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200Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 19990112Primary Sponsor: J. Verne SmithAll Sponsors: J. Verne Smith, Leatherman, ReeseDrafted Document Number: l:\council\bills\kgh\15030htc99.docCompanion Bill Number: 3778Residing Body: SenateCurrent Committee: Banking and Insurance Committee 02 SBISubject: Patients' Compensation Fund established within Insurance Department, Medical and healthHistory Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ Senate 20000322 Co-Sponsor removed by Senator Giese Senate 19990112 Introduced, read first time, 02 SBI referred to Committee Senate 19981216 Prefiled, referred to Committee 02 SBI Versions of This Bill
TO AMEND ARTICLE 5, CHAPTER 79, TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE PATIENTS' COMPENSATION FUND, SO AS TO ELIMINATE THE BOARD OF GOVERNORS OF THE PATIENTS' COMPENSATION FUND AND ESTABLISH THE FUND WITHIN THE DEPARTMENT OF INSURANCE UNDER THE EXECUTIVE AUTHORITY OF THAT DEPARTMENT'S DIRECTOR.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Article 5, Chapter 79, Title 38 of the 1976 Code is amended to read:
Section 38-79-410. 'Licensed health care providers' means physicians and surgeons; directors, officers, and trustees of hospitals; nurses; oral surgeons; dentists; pharmacists; chiropractors; optometrists; podiatrists; hospitals; nursing homes; or any similar category of licensed health care providers.
Section 38-79-420. There is created within the Department of Insurance and under the executive authority of the department's director the South Carolina Patients' Compensation Fund (fund) for the purpose of paying that portion of a medical malpractice or general liability claim, settlement, or judgment which is in excess of one hundred thousand dollars for each incident or in excess of three hundred thousand dollars in the aggregate for one year. The fund is liable only for payment of claims against licensed health care providers
(providers) in compliance with the provisions of this article and includes reasonable and necessary expenses incurred in payment of claims and the fund's administrative expense.
The Board of Governors (board) is created to manage and operate the fund. The board is composed of three physicians to be appointed by the Governor after consultation with the South Carolina Medical Association, two dentists to be appointed by the Governor after consultation with the South Carolina Dental Association, two hospital representatives to be appointed by the Governor after consultation with the South Carolina Hospital Association, two insurance representatives to be appointed by the Governor after consultation with the insurance industry, one attorney to be appointed by the Governor after consultation with the South Carolina Bar, one attorney to be appointed by the Governor after consultation with the South Carolina Trial Lawyers Association, and two representatives of the general public appointed by the Governor who are unaffiliated with insurance or health care industries or the medical or legal professions. The appointed members shall serve for a term of six years. The board shall elect a chairman and other necessary officers for two-year terms. The board must meet at the call of the chairman or a majority of the members but in any event it must meet at least once a year. A majority of the board members shall constitute a quorum for the transaction of any business of the board. The affirmative vote by a majority of the quorum present at a duly called meeting after notice is required to exercise any function of the board. The board Department of Insurance may promulgate any regulations necessary to carry out the provisions of this article.
Section 38-79-440. All South Carolina licensed health care providers may participate in the fund and maintain the participation by remitting to the
Board department the appropriate membership fees and deficit assessments as are required by the Board department on or before the provider's membership anniversary date.
Section 38-79-450. All fund members shall pay annual membership fees set by the
Board department. In addition to the annual membership fees, the Board department may make deficit assessments upon the determination by the Board department that insufficient money is available to meet the fund's liabilities.
Membership in the fund is contingent upon the fund member making timely payment of all membership fees and deficit assessments.
Self-insureds are eligible for membership in the fund upon compliance with the requirements of the
Board of Governors department and shall pay the same membership fees and deficit assessments as the members.
Section 38-79-460. The fund, and any income from it, must be held in trust, deposited in the office of the State Treasurer and kept in a segregated account entitled 'Patients' Compensation Fund', invested and reinvested by the State Treasurer in the same manner as provided by law for the investment of other state funds in interest-bearing investments and may not become a part of the general fund of the State. All expenses of collecting, protecting, and administering the fund must be paid from the fund.
Section 38-79-470. (1) Monies may be withdrawn from the fund only upon the signature of the
chairman of the Board of Governors director of the Department of Insurance or his designee upon written warrants of the Comptroller General, drawn on the State Treasurer to the payee designated in the requisition.
(2) All books, records, and audits of the fund are open for reasonable inspection to the general public.
(3) On or before December thirty-first of each year the State Auditor shall audit the records of the fund and shall furnish an audited financial report to all fund participants, the Department of Insurance, the Legislative Audit Council, and the State Budget and Control Board.
(4) A licensed health care provider participating in the fund may withdraw upon written notice of thirty days prior to the date of withdrawal. However, the provider remains subject to any assessment pertaining to any year in which he participated in the fund. A member who withdraws during any year is entitled to a pro rata return of the annual membership fee.
Section 38-79-480. (1) In an action for damages arising out of the rendering of medical services against a licensed health care provider covered under the fund, the provider shall within five days of receipt of summons and complaint, excluding the first day and holidays, give notice to the
Board department of the action. If after reviewing the facts upon which the action is based it appears that the claim will exceed one hundred thousand dollars, the Board department, in its discretion, may appear and actively defend the fund. In so defending, the Board department may retain counsel and pay out of the fund attorney's fees and expenses including court costs incurred in defending the fund. Any judgment affecting the fund may be appealed.
(2) It is the responsibility of the insurer providing insurance for a licensed health care provider who is also covered by the fund or for the self-insured provider covered by the fund to provide an adequate defense on any claim filed that potentially affects the fund with respect to such insurance contracts or self-insured's liability. The insurers or self-insured providers must act in a fiduciary relationship with respect to any claim affecting the fund. No settlement exceeding one hundred thousand dollars per incident, or three hundred thousand dollars in the aggregate for one year, may be agreed to unless approved by the
(3) A person who has recovered a final judgment or a settlement approved by the
Board department against a provider covered by the fund may file a claim with the Board department to recover that portion of the judgment or settlement which is in excess of one hundred thousand dollars or three hundred thousand dollars in the aggregate for one year. In the event If the fund incurs liability exceeding one hundred thousand dollars to any person under a single occurrence, the fund may not pay more than one hundred thousand dollars per year until the claim has been paid in full. However, in its discretion the Board department may pay an amount in excess of one hundred thousand dollars so as to avoid the payment of interest.
(4) Claims filed against the fund must be paid in the order received within ninety days after filing unless the judgment is appealed. If the fund does not have enough money to pay all of the claims, claims received after the funds are exhausted are immediately payable the following year in the order in which they were received."
SECTION 2. The terms of members of the Board of Governors of the South Carolina Patients' Compensation Fund terminate on the effective date of this act. All policies, procedures, and regulations of the Board of Governors in existence continue in effect until modified by the director of the Department of Insurance in the manner prescribed by law.
SECTION 3. This act takes effect upon approval by the Governor.
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