Original Notice.

     Preproposal statement of inquiry was filed as WSR 06-07-097.

     Title of Rule and Other Identifying Information: Chapter 284-24D WAC, Medical malpractice closed claim data reporting rules for facilities and providers; and chapter 284-24E WAC, Medical malpractice claim settlement data reporting rules for attorneys and claimants.

     Hearing Location(s): Insurance Commissioner's Office, Insurance 5000 Building, 5000 Capital Boulevard, Room TR-120, Tumwater, WA 98504-0255, on April 25, 2007, at 10:00 a.m.

     Date of Intended Adoption: June 1, 2007.

     Submit Written Comments to: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, e-mail KacyS@oic.wa.gov, fax (360) 586-3109, by April 23, 2007.

     Assistance for Persons with Disabilities: Contact Lorie Villaflores by April 23, 2007, TTY (360) 586-0241 or (360) 725-7087.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: These are new procedural rules that implement sections 201-210, chapter 8, Laws of 2006, now codified as chapter 48.140 RCW and RCW 7.70.140. These rules describe the process and procedures that reporting entities must use to report medical malpractice closed claim and settlement data to the commissioner. These rules primarily establish standards for reporting by claimants, insuring entities, self-insurers, facilities, and providers. These rules:

     (1) Define data elements, which will lead accurate reporting of medical malpractice closed claim data.

     (2) Integrate the data elements used by the National Practitioner Data Bank (NPDB) into the reporting structure.

     (3) Establish processes for reporting closed claim data.

     (4) Identify which insuring entity or self-insurer has the primary obligation to report closed claims.

     Reasons Supporting Proposal: These rules implement chapter 48.140 RCW and RCW 7.70.140, and will ensure that data reported to the commissioner by reporting entities are consistent and complete.

     Statutory Authority for Adoption: RCW 48.02.060, 48.140.060.

     Statute Being Implemented: Chapter 48.140 RCW and RCW 7.70.140.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Mike Kreidler, Insurance Commissioner, governmental.

     Name of Agency Personnel Responsible for Drafting: Lisa Smego, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7134; Implementation: Beth Berendt, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7117; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. Chapter 19.85 RCW requires state agencies to prepare a small business economic impact statement for proposed rules in certain circumstances. However, RCW 19.85.025(3) states: "This chapter does not apply to the adoption of a rule described in RCW 34.05.310(4)." RCW 34.05.310(4) states: "This section does not apply to: ...(iii) Rules adopting or incorporating by reference without material changes...Washington state statutes...(v) Rules the content of which is explicitly and specifically dictated by statute..." Therefore, the office of the insurance commissioner (OIC) is not required to prepare a small business economic impact statement for the proposed rules to implement the medical malpractice closed claims reporting requirements of chapter 6, Laws of 2006, since they adopt the medical malpractice closed claims reporting law without material changes, and those statutory provisions provide explicit and specific reporting requirements.

     A cost-benefit analysis is not required under RCW 34.05.328. RCW 34.05.328 says that a cost-benefit analysis must be prepared prior to the adoption of significant legislative rules, with certain exceptions. The relevant exceptions are contained in subsection (5)(b) which says "This section does not apply to: ...(iii) Rules adopting or incorporating by reference without material changes...Washington state statutes...(v) Rules the content of which is explicitly and specifically dictated by statute..." After a comparison of the language of the proposed rules and the relevant provisions of chapter 48.140 RCW, the OIC has determined that the proposed rules are not "significant legislative rules" because they adopt the medical malpractice closed claims reporting requirements of chapter 48.140 RCW without material changes, and those statutory provisions provide explicit and specific reporting requirements which are given an operational framework by the proposed rules. For these reasons the OIC is not required to conduct a cost-benefit analysis for this proposed rule making.

March 21, 2007

Mike Kreidler

Insurance Commissioner

OTS-9581.2

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     (1) "Allocated loss adjustment expense" or "ALAE" means defense and cost containment expenses paid or incurred for defense, litigation and medical cost containment expenses and services. Either internal staff, such as in-house counsel or professional medical staff, or external staff, such as defense counsel or expert witnesses, may provide defense and cost containment services.

     (a) Defense and cost containment expenses and services include:

     (i) Defense services provided by:

     (A) Attorneys or expert witnesses; and

     (B) Private investigators, hearing representatives or fraud investigators.

     (ii) Cost containment activities and services performed by external or internal experts to defend the claim, including:

     (A) Case evaluation, such as an evaluation of whether the medical care provided met professional standards;

     (B) Risk assessment;

     (C) Case preparation and management;

     (D) Medical record review; and

     (E) Settlement negotiations.

     (iii) Specific case-related expenses, such as:

     (A) Surveillance expenses;

     (B) Court costs;

     (C) Medical examination fees;

     (D) The costs of laboratory, X-ray and other medical tests;

     (E) Autopsy expenses;

     (F) Stenographic expenses;

     (G) Fees associated with witnesses and summonses; and

     (H) The costs to obtain copies of documents.

     (b) Allocated loss adjustment expenses do not include:

     (i) Expenses incurred to determine whether coverage is available; or

     (ii) Expenses or costs associated with external or internal claims adjusting staff.

     (2) "Claim" means the same as in RCW 48.140.010(1).

     (3) "Claim identifier" means the unique number assigned to a claim by the reporting entity as required by RCW 48.140.030 (1)(a).

     (4) "Claimant" means the same as in RCW 48.140.010(2).

     (5) "Closed claim" means the same as in RCW 48.140.010(3).

     (6) "Commissioner" means the insurance commissioner.

     (7) "Companion claims" means the same as in RCW 48.140.030 (1)(b).

     (8) "Economic damages" means the same as in RCW 4.56.250 (1)(a).

     (9) "Excess insuring entity" means an insuring entity that provides insurance coverage above the limits of primary insurance or a self-insured retention.

     (10) "Facility" means the same as in RCW 48.140.010(6).

     (11) "Paid and estimated economic damages" means economic damages paid to a claimant based on:

     (a) Objectively verifiable evidence; and

     (b) Estimates developed from the injured person's available personal data and related economic data. Estimated economic damages typically include, but are not limited to:

     (i) Lost earnings and benefits;

     (ii) Lost earnings potential;

     (iii) Lost value of household services; and

     (iv) Future medical care costs.

     (12) "Incident identifier" means the unique number assigned by the reporting entity to a series of closed claims that result from a single incident or related series of incidents of actual or alleged medical malpractice.

     (13) "Insuring entity" means the same as in RCW 48.140.010(8).

     (14) "Medical malpractice" means the same as in RCW 48.140.010(9).

     (15) "OIC" means office of insurance commissioner.

     (16) "Primary insuring entity" means the insuring entity that originates the primary layer of insurance coverage.

     (17) "Provider" means the same as in RCW 48.140.010(7).

     (18) "Record identifier" means a number assigned to a claim by the reporting site when a reporting entity first enters closed claim data.

     (19) "Reporting entity" means any person or entity required to report data under RCW 48.140.020.

     (20) "Reporting site" means the OIC web-based application that insuring entities, facilities, providers, and self-insurers must use to report medical malpractice closed claim data.

     (21) "Self-insurer" means the same as in RCW 48.140.010(11).

     (22) "User ID" is a permanent number assigned by the reporting site to each insuring entity, self-insurer, facility or provider.

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     (1) Develop a secure web-based data reporting application;

     (2) Train OIC staff on applicable laws and agency practices related to protecting confidential and privileged information;

     (3) Limit access to the claim data base to OIC staff responsible for preparing the statistical summaries and annual report;

     (4) Develop and implement confidentiality procedures to be used by staff that has access to the closed claim data base;

     (5) Develop procedures to use if data are accidentally released; and

     (6) Use aggregate data in summaries and reports so that individual claim data cannot be identified.

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     (2) The commissioner may permit a reporting entity to transmit data electronically in an alternative format if the reporting entity develops, at its own expense, an interface that is compatible with the data base maintained by the OIC.

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     (1) Claims closed with an indemnity payment;

     (2) Claims closed with paid allocated loss adjustment expenses; and

     (3) Claims closed with both indemnity payments and allocated loss adjustment expenses.

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     (1) Issues the final payment to the claimant in the form of a check or draft;

     (2) Pays all outstanding bills for allocated loss adjustment expenses; and

     (3) If applicable, receives from the facility, provider or excess insuring entity all indemnity and allocated loss adjustment expense claim payment data needed for reporting under this chapter.

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     (1) Beginning in 2009, closed claim reports for the prior calendar year are due by March 1.

     (2) A reporting entity may report a closed claim any time after the claim is closed, but no later than March 1.

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     (1) Data contained in the reporting site will be frozen from March 15 through June 30 each year so the OIC can prepare reports and statistical summaries as required by RCW 48.140.040 and 48.140.050. The commissioner may accept changes to previously reported data if a correction or omission will significantly affect the conclusions stated in the annual report.

     (2) After June 30, the reporting site will allow a reporting entity to change previously reported data.

     (a) The reporting entity can reopen a claim report using their permanent user ID and the record identifier and make changes or corrections to data.

     (b) Changes and corrections submitted by reporting entities after June 30 of each year will appear in future reports and statistical summaries.

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     (a) The claim identifier must consist solely of numbers. When the reporting entity enters a claim into the reporting site, the site will automatically combine the reporting entity's user ID with the claim identifier to create a unique record identifier for each claim.

     (b) The OIC will use the record identifier to trace the claim for auditing purposes.

     (2) If a claimant makes claims against more than one facility or provider, the insuring entity or self-insurer must report each claim separately and include an incident identifier.

     (a) The incident identifier for companion claims must consist solely of numbers.

     (b) The insuring entity or self-insurer is responsible to report claims only if it provides insurance coverage for a facility or provider and defends the claim.

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     (1) The primary insuring entity must report the total amounts paid to settle the claim, including any claim payments or ALAE payments made by:

     (a) A facility or provider;

     (b) An excess insuring entity; or

     (c) Any other person or entity on behalf of the provider.

     (2) Facilities or providers insured by the primary insuring entity must cooperate and assist the primary insuring entity in the reporting process.

     (3) If a primary insuring entity and one or more excess insuring entities combine to pay a claim:

     (a) The primary insuring entity must report all paid indemnity and allocated loss adjustment expense; and

     (b) The excess insuring entity must cooperate and assist the primary insuring entity in the reporting process.

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     (a) Self-insurers must report all claim payments and allocated loss adjustment expenses to the excess insuring entity for reporting purposes; and

     (b) The excess insuring entity must report data on behalf of itself and the self-insurer.

     (2) An excess insurer is not responsible to report closed claim data reported by a primary insuring entity under WAC 284-24D-120.

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     (1) Notify the commissioner in writing of this arrangement;

     (2) Report closed claim data required under chapter 48.140 RCW and this chapter on behalf of itself and the excess insuring entity; and

     (3) Accept responsibility for compliance with RCW 48.140.020(2).

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     (1) A claim is made against the facility or provider;

     (2) The facility or provider makes indemnity payments directly to the claimant or incurs ALAE expenses to defend the claim, or both; and

     (3) There is no insurance coverage available from an insuring entity or self-insurer to defend or pay for the claim.

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     (1) Insured notifies the primary insuring entity or self-insurer of a claim if insurance coverage is available; or

     (2) The claimant notifies the facility or provider is notified of a claim if insurance coverage is not available.

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     (1) Catheterization lab;

     (2) Critical care unit;

     (3) Dispensary;

     (4) Emergency department;

     (5) Labor and delivery room;

     (6) Laboratory;

     (7) Nursery;

     (8) Operating room;

     (9) Outpatient department;

     (10) Patient room;

     (11) Pharmacy;

     (12) Physical therapy department;

     (13) Radiation therapy department;

     (14) Radiology department;

     (15) Recovery room;

     (16) Rehabilitation center;

     (17) Special procedure room;

     (18) Location other than an inpatient facility:

     (a) Clinical support center, such a laboratory or radiology center;

     (b) Office;

     (c) Walk-in clinic; or

     (d) Other;

     (19) Other department in hospital;

     (20) Unknown; and

     (21) Other.

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     (1) Temporary injuries include:

     (a) Emotional injury only, such as fright, where no physical damage occurred;

     (b) Insignificant injury such as lacerations, contusions, minor scars or rash where no delay in recovery occurs;

     (c) Minor injury such as infection, fracture set improperly, or a fall in the hospital, where recovery is complete but delayed; or

     (d) Major injury such as burns, surgical material left, drug side effect, brain damage, where recovery is complete but delayed.

     (2) Permanent injuries include:

     (a) Minor injury such as loss of fingers, loss or damage to organs, where the injury is not disabling;

     (b) Significant injury such as deafness, loss of limb, loss of eye, loss of one kidney or lung;

     (c) Major injury such as paraplegia, blindness, loss of two limbs, brain damage;

     (d) Grave injury such as quadriplegia, severe brain damage, life long care or fatal prognosis; or

     (e) Death.

     (3) The reporting entity should report the principal injury if several injuries are involved.

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     (1) Claim abandoned by claimant.

     (2) Claim settled by the parties.

     (3) Claim is disposed of by a court when the court issues a:

     (a) Directed verdict for plaintiff:

     (b) Directed verdict for defendant;

     (c) Judgment notwithstanding verdict for plaintiff (judgment for defendant);

     (d) Judgment notwithstanding verdict for defendant (judgment for plaintiff);

     (e) Involuntary dismissal;

     (f) Judgment for plaintiff;

     (g) Judgment for defendant;

     (h) Judgment for plaintiff after appeal; or

     (i) Judgment for defendant after appeal.

     (4) Claim settled by alternative dispute resolution process, whether resolved by:

     (a) Arbitration award for plaintiff;

     (b) Arbitration for defense;

     (c) Mediation;

     (d) Private trial; or

     (e) Other type of alternative dispute resolution process.

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     (1) Before filing suit, requesting arbitration or mediation hearing;

     (2) Before trial, arbitration or mediation;

     (3) During trial, arbitration or mediation;

     (4) After trial or hearing, but before judgment or award;

     (5) After judgment or decision, but before appeal;

     (6) During an appeal; or

     (7) After an appeal.

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     (1) Reimbursement for a deductible by the insured;

     (2) Reimbursement for claim payments by a reinsurer; or

     (3) Anticipated subrogation recoveries.

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     (1) The actual claim payment, which may be either:

     (a) The policy limit; or

     (b) The actual amount paid on behalf of the insured. The actual amount paid by the insuring entity may be either higher or lower than the policy limit, depending on the settlement agreement.

     (2) Additional payments made to the claimant(s) by an insured facility or provider; and

     (3) Allocated loss adjustment expenses paid by both the insuring entity and the insured.

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     (2) If a claim is paid with a combination of a lump-sum payment to the claimant and a structured settlement, the reporting entity must report the sum of both payments.

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     (1) The total amount of the verdict, judgment, or settlement;

     (2) The gross amount paid to indemnify the claimant;

     (3) Itemized economic and noneconomic damages as allocated by the court; and

     (4) Allocated loss adjustment expenses paid by the insuring entities and defendants.

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     (1) The total amount of the verdict, judgment, or settlement;

     (2) The gross amount paid to indemnify the claimant;

     (3) Paid and estimated economic damages; and

     (4) Allocated loss adjustment expenses paid by the insuring entities and defendants.

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     (1) If a claimant makes a claim against more than one facility or provider, the reporting entity must assign the same incident identifier to each "companion claim."

     (2) The reporting entity must maintain all data required under chapter 48.140 RCW and this chapter for each facility or provider it defends.

     (3) Indemnity payments and allocated loss adjustment expenses paid to defend and settle each claim must be reported separately for each facility or provider. The reporting entity must:

     (a) Allocate indemnity payments between defendants based on an assessment of comparative fault; and

     (b) Allocate ALAE payments between defendants based on which facility or provider the reporting entity purchased defense services on behalf of.

     (4) If the reporting entity makes payments in the absence of clear legal liability, it may allocate claim or ALAE payments equally among all defendants.

     (5) Under this section, the reporting entity is responsible for reporting incident level data only on its own claims.

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     (1) ALAE for defense counsel, including both in-house and outside counsel;

     (2) ALAE for expert witnesses, including both in-house and outside experts;

     (3) All other ALAE; and

     (4) Total ALAE.

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     (a) Ask its professional medical staff to:

     (i) Evaluate medical care;

     (ii) Review medical records; or

     (iii) Assist in case preparation.

     (b) Retain in-house legal counsel to:

     (i) Assess risk of litigation;

     (ii) Evaluate legal issues;

     (iii) Engage in case preparation or management activities, or settlement negotiations.

     (2) When calculating ALAE, a reporting entity that uses internal staff to defend a claim as described in subsection (1) of this section and WAC 284-24D-020(1):

     (a) Must include salary, benefits and an allocation for overhead for those employees; and

     (b) May use average salaries and time studies when calculating ALAE.

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     (1) Medical expenses;

     (2) Loss of earnings;

     (3) Burial costs;

     (4) Cost of obtaining substitute domestic services;

     (5) Loss of employment; and

     (6) Loss of business or employment opportunities.

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     (1) Where appropriate, the person estimating economic damages must:

     (a) Project the elements of loss listed in WAC 284-24D-360:

     (i) For the duration of the injury or disability; or

     (ii) In the event of death, for the anticipated life span of the injured person; and

     (b) Discount damages to present value;

     (c) Consider related factors, such as:

     (i) Issues of negligence and liability;

     (ii) The relative strength of the defense; and

     (iii) The component of the claim payment that was driven by economic damages.

     (2) Reporting entities must select reasonable discount factors when estimating economic damages.

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     (1) Combine all elements of paid and estimated economic loss described in WAC 284-24D-360; and

     (2) Report one figure for paid and estimated economic loss to the commissioner.

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OTS-9582.3

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     (1) "Claim" means the same as in RCW 48.140.010(1).

     (2) "Claimant" means the same as in RCW 48.140.010(2), and, for reporting purposes, includes a claimant's legal representative.

     (3) "Commissioner" means the insurance commissioner.

     (4) "Facility" means the same as in RCW 48.140.010(6).

     (5) "Insuring entity" means the same as in RCW 48.140.010(8).

     (6) "Medical malpractice" means the same as in RCW 48.140.010(9).

     (7) "OIC" means office of insurance commissioner.

     (8) "Provider" means the same as in RCW 48.140.010(7).

     (9) "Record identifier" means the number assigned to a claim by the reporting site when a person first enters claim settlement information.

     (10) "Reporting site" means the OIC web-based application that attorneys and claimants must use to report medical malpractice claim settlement data.

     (11) "Self-insurer" means the same as in RCW 48.140.010(11).

     (12) "User ID" is a permanent number assigned by the reporting site to any claimant or attorney who reports claim settlement data.

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     (1) Develop a secure web-based data reporting application;

     (2) Train OIC staff on applicable laws and agency practices related to protecting confidential and privileged information;

     (3) Limit access to the claim data base to OIC staff responsible for preparing the statistical summaries and annual report;

     (4) Develop and implement confidentiality procedures to be used by staff that has access to the closed claim data base;

     (5) Develop procedures to use if data are accidentally released; and

     (6) Use aggregate data in summaries and reports so that individual claim data cannot be identified.

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     (1) Receives final indemnity payment(s) from all defendants;

     (2) Pays all related legal expenses; and

     (3) Pays all related attorney fees agreed to by the claimant and his or her attorney.

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     (2) If a claimant is not represented by an attorney:

     (a) The claimant must report claim data to the commissioner; and

     (b) An insuring entity, self-insurer or provider may assist or inform the claimant of his or her reporting responsibilities.

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     (1) Beginning in 2009, claim settlement reports for the prior calendar year are due by March 1.

     (2) An attorney or claimant may enter data into the reporting site at any time after the claim is settled, but no later than March 1.

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     (1) Data contained in the reporting site will be frozen from March 15 through June 30 each year so the OIC can prepare reports and statistical summaries can be prepared as required by RCW 48.140.040 and 48.140.050. The commissioner may accept changes to previously reported data if a correction or omission will significantly affect the conclusions stated in the annual report.

     (2) After June 30, the reporting site will allow an attorney or claimant to change previously reported data.

     (a) An attorney or claimant can reopen a claim report using their permanent user ID and the record identifier and make changes or corrections to data.

     (b) Changes and corrections submitted after June 30 of each year will appear in future reports and statistical summaries.

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     (1) Claim is settled by the parties.

     (2) Claim is disposed of by a court when the court issues a:

     (a) Directed verdict for plaintiff;

     (b) Judgment notwithstanding verdict for defendant (judgment for plaintiff);

     (c) Judgment for plaintiff; or

     (d) Judgment for plaintiff after appeal.

     (3) Claim settled by alternative dispute resolution process, whether resolved by:

     (a) Arbitration;

     (b) Mediation;

     (c) Private trial; or

     (d) Other type of alternative dispute resolution process.

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     (1) Before filing suit, requesting arbitration or mediation hearing;

     (2) Before trial, arbitration or mediation;

     (3) During trial, arbitration or mediation;

     (4) After trial or hearing, but before judgment or award;

     (5) After judgment or decision, but before appeal;

     (6) During an appeal; or

     (7) After an appeal.

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     (2) If a claim is settled with a combination of a lump-sum payment to the claimant and a structured settlement, the attorney or claimant must report the sum of both payments.

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     (1) The total of all settlements paid by all defendants; and

     (2) The total amounts paid by the claimant for legal expenses, itemized by:

     (a) Court costs;

     (b) Expert witnesses fees; and

     (c) Attorney fees and expenses.

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