BILL REQ. #:  S-1111.4 

READ FIRST TIME 03/05/03.   

     AN ACT Relating to actions against health care providers; amending RCW 4.56.250, 7.70.070, 4.16.350, and 7.70.080; adding new sections to chapter 4.56 RCW; adding a new section to chapter 4.28 RCW; adding a new section to chapter 7.04 RCW; adding new sections to chapter 7.70 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that it is in the best interest of the people of the state of Washington to contain the significantly increasing costs of malpractice insurance for licensed health care professionals and institutions and to ensure the continued availability and affordability of health care services in this state by enacting further reforms to the health care tort liability system.
     The legislature finds that, notwithstanding the tort reform measures it has enacted in the past, the amounts being paid out in judgments and settlements have continued to increase inordinately, and that as a result there have been dramatic increases in the cost of health care professional liability insurance coverage. The legislature further finds that the upward pressures on already high malpractice insurance premiums threaten the publics' health by discouraging physicians and other health care professionals from initiating or continuing their practice in this state.
     The legislature further finds that the state of California, largely as a result of its enactment of the "medical injury compensation reform act" in 1975, has been able to successfully stabilize the health care professional liability insurance market, maintain access to affordable quality health care services, and avert the kind of crisis now facing the residents of Washington.
     The legislature finds that such reforms are rationally related to the legitimate goals of reducing the costs associated with the health care tort liability system while ensuring adequate and appropriate compensation for persons injured as a result of health care, ensuring the continued availability and affordability of health care services in this state, preventing the curtailment of health care services in this state, stabilizing insurance and health care costs, preventing stale health care liability claims, and protecting and preserving the public health, safety, and welfare as a whole.

Sec. 2   RCW 4.56.250 and 1986 c 305 s 301 are each amended to read as follows:
     (1) As used in this section, the following terms have the meanings indicated unless the context clearly requires otherwise.
     (a) "Economic damages" means objectively verifiable monetary losses, including medical expenses, loss of earnings, burial costs, loss of use of property, cost of replacement or repair, cost of obtaining substitute domestic services, loss of employment, and loss of business or employment opportunities.
     (b) "Noneconomic damages" means subjective, nonmonetary losses, including((,)) but not limited to pain, suffering, inconvenience, mental anguish, disability or disfigurement incurred by the injured party, loss of ability to enjoy life, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation, ((and)) destruction of the parent-child relationship, and other nonpecuniary damages of any type.
     (c) "Bodily injury" means physical injury, sickness, or disease, including death.
     (d) "Average annual wage" means the average annual wage in the state of Washington as determined under RCW 50.04.355.
     (2) In no action seeking damages for personal injury or death may a claimant recover a judgment for noneconomic damages exceeding an amount determined by multiplying 0.43 by the average annual wage and by the life expectancy of the person incurring noneconomic damages, as the life expectancy is determined by the life expectancy tables adopted by the insurance commissioner. For purposes of determining the maximum amount allowable for noneconomic damages, a claimant's life expectancy shall not be less than fifteen years. The limitation contained in this subsection applies to all claims for noneconomic damages made by a claimant who incurred bodily injury. Claims for loss of consortium, loss of society and companionship, destruction of the parent-child relationship, and all other derivative claims asserted by persons who did not sustain bodily injury are to be included within the limitation on claims for noneconomic damages arising from the same bodily injury.
     (3) If a case is tried to a jury, the jury shall not be informed of the limitation contained in subsection (2) of this section.

NEW SECTION.  Sec. 3   A new section is added to chapter 4.56 RCW to read as follows:
     (1) In an action or arbitration for damages for injury or death occurring as a result of health care, or arranging for the provision of health care, whether brought under chapter 7.70 RCW, or under RCW 4.20.010, 4.20.020, 4.20.046, 4.20.060, 4.24.010, or 48.43.545(1), or any combination thereof, the total amount of noneconomic damages may not exceed the following:
     (a) For claims filed on or after the effective date of this section, but before July 1, 2011, the sum of three hundred fifty thousand dollars;
     (b) For claims for causes of action filed on or after July 1, 2011, but before July 1, 2017, the sum of five hundred fifty thousand dollars;
     (c) For claims for causes of action filed on or after July 1, 2017, the sum of seven hundred fifty thousand dollars.
     (2) The limitation on noneconomic damages contained in subsection (1) of this section includes all noneconomic damages claimed by or on behalf of the person whose injury or death occurred as a result of health care or arranging for the provision of health care, as well as all claims for loss of consortium, loss of society and companionship, destruction of the parent-child relationship, and other derivative claims asserted by or on behalf of others arising from the same injury or death. If the jury's assessment of noneconomic damages exceeds the limitation contained in subsection (1) of this section, nothing in RCW 4.44.450 precludes the court from entering a judgment that limits the total amount of noneconomic damages to those limits provided in subsection (1) of this section.

Sec. 4   RCW 7.70.070 and 1975-'76 2nd ex.s. c 56 s 12 are each amended to read as follows:
     (1) Except as set forth in subsection (2) of this section, 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)(a) An attorney may not contract for or collect a contingency fee for representing a person in connection with an action for damages against a health care provider based upon professional negligence in excess of the following limits:
     (i) Forty percent of the first fifty thousand dollars recovered;
     (ii) Thirty-three and one-third percent of the next fifty thousand dollars recovered;
     (iii) Twenty-five percent of the next five hundred thousand dollars recovered;
     (iv) Fifteen percent of any amount in which the recovery exceeds six hundred thousand dollars.
     (b) The limitations in this section apply regardless of whether the recovery is by judgment, settlement, arbitration, mediation, or other form of alternative dispute resolution.
     (c) If periodic payments are awarded to the plaintiff, the court shall place a total value on these payments and include this amount in computing the total award from which attorneys' fees are calculated under this subsection.
     (d) For purposes of this subsection, "recovered" means the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim. Costs of medical care incurred by the plaintiff and the attorneys' office overhead costs or charges are not deductible disbursements or costs for such purposes.
     (3) This section applies to all agreements for attorneys' fees entered into or modified after the effective date of this section.

NEW SECTION.  Sec. 5   A new section is added to chapter 4.28 RCW to read as follows:
     (1) No action based upon a health care provider's professional negligence 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 of 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 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) Failure to comply with this section does not invalidate any proceedings of any court of this state, nor does it affect the jurisdiction of the court to render a judgment therein. However, failure by an attorney at law to comply with the provisions of this section is grounds for professional discipline and the Washington state bar association shall investigate and take appropriate action in any such cases brought to its attention.

Sec. 6   RCW 4.16.350 and 1998 c 147 s 1 are each amended to read as follows:
     (1) Any civil action for damages for injury or death occurring as a result of health care which is provided after June 25, 1976, against:
     (((1))) (a) 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))) (b) An employee or agent of a person described in (a) of this subsection (((1) of this section)), acting in the course and scope of his or her employment, including, in the event such employee or agent is deceased, his or her estate or personal representative; or
     (((3))) (c) An entity, whether or not incorporated, facility, or institution employing one or more persons described in (a) of this 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 or her employment, including, in the event such officer, director, employee, or agent is deceased, his or her estate or personal representative;
based upon alleged professional negligence shall be commenced within three years of the act or omission alleged to have caused the injury or condition, or 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 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 in which to commence a civil action for damages.
     (b) In the case of a minor, for any period during minority, but only for such period during minority in which 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.
     (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) Any action not commenced in accordance with this section is barred.
     (4) For purposes of this section, the tolling provisions of RCW 4.16.190 do not apply.
     (5) 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).

Sec. 7   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)) plaintiff 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, rendering of services to the patient free of charge to the patient, or indemnification of expenses incurred by or on behalf of the patient. Notwithstanding this section, evidence of compensation by a defendant health care provider may be offered only by that provider.
     (2) Unless otherwise provided by statute, there is no right of subrogation or reimbursement from a plaintiff's tort recovery with respect to compensation covered in subsection (1) of this section.

NEW SECTION.  Sec. 8   A new section is added to chapter 7.04 RCW to read as follows:
     (1) A contract for health care services that contains a provision for arbitration of a dispute as to professional negligence of a health care provider under chapter 7.70 RCW must have the provision as the first article of the contract and must be expressed in the following language:
     "It is understood that any dispute as to medical malpractice that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered, will be determined by submission to arbitration as provided by Washington law, and not by a lawsuit or resort to court process except as Washington law provides for judicial review of arbitration proceedings. Both parties to this contract, by entering into it, are giving up their constitutional right to have such a dispute decided in a court of law before a jury, and instead are accepting the use of arbitration."
     (2) Immediately before the signature line provided for the individual contracting for the medical services, there must appear the following in at least ten-point bold red type:
     "NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL. SEE ARTICLE ONE OF THIS CONTRACT."
     (3) Once signed, such a contract governs all subsequent open-book account transactions for medical services for which the contract was signed until or unless rescinded by written notice within thirty days of signature. Written notice of such rescission may be given by a guardian or other legal representative of the patient if the patient is incapacitated or a minor.
     (4) Where the contract is one for medical services to a minor, it may not be disaffirmed if signed by the minor's parent or legal guardian.
     (5) Such a contract is not a contract of adhesion, nor unconscionable, nor otherwise improper, where it complies with subsections (1) through (3) of this section.
     (6) Subsections (1) through (3) of this section do not apply to any health benefit plan contract offered by an organization regulated under Title 48 RCW that has been negotiated to contain an arbitration agreement with subscribers and enrollees under such a contract.

NEW SECTION.  Sec. 9   A new section is added to chapter 7.70 RCW to read as follows:
     RCW 7.70.100, 7.70.110, 7.70.120, and 7.70.130 do not apply if there is a contract for binding arbitration under section 8 of this act.

NEW SECTION.  Sec. 10   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 medical treatment, 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, 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) 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 the intent of the legislature in enacting this section to authorize, in actions for damages for injury occurring as a result of health care, 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 the further intent of the legislature 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 the intent of the legislature 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.

NEW SECTION.  Sec. 11   A new section is added to chapter 4.56 RCW to read as follows:
     In the event that the Washington state supreme court or other court of competent jurisdiction rules or affirms that section 3 of this act is unconstitutional, then the prescribed cap on noneconomic damages takes effect upon the ratification of a state constitutional amendment that empowers the legislature to place limits on the amount of noneconomic damages recoverable in any or all civil causes of action.

NEW SECTION.  Sec. 12   Unless otherwise provided in this act, this act applies to all causes of action filed on or after the effective date of this section.

NEW SECTION.  Sec. 13   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.