New Md. Medical Liability Law, Upcoming Issues Reportedly Concerning Insurers

Although disappointed that the Maryland General Assembly chose to override Gov. Robert Ehrlich’s veto of a controversial medical liability reform bill, insurers are reportedly equally concerned about other challenges they will face in the 2005 regular session, which began Wednesday.

“Hopefully the veto override doesn’t indicate that no progress can be made on important issues,” said Don Cleasby, vice president, regional manager and counsel for the Property Casualty Insurers Association of America (PCI). “With issues like the budget and the continued debate over medical liability reform on the table, it appears there is some serious work ahead of us.”

On Wednesday, the General Assembly voted to override the governor’s veto of H.B. 2, which was enacted in special session in December. Among other provisions, the bill establishes a “People’s Insurance Counsel” in the Attorney General’s office, with jurisdiction over medical liability and homeowners rating and other issues. The legislation authorizes the Counsel to evaluate each matter pending before the insurance commissioner dealing with medical liability or homeowners insurance to determine whether the interests of insurance consumers are affected.

The Counsel is also mandated to review any proposed medical liability or homeowners rate increase of 10 percent or more. The Counsel will be funded through assessments on medical liability and homeowners insurers doing business in Maryland. Other provisions in the bill relate to insurers writing medical liability coverage in the state, even if only on a surplus lines basis.

Gov. Ehrlich reportedly objected to the bill because he felt it was too weak in its legal liability reforms, and that it imposed a regressive 2 percent tax on HMO premiums. The Maryland House of Delegates voted to override the veto by an 85 to 50 margin, with 85 votes the minimum number required for a veto override. The Senate then did the same.

“Passage of H.B. 2 will not make the medical liability issue go away,” added Cleasby. “The Governor has pledged to introduce new legislation to enact the legal liability reforms he believes are needed for the long-term correction in Maryland’s medical liability litigation system, including more stringent caps on damages.” Cleasby also predicted an “H.B. 2 correction bill” to amend to repeal some of the bill’s more troublesome provisions.

Other insurance matters to be addressed this session include:

Cancellation, nonrenewal and notice of premium increase
The industry has united in an effort to make needed reforms to Subtitle 6 of the Maryland Insurance Code dealing with these concerns. The Maryland Insurance Administration is expected to sponsor reforms to the statute dealing with private passenger automobile insurance cancellation, nonrenewal and notice of premium increase procedures. The industry is still awaiting to review the Department’s language. Separate legislation will deal with reforms in those statutes dealing with commercial property and casualty coverages and homeowners insurance.

Mold
On Jan. 19, the House Economic Matters Committee will hold an informational briefing on mold coverage in homeowners insurance. Legislation introduced in 2004 would have prohibited homeowners’ insurers from excluding mold coverage in their policies. That legislation received an unfavorable vote in committee. However, questions surfaced after the hearing on that bill regarding the exact extent of mold coverage available in the marketplace. PCI will testify at the hearing.

Asbestos litigation reform
Legislation introduced last session sought to make Maryland’s non-economic damage cap, enacted in the mid-1980s, applicable to asbestos related cases. PCI is working with an all-industry coalition to get legislation introduced in both Houses this session.

Workers’ compensation
PCI member companies continue to support legislation introduced in 2004 allowing for employer provider panels as the most significant workers’ comp cost containment feature that Maryland can address at this time. The focus may move away from employer provider panels to provider networks. PCI is expecting a host of other workers comp related legislation, including legislation dealing with the definition of “accidental personal injury”; extending workers’ comp benefits to a spouse who was wholly dependent at the time of death, but subsequently becomes partially dependent; and presumptions of occupational disease.