cash, or by check, bank draft, or money order.
     (5) This section shall not apply to contracts of life or disability insurance without provision for cancellation prior to the date to which premiums have been paid, or to contracts of insurance procured under the provisions of chapter 48.15 RCW.

Sec. 304   RCW 48.18.2901 and 2002 c 347 s 1 are each amended to read as follows:
     (1) Each insurer shall be required to renew any contract of insurance subject to RCW 48.18.290 unless one of the following situations exists:
     (a) The insurer gives the named insured at least forty-five or ninety days' notice in writing as provided for in RCW 48.18.290(1)(a) (i) or (ii), that it ((proposes to refuse to renew)) will not renew the insurance contract upon its expiration date; and sets forth in that writing the actual reason for refusing to renew;
     (b) At least twenty days prior to its expiration date, the insurer has communicated, either directly or through its agent, its willingness to renew in writing to the named insured and has included in that writing a statement of the amount of the premium or portion thereof required to be paid by the insured to renew the policy, and the insured fails to discharge when due his or her obligation in connection with the payment of such premium or portion thereof;
     (c) The insured has procured equivalent coverage prior to the expiration of the policy period;
     (d) The contract is evidenced by a written binder containing a clearly stated expiration date which has expired according to its terms; or
     (e) The contract clearly states that it is not renewable, and is for a specific line, subclassification, or type of coverage that is not offered on a renewable basis. This subsection (1)(e) does not restrict the authority of the insurance commissioner under this code.
     (2) Any insurer failing to include in the notice required by subsection (1)(b) of this section the amount of any increased premium resulting from a change of rates and an explanation of any change in the contract provisions shall renew the policy if so required by that subsection according to the rates and contract provisions applicable to the expiring policy. However, renewal based on the rates and contract provisions applicable to the expiring policy shall not prevent the insurer from making changes in the rates and/or contract provisions of the policy once during the term of its renewal after at least twenty days' advance notice of such change has been given to the named insured.
     (3) Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of such renewal, or with respect to cancellation of fire policies under chapter 48.53 RCW.
     (4) "Renewal" or "to renew" means the issuance and delivery by an insurer of a contract of insurance replacing at the end of the contract period a contract of insurance previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of a contract beyond its policy period or term. However, (a) any contract of insurance with a policy period or term of six months or less whether or not made continuous for successive terms upon the payment of additional premiums shall for the purpose of RCW 48.18.290 and 48.18.293 through 48.18.295 be considered as if written for a policy period or term of six months; and (b) any policy written for a term longer than one year or any policy with no fixed expiration date, shall, for the purpose of RCW 48.18.290 and 48.18.293 through 48.18.295, be considered as if written for successive policy periods or terms of one year.
     (5) A midterm blanket reduction in rate, approved by the commissioner, for medical malpractice insurance shall not be considered a renewal for purposes of this section.

NEW SECTION.  Sec. 305   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Claim" means a demand for payment of a loss caused by medical malpractice.
     (a) Two or more claims, or a single claim naming multiple health care providers or facilities, arising out of a single injury or incident of medical malpractice is one claim.
     (b) A series of related incidents of medical malpractice is one claim.
     (2) "Claimant" means a person filing a claim against a health care provider or health care facility.
     (3) "Closed claim" means a claim concluded with or without payment and for which all administrative activity has been finalized by the insuring entity or self-insurer.
     (4) "Commissioner" means the insurance commissioner.
     (5) "Health care facility" or "facility" means a clinic, diagnostic center, hospital, laboratory, mental health center, nursing home, office, surgical facility, treatment facility, or similar place where a health care provider provides health care to patients.
     (6) "Health care provider" or "provider" means a physician licensed under chapter 18.71 RCW, an osteopathic physician licensed under chapter 18.57 RCW, a podiatric physician licensed under chapter 18.22 RCW, a dentist licensed under chapter 18.32 RCW, a chiropractor licensed under chapter 18.25 RCW, an advance registered nurse practitioner licensed under chapter 18.79 RCW, a physician assistant licensed under chapter 18.71A RCW, and a naturopath licensed under chapter 18.36A RCW.
     (7) "Insuring entity" means:
     (a) An insurer;
     (b) A joint underwriting association;
     (c) A risk retention group; or
     (d) An unauthorized insurer that provides surplus lines coverage.
     (8) "Medical malpractice" means a negligent act, error, or omission in providing or failing to provide professional health care services that is actionable under chapter 7.70 RCW.
     (9) "Self-insurer" means any health care provider, facility, or other individual or entity that assumes operational or financial risk for claims of medical malpractice.

NEW SECTION.  Sec. 306   (1) Beginning April 1, 2006, every self-insurer or insuring entity that provides medical malpractice insurance to any facility or provider in Washington state must report to the commissioner any closed claim related to medical malpractice, if the claim resulted in a final:
     (a) Judgment in any amount;
     (b) Settlement or payment in any amount; or
     (c) Disposition of a medical malpractice claim resulting in no indemnity payment on behalf of an insured.
     (2) If a claim is not reported by an insuring entity or self-insurer under subsection (1) of this section due to limitations in the medical malpractice coverage of a facility or provider, the facility or provider must report the claim to the commissioner.
     (3) Reports under this section must be filed with the commissioner within sixty days after the claim is closed by the insuring entity or self-insurer.
     (4)(a) The commissioner may impose a fine of up to two hundred fifty dollars per day per case against any insuring entity that violates the requirements of this section. The total fine per case may not exceed ten thousand dollars.
     (b) The department of health may impose a fine of up to two hundred fifty dollars per day per case against any facility or provider that violates the requirements of this section. The total fine per case may not exceed ten thousand dollars.

NEW SECTION.  Sec. 307   The reports required under section 306 of this act must contain the following data in a form and with coding prescribed by the commissioner for each claim:
     (1) A unique number assigned to the claim by the insuring entity or self-insurer to serve as an identifier for the claim;
     (2) The type of health care provider, including the provider's medical specialty; the type of facility, if any, and the location within the facility where the injury occurred;
     (3) The date of the event that resulted in the claim;
     (4) The county or counties in which the event that resulted in the claim occurred;
     (5) The date the claim was reported to the insuring entity, self-insurer, facility, or provider;
     (6) The date of suit, if filed;
     (7) The claimant's age and sex;
     (8) Specific information about the judgment or settlement including:
     (a) The date and amount of any judgment or settlement;
     (b) Whether the settlement:
     (i) Was the result of a judgment, arbitration, or mediation; and
     (ii) Occurred before or after trial;
     (c) For claims that result in a verdict or judgment that itemizes damages:
     (i) Economic damages, such as incurred and anticipated medical expense and lost wages;
     (ii) Noneconomic damages; and
     (iii) Allocated loss adjustment expense, including but not limited to court costs, attorneys' fees, and costs of expert witnesses;
     (d) For claims that do not result in a verdict or judgment that itemizes damages:
     (i) Total damages; and
     (ii) Allocated loss adjustment expense, including but not limited to court costs, attorneys' fees, and costs of expert witnesses; and
     (e) If there is no judgment or settlement:
     (i) The date and reason for final disposition; and
     (ii) The date the claim was closed; and
     (9) The reason for the medical malpractice claim. The commissioner shall use the same coding of reasons for malpractice claims as those used for mandatory reporting to the national practitioner data bank, in the federal department of health and human services, as provided in 42 U.S.C. Secs. 11131 and 11134, as amended.

NEW SECTION.  Sec. 308   The commissioner must prepare aggregate statistical summaries of closed claims based on calendar year data submitted under section 306 of this act.
     (1) At a minimum, data must be sorted by calendar year and calendar incident year. The commissioner may also decide to display data in other ways.
     (2) The summaries must be available by March 31st of each year.
     (3) Information included in an individual closed claim report submitted by an insurer or self-insurer under this chapter is confidential, is exempt from public disclosure, and may not be made available by the commissioner to the public.

NEW SECTION.  Sec. 309   Beginning in 2006, the commissioner must prepare an annual report by June 30th that summarizes and analyzes the closed claim reports for medical malpractice filed under section 306 of this act and the annual financial reports filed by insurers writing medical malpractice insurance in this state. The report must include:
     (1) An analysis of closed claim reports of prior years for which data are collected and show:
     (a) Trends in the frequency and severity of claims payments;
     (b) An itemization of economic and noneconomic damages;
     (c) An itemization of allocated loss adjustment expenses;
     (d) The types of medical malpractice for which claims have been paid; and
     (e) Any other information the commissioner determines illustrates trends in closed claims;
     (2) An analysis of the medical malpractice insurance market in Washington state, including:
     (a) An analysis of the financial reports of the insurers with a combined market share of at least ninety percent of net written medical malpractice premium in Washington state for the prior calendar year;
     (b) A loss ratio analysis of medical malpractice insurance written in Washington state; and
     (c) A profitability analysis of each insurer writing medical malpractice insurance;
     (3) A comparison of loss ratios and the profitability of medical malpractice insurance in Washington state to other states based on financial reports filed with the national association of insurance commissioners and any other source of information the commissioner deems relevant;
     (4) A summary of the rate filings for medical malpractice that have been approved by the commissioner for the prior calendar year, including an analysis of the trend of direct and incurred losses as compared to prior years;
     (5) The commissioner must post reports required by this section on the internet no later than thirty days after they are due; and
     (6) The commissioner may adopt rules that require insuring entities and self-insurers required to report under section 306(1) of this act to report data related to:
     (a) The frequency and severity of open claims for the reporting period;
     (b) The aggregate amounts reserved for incurred claims;
     (c) Changes in reserves from the previous reporting period; and
     (d) Any other information that helps the commissioner monitor losses and claims development in the Washington state medical malpractice insurance market.

NEW SECTION.  Sec. 310   The commissioner shall adopt all rules needed to implement this chapter. To ensure that claimants, health care providers, health care facilities, and self-insurers cannot be individually identified when data is disclosed to the public, the commissioner shall adopt rules that require the protection of information that, in combination, could result in the ability to identify the claimant, health care provider, health care facility, or self-insurer in a particular claim or collection of claims.

NEW SECTION.  Sec. 311   A new section is added to chapter 7.70 RCW to read as follows:
     In any action filed under this chapter that results in a final:
     (1) Judgment in any amount;
     (2) Settlement or payment in any amount; or
     (3) Disposition resulting in no indemnity payment,
the claimant or his or her attorney shall report to the office of the insurance commissioner on forms provided by the commissioner any court costs, attorneys' fees, or costs of expert witnesses incurred in pursuing the action.

NEW SECTION.  Sec. 312   If the national association of insurance commissioners adopts model medical malpractice reporting standards, the insurance commissioner must analyze the model standards and report to the legislature on or before the December 1st subsequent to the adoption of the model standards. The report must include an analysis of any differences between the model standards and sections 305 through 310 of this act and make recommendations, if any, regarding possible legislative changes. The report must be made to the house of representatives committees on health care; financial institutions and insurance; and judiciary and the senate committees on health and long-term care; financial institutions, housing and consumer protection; and judiciary.

NEW SECTION.  Sec. 313   A new section is added to chapter 42.17 RCW to read as follows:
     Information in a closed claim report filed under section 307 of this act that alone or in combination could result in the ability to identify a claimant, health care provider, health care facility, or self-insurer involved in a particular claim is exempt from disclosure under this chapter.

NEW SECTION.  Sec. 401   The department of health shall develop, in consultation with the department of revenue, a program to provide business and occupation tax credits for physicians who serve uninsured, medicare, and medicaid patients in a private practice or a reduced fee access program for the uninsured and shall submit proposed legislation to the legislature by December 15, 2005.

NEW SECTION.  Sec. 501   A new section is added to chapter 7.70 RCW to read as follows:
     (1) In an action against a health care provider under this chapter, an expert may not provide testimony at trial unless the expert meets the following criteria:
     (a) Has expertise in the medical condition at issue in the action; and
     (b) At the time of the occurrence of the incident at issue in the action, or at the time of retirement in the case of an expert who retired no sooner than five years prior to the time the action is commenced, was either:
     (i) Engaged in active practice in the same or similar area of practice or specialty as the defendant; or
     (ii) Teaching at an accredited medical school or an accredited or affiliated academic or clinical training program in the same or similar area of practice or specialty as the defendant, including instruction regarding the particular condition at issue.
     (2) Upon motion of a party, the court may waive the requirements of subsection (1) of this section and allow an expert who does not meet those requirements to testify at trial if the court finds that:
     (a) Extensive efforts were made by the party to locate an expert who meets the criteria under subsection (1) of this section, but none was willing and available to testify; and
     (b) The proposed expert is qualified to be an expert witness by virtue of the person's training, experience, and knowledge.

NEW SECTION.  Sec. 502   A new section is added to chapter 7.70 RCW to read as follows:
     An expert opinion provided in the course of an action against a health care provider under this chapter must be corroborated by admissible evidence, such as, but not limited to, treatment or practice protocols or guidelines developed by medical specialty organizations, objective academic research, clinical trials or studies, or widely accepted clinical practices.

NEW SECTION.  Sec. 503   A new section is added to chapter 7.70 RCW to read as follows:
     In any action under this chapter, each party shall presumptively be entitled to only two independent experts on an issue, except upon a showing of good cause. The court, upon a showing of good cause, shall allow additional experts on an issue to be called as the court deems appropriate.

NEW SECTION.  Sec. 504   A new section is added to chapter 7.70 RCW to read as follows:
     (1) In an action against an individual health care provider under this chapter for personal injury or wrongful death in which the injury is alleged to have been caused by an act or omission that violates the accepted standard of care, the plaintiff must file a certificate of merit at the time of commencing the action. If the action is commenced within forty-five days of the expiration of the applicable statute of limitations, the plaintiff must file the certificate of merit within forty-five days of commencing the action.
     (2) The certificate of merit must be executed by a health care provider who meets the qualifications of an expert under this chapter. If there is more than one defendant in the action, the person commencing the action must file a certificate of merit for each defendant.
     (3) The certificate of merit must contain a statement that the person executing the certificate of merit believes, based on the information known at the time of executing the certificate of merit, that there is a reasonable probability that the defendant's conduct did not follow the accepted standard of care required to be exercised by the defendant.
     (4) Upon motion of the plaintiff, the court may grant an additional period of time to file the certificate of merit, not to exceed ninety days, if the court finds there is good cause for the extension.
     (5)(a) Failure to file a certificate of merit that complies with the requirements of this section is grounds for dismissal of the case.
     (b) If a case is dismissed for failure to file a certificate of merit that complies with the requirements of this section, the filing of the claim against the health care provider shall not be used against the health care provider in professional liability insurance rate setting, personal credit history, or professional licensing and credentialing.

Sec. 505   RCW 4.16.350 and 1998 c 147 s 1 are each amended to read as follows:
     (1) Any civil action or arbitration for damages for injury or death occurring as a result of health care or related services, or the arranging for the provision of health care or related services, which is provided after June 25, 1976, against((:
     (1) A person licensed by this state to provide health care or related services, including, but not limited to, a physician, osteopathic physician, dentist, nurse, optometrist, podiatric physician and surgeon, chiropractor, physical therapist, psychologist, pharmacist, optician, physician's assistant, osteopathic physician's assistant, nurse practitioner, or physician's trained mobile intensive care paramedic, including, in the event such person is deceased, his estate or personal representative;
     (2) An employee or agent of a person described in subsection (1) of this section, acting in the course and scope of his employment, including, in the event such employee or agent is deceased, his estate or personal representative; or
     (3) An entity, whether or not incorporated, facility, or institution employing one or more persons described in subsection (1) of this section, including, but not limited to, a hospital, clinic, health maintenance organization, or nursing home; or an officer, director, employee, or agent thereof acting in the course and scope of his employment, including, in the event such officer, director, employee, or agent is deceased, his estate or personal representative;)) a health care provider as defined in RCW 7.70.020, or a health care institution, based upon alleged professional negligence shall be commenced within three years of the act or omission alleged to have caused the injury, death, or condition, or within one year of the time the patient or his or her representative or custodial parent or guardian discovered or reasonably should have discovered that the injury, death, or condition was caused by said act or omission, whichever period ((expires later, except that in no event shall an action be commenced more than eight years after said act or omission: PROVIDED, That the time for commencement of an action is tolled upon proof of fraud, intentional concealment, or the presence of a foreign body not intended to have a therapeutic or diagnostic purpose or effect, until the date the patient or the patient's representative has actual knowledge of the act of fraud or concealment, or of the presence of the foreign body; the patient or the patient's representative has one year from the date of the actual knowledge in which to commence a civil action for damages.
     For purposes of this section, notwithstanding RCW 4.16.190, the knowledge of a custodial parent or guardian shall be imputed to a person under the age of eighteen years, and such imputed knowledge shall operate to bar the claim of such minor to the same extent that the claim of an adult would be barred under this section. Any action not commenced in accordance with this section shall be barred.
     For purposes of this section, with respect to care provided after June 25, 1976, and before August 1, 1986, the knowledge of a custodial parent or guardian shall be imputed as of April 29, 1987, to persons under the age of eighteen years)) occurs first.
     (2) In no event may an action be commenced more than three years after the act or omission alleged to have caused the injury or condition except:
     (a) Upon proof of fraud, intentional concealment, or the presence of a foreign body not intended to have a therapeutic or diagnostic purpose or effect, in which case the patient or the patient's representative has one year from the date the patient or the patient's representative or custodial parent or guardian has actual knowledge of the act of fraud or concealment or of the presence of the foreign body within which to commence a civil action for damages.
     (b) In the case of a minor, upon proof that the minor's custodial parent or guardian and the defendant or the defendant's insurer have committed fraud or collusion in the failure to bring an action on behalf of the minor, in which case the patient or the patient's representative has one year from the date the patient or the patient's representative other than the custodial parent or guardian who committed the fraud or collusion has actual knowledge of the fraud or collusion, or one year from the date of the minor's eighteenth birthday, whichever provides a longer period.
     (c) In the case of a minor under the full age of six years, in which case the action on behalf of the minor must be commenced within three years, or prior to the minor's eighth birthday, whichever provides a longer period.
     (3) For purposes of this section, the tolling provisions of RCW 4.16.190 do not apply.
     (4) This section does not apply to a civil action based on intentional conduct brought against those individuals or entities specified in this section by a person for recovery of damages for injury occurring as a result of childhood sexual abuse as defined in RCW 4.16.340(5).
     (5) This section applies to all causes of action for injury or death occurring as a result of health care or related services, or the arranging for the provision of health care or related services, filed on or after the effective date of this section. However, any action which, if filed on or after the effective date of this section, would have been timely under former law, but now would be barred under the chapter . . ., Laws of 2005 amendments contained in this section, may be brought within one year following the effective date of this section.
     (6) Any action not commenced in accordance with this section is barred.

NEW SECTION.  Sec. 506   A new section is added to chapter 7.70 RCW to read as follows:
     The definitions in this section apply throughout sections 507 through 511 of this act unless the context clearly requires otherwise.
     (1) "Allegedly responsible party" means a health care provider alleged by the claimant to be responsible for at least some portion of an injury to the claimant resulting from alleged professional negligence in the provision of health care.
     (2) "Amount recovered" means the total compensation, including the reasonable value of nonmonetary compensation, that an attorney has obtained on behalf of a claimant through settlement, arbitration, or judgment, minus the reasonable costs and expenses incurred by the attorney in prosecuting or settling the claim.
     (3) "Claimant" means any natural person who, in his or her own right, or vicariously, is seeking compensation in connection with a claim under this chapter for personal injury or wrongful death as a result of alleged professional negligence in the provision of health care.
     (4) "Collateral source" means compensation or benefits paid or payable to the claimant or on the claimant's behalf, to compensate the claimant for the injury complained of, regardless of the right of recoupment of any other entity, through subrogation, trust agreement, lien, or otherwise.
     (5) "Contingent fee" means compensation, however calculated, that is payable only if an amount is recovered.
     (6) "Early settlement offer" means a settlement offer made in accordance with section 507 of this act.
     (7) "Economic damages" has the meaning provided in RCW 4.56.250.
     (8) "Entity" includes an individual or person.
     (9) "Noneconomic damages" has the meaning provided in RCW 4.56.250.

NEW SECTION.  Sec. 507   A new section is added to chapter 7.70 RCW to read as follows:
     (1) In any civil action for damages brought under this chapter against a health care provider based on alleged professional negligence, an allegedly responsible party may make an early settlement offer at any time prior to one hundred twenty days after the claim is filed with a court. To qualify as an early settlement offer, the offer must include a good faith offer to compensate the claimant for the claimant's current and future economic damages suffered as a result of the allegedly responsible party's act or omission, less collateral source benefits available to the claimant, and for reasonable hourly attorneys' fees for the claimant. The early settlement offer must be in writing and communicated to the claimant by certified mail. The offer must remain open for acceptance for a minimum of thirty days from the date the offer is received by the claimant.
     (2) An allegedly responsible party may amend or issue an additional early settlement offer prior to one hundred twenty days after the action is commenced. The claimant may extend the time for receiving the offer beyond this period.
     (3) An attorney who receives an early settlement offer shall provide a true and complete copy of the offer to his or her client.
     (4) A claimant who agrees in writing to an early settlement offer may not bring or continue a civil action, based on the same alleged professional negligence, against the allegedly responsible party who made the early settlement offer or any other allegedly responsible parties who joined in the early settlement offer under subsection (5) of this section.
     (5) An offer under subsection (1) of this section may include other allegedly responsible parties who were involved in the events that gave rise to the civil action, regardless of the theory of liability on which the claim is based, with their consent. If, after an early settlement offer is made and accepted, the participants in the offer dispute their relative contributions to the payments to be made to the claimant, such disputes shall be resolved through binding arbitration in accordance with chapter 7.04 RCW.
     (6) The claimant may reject an offer of compensation made under subsection (1) of this section and elect to bring or maintain a civil action for damages. Upon rejection of an offer of compensation that complies with the requirements of subsection (1) of this section, the claimant may recover damages in the civil action only if the claimant proves by clear and convincing evidence that the allegedly responsible party caused the injury by reckless, willful, or wanton conduct.

NEW SECTION.  Sec. 508   A new section is added to chapter 7.70 RCW to read as follows:
     (1) An attorney who represents a person alleging personal injury or death resulting from professional negligence in the provision of health care, and who represents the person on a contingent-fee basis, shall send a demand for compensation by certified mail to each allegedly responsible party prior to commencing a court action. In the event that multiple allegedly responsible parties are known to the attorney, a demand must be sent on the same date to each party. The demand must specify the amount of compensation sought and must set forth the material facts, documentary evidence, and other information relevant to the demand, including:
     (a) The name and address of the claimant or of the person on whose behalf the claim is being made;
     (b) A brief description of how the injury or loss occurred;
     (c) The names and, if known, the addresses and telephone numbers of all known witnesses to the injury or loss;
     (d) Copies of photographs in the claimant's possession which relate to the injury or loss;
     (e) The basis for claiming that the party to whom the demand is addressed is responsible or partially responsible for the injury or loss;
     (f) A description of the nature of the injury or loss, including the dates and nature of the care or services provided, and the names and addresses of all physicians and other health care providers that provided medical care or services to the claimant or injured party;
     (g) Medical records relating to the injury, including those involving a prior injury or preexisting medical condition which would be discoverable by the allegedly responsible party during the course of litigation or, in lieu thereof, executed releases authorizing the allegedly responsible party to obtain the records directly from those health care providers who provided treatment to the claimant; and
     (h) Documentation of any medical expenses, lost wages, personal losses, and other economic and noneconomic damages suffered as a consequence of the injury or loss.
     (2) The attorney shall mail copies of each demand to the claimant and to each allegedly responsible party.
     (3) A claimant's attorney who learns of an additional allegedly responsible party after making a demand for compensation under subsection (1) of this section shall send a demand for compensation to the newly discovered allegedly responsible party and simultaneously mail a copy of the demand to each of the other allegedly responsible parties and to the claimant.
     (4) In the event that a claimant's attorney learns of an additional allegedly responsible party more than ninety days after making a demand for compensation under subsection (1) of this section, the attorney shall not be required to send a demand to that party nor do the fee limitations imposed under section 510 (1) and (2) of this act apply with regard to an amount recovered from that party, except as provided by this subsection. An attorney who fails as a result of a breach of the standard of care to learn of an additional allegedly responsible party within ninety days of sending a demand for compensation to another allegedly responsible party shall not collect a fee in excess of that allowed under section 510 (1) and (2) of this act with respect to an amount recovered from the additional allegedly responsible party.

NEW SECTION.  Sec. 509   A new section is added to chapter 7.70 RCW to read as follows:
     An allegedly responsible party is under no obligation to issue a response to a demand for compensation made under section 508 of this act. The fact that a demand for compensation was or was not made, the fact that an early settlement offer was or was not made, and the amount of any demand or settlement offer made are inadmissible at a trial arising from the injury or loss.

NEW SECTION.  Sec. 510   A new section is added to chapter 7.70 RCW to read as follows:
     (1) An attorney who represents a claimant who has accepted an early settlement offer under section 507 of this act shall not collect an amount as compensation for the attorney's services that is more than the attorney's reasonable hourly fees for the services performed.
     (2) An attorney who represents a claimant who has rejected or failed to accept an early settlement offer shall not collect a contingent fee that is greater than twenty percent of the amount of the early settlement offer plus the percentage of the amount recovered in excess of the early settlement offer as was agreed to by the claimant and the attorney.
     (3) A claimant's attorney who has failed to make a demand for compensation under section 508 of this act, or who has omitted from the demand any information required under section 508 of this act of a material nature which the attorney had in his or her possession, or which was readily available to him or her, or of which the attorney had knowledge, shall not collect a contingent fee greater than twenty percent of the amount recovered.
     (4) A claimant's attorney who has failed to provide his or her client a true and complete copy of an early settlement offer received by the attorney, as required under section 507 of this act, shall not collect a contingent fee greater than twenty percent of the amount recovered.
     (5) An attorney shall disclose, plainly and in writing, to claimants whom the attorney proposes to represent on a contingent-fee basis: (a) The fee limitations imposed by this section; and (b) the fact that such limitations are maximum limits and that the attorney and claimant may negotiate a lower fee.
     The attorney shall also provide to each claimant a copy of this act.
     (6) The fee limitations imposed by this section may not be waived.
     (7) This section applies to all attorneys practicing in this state, including attorneys prosecuting claims filed in federal court, to the maximum extent permitted by federal law.

NEW SECTION.  Sec. 511   A new section is added to chapter 7.70 RCW to read as follows:
     A fiduciary relationship applies with respect to a fee agreement between an attorney and a claimant.

Sec. 512   RCW 7.70.070 and 1975-'76 2nd ex.s. c 56 s 12 are each amended to read as follows:
     (1) The court shall, in any action under this chapter, determine the reasonableness of each party's attorneys fees. The court shall take into consideration the following:
     (((1))) (a) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
     (((2))) (b) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
     (((3))) (c) The fee customarily charged in the locality for similar legal services;
     (((4))) (d) The amount involved and the results obtained;
     (((5))) (e) The time limitations imposed by the client or by the circumstances;
     (((6))) (f) The nature and length of the professional relationship with the client;
     (((7))) (g) The experience, reputation, and ability of the lawyer or lawyers performing the services;
     (((8))) (h) Whether the fee is fixed or contingent.
     (2) An attorney's contingency fee is limited to the maximum permissible fee allowed under section 510 of this act.

Sec. 513   RCW 7.70.080 and 1975-'76 2nd ex.s. c 56 s 13 are each amended to read as follows:
     (1) Any party may present evidence to the trier of fact that the patient or claimant has already been, or will be, compensated for the injury complained of from ((any source except the assets of the patient, his representative, or his immediate family, or insurance purchased with such assets. In the event such evidence is admitted, the plaintiff may present evidence of an obligation to repay such compensation. Insurance bargained for or provided on behalf of an employee shall be considered insurance purchased with the assets of the employee)) a collateral source. In the event the evidence is admitted, the other party may present evidence of any amount that was paid or contributed to secure the right to any compensation. Compensation as used in this section shall mean payment of money or other property to or on behalf of the patient or claimant, rendering of services to the patient free of charge to the patient or claimant, or indemnification of expenses incurred by or on behalf of the patient or claimant. Notwithstanding this section, evidence of compensation by a defendant health care provider may be offered only by that provider.
     (2) Unless otherwise provided by state law or superseding federal law, there is no right of subrogation or reimbursement from the patient's or claimant's tort recovery with respect to compensation covered in subsection (1) of this section. This subsection does not apply to a subrogation or reimbursement right under a contract or other agreement entered into prior to the effective date of this act.

Sec. 514   RCW 7.70.100 and 1993 c 492 s 419 are each amended to read as follows:
     (1) No action for damages for injury or death occurring as a result of health care or related services, or the arranging for the provision of health care or related services, may be commenced unless the defendant has been given at least ninety days' notice of the intention to commence the action. If the notice is served within ninety days before the expiration of the applicable statute of limitations, the time for the commencement of the action must be extended ninety days from the service of the notice.
     (2) The provisions of subsection (1) of this section are not applicable with respect to any defendant whose name is unknown to the plaintiff at the time of filing the complaint and who is identified therein by a fictitious name.
     (3) After the filing of the ninety-day presuit notice, and before a superior court trial, all causes of action, whether based in tort, contract, or otherwise, for damages ((arising from)) for injury or death occurring as a result of health care or related services, or the arranging for the provision of health care or related services, provided after July 1, 1993, shall be subject to mandatory mediation prior to trial.
     (((2))) (4) The supreme court shall by rule adopt procedures to implement mandatory mediation of actions under this chapter. The rules shall require mandatory mediation without exception and address, at a minimum:
     (a) Procedures for the appointment of, and qualifications of, mediators. A mediator shall have experience or expertise related to actions arising from injury occurring as a result of health care, and be a member of the state bar association who has been admitted to the bar for a minimum of five years or who is a retired judge. The parties may stipulate to a nonlawyer mediator. The court may prescribe additional qualifications of mediators;
     (b) Appropriate limits on the amount or manner of compensation of mediators;
     (c) The number of days following the filing of a claim ((under this chapter)) within which a mediator must be selected;
     (d) The method by which a mediator is selected. The rule shall provide for designation of a mediator by the superior court if the parties are unable to agree upon a mediator;
     (e) The number of days following the selection of a mediator within which a mediation conference must be held;
     (f) A means by which mediation of an action ((under this chapter)) may be waived by a mediator who has determined that the claim is not appropriate for mediation; and
     (g) Any other matters deemed necessary by the court.
     (((3))) (5) Mediators shall not impose discovery schedules upon the parties.
     (6) The supreme court shall by rule also adopt procedures for the parties to certify to the court the manner of mediation used by the parties to comply with this section.

NEW SECTION.  Sec. 515   A new section is added to chapter 7.70 RCW to read as follows:
     (1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Future damages" includes damages for future health care or related services, care or custody, loss of future earnings, loss of bodily function, or future pain and suffering of the judgment creditor.
     (b) "Periodic payments" means the payment of money or delivery of other property to the judgment creditor at regular intervals.
     (2) In any action for damages for injury occurring as a result of health care or related services, or for the arranging for the provision of health care or related services, the court shall, at the request of either party, enter a judgment ordering that money damages or its equivalent for future damages of the judgment creditor be paid in whole or in part by periodic payments rather than by a lump-sum payment if the award equals or exceeds fifty thousand dollars in future damages. In entering a judgment ordering the payment of future damages by periodic payments, the court shall make a specific finding as to the dollar amount of periodic payments which will compensate the judgment creditor for such future damages. As a condition to authorizing periodic payments of future damages, the court shall require the judgment debtor who is not adequately insured to post security adequate to ensure full payment of such damages awarded by the judgment. Upon termination of periodic payments of future damages, the court shall order the return of this security, or so much as remains, to the judgment debtor.
     (3)(a) The judgment ordering the payment of future damages by periodic payments must specify the recipient or recipients of the payments, the dollar amount of the payments, the interval between payments, and the number of payments or the period of time over which payments must be made. The payments are only subject to modification in the event of the death of the judgment creditor.
     (b) In the event that the court finds that the judgment debtor has exhibited a continuing pattern of failing to make the payments, as specified in (a) of this subsection, the court shall find the judgment debtor in contempt of court and, in addition to the required periodic payments, shall order the judgment debtor to pay the judgment creditor all damages caused by the failure to make such periodic payments, including court costs and attorneys' fees.
     (4) In the event of the death of the judgment creditor, the court, upon petition of any party in interest, shall modify the judgment to eliminate future periodic payments of damages awarded for future medical treatment, care or custody, loss of bodily function, or future pain and suffering of the judgment creditor. However, money damages awarded for loss of future earnings may not be reduced or payments terminated by reason of the death of the judgment creditor, but must be paid to persons to whom the judgment creditor owed a duty of support, as provided by law, immediately prior to his or her death. In such cases, the court that rendered the original judgment may, upon petition of any party in interest, modify the judgment to award and apportion the unpaid future damages in accordance with this subsection (4).
     (5) Following the occurrence or expiration of all obligations specified in the periodic payment judgment, any obligation of the judgment debtor to make further payments ceases and any security given under subsection (2) of this section reverts to the judgment debtor.
     (6) For purposes of this section, the provisions of RCW 4.56.250 do not apply.
     (7) It is intended in enacting this section to authorize, in actions for damages for injury occurring as a result of health care or related services, or the arranging for the provision of health care or related services, the entry of judgments that provide for the payment of future damages through periodic payments rather than lump-sum payments. By authorizing periodic payment judgments, it is further intended that the courts will utilize such judgments to provide compensation sufficient to meet the needs of an injured plaintiff and those persons who are dependent on the plaintiff for whatever period is necessary while eliminating the potential windfall from a lump-sum recovery that was intended to provide for the care of an injured plaintiff over an extended period who then dies shortly after the judgment is paid, leaving the balance of the judgment award to persons and purposes for which it was not intended. It is also intended that all elements of the periodic payment program be specified with certainty in the judgment ordering such payments and that the judgment not be subject to modification at some future time that might alter the specifications of the original judgment, except in the event of the death of the judgment creditor.

Sec. 516   RCW 4.22.070 and 1993 c 496 s 1 are each amended to read as follows:
     (1) In all actions involving fault of more than one entity, the trier of fact shall determine the percentage of the total fault which is attributable to every entity which caused the claimant's damages except entities immune from liability to the claimant under Title 51 RCW. The sum of the percentages of the total fault attributed to at-fault entities shall equal one hundred percent. The entities whose fault shall be determined include the claimant or person suffering personal injury or incurring property damage, defendants, third-party defendants, entities ((released by)) who have entered into a release, covenant not to sue, covenant not to enforce judgment, or similar agreement with the claimant, entities with any other individual defense against the claimant, and entities immune from liability to the claimant, but shall not include those entities immune from liability to the claimant under Title 51 RCW. Judgment shall be entered against each defendant except those entities who have ((been released by)) entered into a release, covenant not to sue, covenant not to enforce judgment, or similar agreement with the claimant or are immune from liability to the claimant or have prevailed on any other individual defense against the claimant in an amount which represents that party's proportionate share of the claimant's total damages. The liability of each defendant shall be several only and shall not be joint except:
     (a) A party shall be responsible for the fault of another person or for payment of the proportionate share of another party where both were acting in concert or when a person was acting as an agent or servant of the party.
     (b)(i) Except as provided in (b)(ii) of this subsection, if the trier of fact determines that the claimant or party suffering bodily injury or incurring property damages was not at fault, the defendants against whom judgment is entered shall be jointly and severally liable for the sum of their proportionate shares of the ((claimants [claimant's])) claimant's total damages.
     (ii) (b)(i) of this subsection does not apply to a health care provider as defined in RCW 7.70.020 in an action for damages for injury or death occurring as a result of health care or related services, or the arranging for the provision of health care or related services, whether brought under chapter 7.70 RCW, RCW 4.20.010, 4.20.020, 4.20.046, 4.24.010, or 48.43.545(1), any other applicable law, or any combination thereof, with respect to judgments for noneconomic damages. In all actions for damages for injury or death occurring as a result of health care or related services, or the arranging for the provision of health care or related services, the liability of a health care provider for noneconomic damages is several only. For the purposes of this subsection, "noneconomic damages" has the meaning given in RCW 4.56.250.
     (2) If a defendant is jointly and severally liable under one of the exceptions listed in subsection((s)) (1)(a) or (((1))) (b) of this section, such defendant's rights to contribution against another jointly and severally liable defendant, and the effect of settlement by either such defendant, shall be determined under RCW 4.22.040, 4.22.050, and 4.22.060.
     (3)(a) Nothing in this section affects any cause of action relating to hazardous wastes or substances or solid waste disposal sites.
     (b) Nothing in this section shall affect a cause of action arising from the tortious interference with contracts or business relations.
     (c) Nothing in this section shall affect any cause of action arising from the manufacture or marketing of a fungible product in a generic form which contains no clearly identifiable shape, color, or marking.

Sec. 517   RCW 4.22.015 and 1981 c 27 s 9 are each amended to read as follows:
     "Fault" includes acts or omissions, including misuse of a product, that are in any measure negligent or reckless toward the person or property of the actor or others, or that subject a person to strict tort liability or liability on a product liability claim. The term also includes breach of warranty, unreasonable assumption of risk, and unreasonable failure to avoid an injury or to mitigate damages. Legal requirements of causal relation apply both to fault as the basis for liability and to contributory fault.
     A comparison of fault for any purpose under RCW 4.22.005 through ((4.22.060)) 4.22.070 shall involve consideration of both the nature of the conduct of the parties to the action and the extent of the causal relation between such conduct and the damages.

NEW SECTION.  Sec. 518   A new section is added to chapter 7.70 RCW to read as follows:
     (1) In any action under this section, an attorney that has drafted, or assisted in drafting and filing an action, counterclaim, cross-claim, third-party claim, or a defense to a claim, upon signature and filing, certifies that to the best of the party's or attorney's knowledge, information, and belief, formed after reasonable inquiry it is not frivolous, and is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause frivolous litigation. If an action is signed and filed in violation of this rule, the court, upon motion or upon its own initiative, may impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the action, counterclaim, cross-claim, third-party claim, or a defense to a claim, including a reasonable attorney fee. The procedures governing the enforcement of RCW 4.84.185 shall apply to this section.
     (2) Within one hundred twenty days after filing a lawsuit under this chapter, the attorney of record, or the plaintiff if pro se, must file a certificate of merit. The certificate must state that the attorney or pro se plaintiff has consulted with a qualified expert who believes on a more probable than not basis that the claim set forth satisfies at least one of the basis for recovery under this chapter. Upon a showing of good cause, a court may extend the time frame for filing the certificate for a period not to exceed sixty days.

NEW SECTION.  Sec. 519   A new section is added to chapter 7.70 RCW to read as follows:
     In any action brought under this chapter that is tried by jury, the judge shall present the following questions to the jury after the jury has delivered its verdict in the proceeding. The questions shall be considered and answered by the jury in a deliberative process and the results announced in open court.
     (1) Do you as a jury believe any pleading, claim, or issue in this case was frivolous? To decide that a pleading, claim, or issue in this case was frivolous you must decide at least one of the following in the affirmative:
     (a) The pleading, claim, or issue was primarily filed, brought, or raised by a party for an improper purpose. "Improper purpose" means that the pleading, claim, or issue was filed, brought, or raised with the purpose of harassing, embarrassing, or coercing another party, causing unnecessary delay, or needlessly increasing litigation costs.
     (b) The pleading, claim, or issue was filed, brought, or raised in bad faith. "Bad faith" means that the party either knew reasonable grounds did not exist for filing, bringing, or raising the pleading, claim, or issue, or the party acted with reckless disregard as to whether or not reasonable grounds existed for filing, bringing, or raising the pleading, claim, or issue.
     (2) If your answers to the question in both (a) and (b) of subsection (1) of this section are "No" do not proceed further. If your answer is "Yes" to a question in either (a) or (b) of subsection (1) of this section, you must make one of the following recommendations:
     (a) We recommend that . . . . . . (name of party) be required to pay sanctions in the amount of . . . . . dollars, payable to . . . . . (name of party) as a result of filing, bringing, or raising a frivolous pleading, claim, or issue.
     (b) We do not believe that a monetary sanction should be imposed against . . . . . . (name of party) for filing, bringing, or raising a frivolous pleading, claim, or issue.
     (3) The court shall take the jury's recommendation under consideration in deciding whether to impose sanctions against a party for filing, bringing, or raising a frivolous pleading, claim, or issue. The court shall enter into the record written findings and conclusions in accepting or rejecting the jury's recommendations.
     (4) In addition to any other remedies provided in RCW 4.84.185 or by court rule, sanctions that may be imposed under this section at the discretion of the court for filing, bringing, or raising a frivolous pleading, claim, or issue include the payment of reasonable costs and reasonable attorneys' fees of the other party caused in responding to the frivolous pleading, claim, or issue, and a monetary penalty on the party or party's attorney who brought the frivolous pleading, claim, or issue, and the firm with which the attorney is employed or associated.

NEW SECTION.  Sec. 601   The index, part headings, and subheadings used in this act are not any part of the law.

NEW SECTION.  Sec. 602   (1) Sections 115 through 119 of this act constitute a new chapter in Title 70 RCW.
     (2) Sections 305 through 310 of this act constitute a new chapter in Title 48 RCW.

NEW SECTION.  Sec. 603   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 604   This act constitutes an alternative to Initiative 330. The secretary of state shall place this act on the ballot in conjunction with Initiative 330 at the next regular general election.

NEW SECTION.  Sec. 605   This act constitutes an alternative to Initiative 336. The secretary of state shall place this act on the ballot in conjunction with Initiative 336 at the next regular general election.