(No. 228) (Approved August 24, 2004) AN ACT

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1 (H. B. 3592) (Conference) (No. 228) (Approved August 24, 2004) AN ACT To amend Article of the Puerto Rico Insurance Code of 1957, in order to exempt health services professionals from being included as defendants in actions for damages involving medical malpractice, fault or negligence when rendering services in the fields of obstetrics, orthopedics, general surgery and trauma exclusively in medical-hospital facilities property of the Commonwealth of Puerto Rico, its dependencies, instrumentalities and/or municipalities, regardless of whether said institutions are being administered or operated by some private enterprise. STATEMENT OF MOTIVES The Government of the Commonwealth of Puerto Rico has the obligation of attending to the problems created by the present and potential high cost of the insurance premiums for medical-hospital malpractice. It must likewise attend to the problems created by the privatization process the public health system went through during the 90 s. In other words, the situation concerning medical-hospital services, and thus any direct or indirect element that may negatively affect said services, is of great public interest for the Commonwealth of Puerto Rico. During the public health services privatization process certain public facilities such as municipal diagnostic and treatment centers and regional

2 hospitals were sold to obtain funds with which to subsidize the increasing cost of the health insurance cards that were given to the citizens. As a result, those health professionals that for years had rendered services in said public facilities suddenly became employees working under contract or employees of the private entities that acquired the property where the Hospitals or Diagnostic and Treatment Centers were located. In most cases the private entities that acquired the public properties were oriented towards obtaining profits and not towards providing a public service as they had been doing while in government hands. Fortunately, not all health facilities were privatized and many of those that survived this process became the property of the municipalities of the Commonwealth of Puerto Rico. At the same time said municipalities had to determine whether they should privatize the administration and operation of the facilities or provide the services directly. As a result, a large number of private companies were recruited to render these services and many heath facilities were kept open and operational. Before the health privatization process undertaken during the 90 s was initiated, those health professionals that worked at the institutions owned by the Commonwealth of Puerto Rico and its instrumentalities or by the municipalities enjoyed immunity derived from Act No. 104 of June 29, 1955, as amended, the Actions Against the Commonwealth of Puerto Rico Act. This provision served as an incentive for those health professionals to render their services at public facilities. After the changes that took place in the 90 s, if any allegation of malpractice were to be made in any health facility owned by the government, although privately operated, the health professionals working there would not be covered by the limits of the

3 amounts provided by Act No. 104, supra, even though they had been rendering a public service delegated through government action. As a result many health professionals choose to render their services at private entities since the employment security they obtain from those institutions is more solid and the economic benefits greater. This means that every day it become more difficult to recruit medical personnel for our public health facilities. The difference between an institution with sufficient personnel and resources and another with limited professional services is dramatic since this can decide whether a human being lives or dies. Many of our public health facilities, in spite of being privately managed, receive financial aid from the municipal governments as well as from the Legislature and the Executive, since they are the backbone of the public hospital services. Even more so, the public policy of the Commonwealth of Puerto Rico is directed to strengthening medical-hospital services and providing the people of Puerto Rico with total access to said services, especially the medically indigent population. In fact, the Proyecto Puertorriqueño para el Siglo XXI (Puerto Rican Project for the 21 st Century), which contains the public policy of the present administration, establishes that the indiscriminate sale of the existing public health facilities is to cease, as in effect was done, and that the weaknesses and strengths of every facility is to be evaluated in order to determine its best possible use. By putting this public policy in action almost every municipality of Puerto Rico has had emergency rooms reopened, strengthened and expanded to provide twenty-four hour medical attention to our citizens during the seven days of the week. However, to be able to recruit health professionals who wish to practice their profession in facilities property of the Commonwealth of Puerto Rico,

4 its instrumentalities or municipalities, we believe it is necessary to guarantee the same protection they would receive if they were employees of the Commonwealth of Puerto Rico under the scheme that existed prior to the decade of the 90 s. Thus, they should be given the immunity provided in Section of the Insurance Code. Through the present Act and separate legislation, Act No. 104, supra, shall be amended to establish that the Commonwealth of Puerto Rico shall be liable for any medical-hospital malpractice claims against health professionals for the limits provided in said law when the latter rendered their services in the fields of obstetrics, orthopedics, general surgery and trauma exclusively in health facilities property of the Commonwealth of Puerto Rico, its instrumentalities or municipalities. This Act places our health system in optimum conditions by providing the same with the tools needed to solidify the services they have been offering the people of Puerto Rico. It also allows the public hospital institutions to compete in equal terms with private companies in the search for competent professionals. BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO: Section 1.- Article of the Puerto Rico Insurance Code is hereby amended to read as follows: Article Financial solvency. Every health services professional or health care institution shall file proof of its financial solvency in the amount of one hundred thousand (100,000) dollars per claim or an aggregate of three hundred thousand (300,000) dollars per year. The Commissioner may require maximum limits of up to five hundred thousand (500,000) dollar per medical claim and an aggregate of one million (1,000,000) dollars per year in those cases of health

5 care institutions, and in those rate classifications of health services professionals engaged in the high risk practice of specialties, after public hearings are held in which said professionals or institutions or any other interested party may have the opportunity of appearing or expressing their views on the particular matter and introduce any information, documents or studies to support their position. Health services professionals who are not engaged in the private practice of their profession and who work exclusively as employees of private health care institutions are exempted from this obligation, provided they have coverage under their proof of financial solvency. Also exempted from this obligation are those health services professionals who render their services exclusively as employees of or personnel under contract to the Commonwealth of Puerto Rico, its dependencies, instrumentalities and municipalities and who are not engaged in the private practice of their profession. Health care institutions that belong to or are operated or administered by the Commonwealth of Puerto Rico, its dependencies, instrumentalities and municipalities are also exempted. The proof of financial solvency required in the first paragraph of this Article shall be filed with the corresponding Board of Examiners or with the Department of Health, as pertinent, not later than June 30 of each year, and shall cover the financial liability of the health services professional or of the health care institution, as the case may be, for the following year. No health services professional may be included as a defendant in a civil action for damages involving medical malpractice, fault or negligence caused in the performance of his/her profession while said health services professional acts in compliance with his/her duties and functions as an employee of the Commonwealth of Puerto Rico, its dependencies, instrumentalities and municipalities or as personnel under contract thereto,

6 while acting in compliance with his/her duties and functions in the fields of obstetrics, orthopedics, general surgery and trauma in a medical-hospital facility property of the Commonwealth of Puerto Rico, its dependencies, instrumentalities and/or municipalities, regardless of whether said facility is being administered or operated by a private entity. In any civil action in which damages are claimed against the University of Puerto Rico; in any case in which a judgment is pronounced for acts which constitute hospital-medical malpractice committed by the employees, faculty members, residents or students of the Medical Sciences Campus of the University of Puerto Rico or physicians rendering services under contract to the University of Puerto Rico in the performance of its institutional duties; or when a judgment is pronounced for acts which constitute a fault or negligence directly related to the operation of a health care institution by the University of Puerto Rico, the latter shall be subject to the liability limits and conditions which Act No. 104 of June 29, 1955, as amended, imposes to demand that the Commonwealth of Puerto Rico be made liable in similar circumstances. Every health services professional and health care institution must show its financial solvency for the fiscal year in which it shall exercise its function in one of the following manners: (1) Establish a guarantee fund whose minimum amount in the case of a health services professional shall be, at all times, the amount of the aggregate limit established as provided in this Section and in the case of health care institutions for the amount of one million (1,000,000) dollars. In no case may it be drawn against those amounts without the prior authorization of the Commissioner.

7 Those health care institutions that avail themselves of this option must also comply with the conditions established below and with those others the Commissioner may authorize so that two (2) or more health care institutions may establish guarantee funds in common, provided they also meet the following requirements: (a) That the guarantee fund be deposited in a trust created according to the laws of the Commonwealth of Puerto Rico. (b) That the trust invest said funds in securities authorized by this title for the insurers of the country. (c) That the trust accredits to the guarantee fund the income accrued as a result of its investments. (d) That any sum needed to ensure that the guarantee fund maintains the minimum level required be replaced, in case disbursements are made to pay claims. (e) That the trust use the guarantee fund solely and exclusively for paying claims for medical-hospital professional liability and for paying expenses inherent to said claims. (f) That a risk management plan be established, with emphasis on matters pertaining to the prevention of losses approved by the

8 Commissioner who may authorize that two or more institutions establish guarantee funds in common, provided they meet all requirements herein established. (2) To have obtained from an insurer active in the free trade market, or from the Syndicate, a professional liability medical-hospital insurance policy for the limits established as provided in this Section. Said insurance contract shall contain a provision stating that the insurer or the Syndicate shall previously notify the corresponding Board of Examiners or the Secretary of Health, as the case may be, about the cancellation or termination of the insurance. (3) Any combination of a professional liability medicalhospital insurance policy and a guarantee fund that meets all minimum requirements herein established. corresponding or the Secretary of Health, as the case may be, shall take the disciplinary actions specifically provided by the law, suspend or revoke the license or certificate of authority issued in favor of the health services professional or the health care institution. (4) Should a health services professional or a health care institution fail to comply with the provisions on financial solvency established in this Section, the corresponding Board of Examiners or the Secretary of Health, as the case may be, shall suspend the license or the certificate of

9 authority issued in favor of the aforementioned health services professional or the health care institution, to practice the profession or trade. (5) In those situations in which the health services professional or the health care institution have incurred by error, omission, fault or negligence in acts of professional malpractice or manifest negligence in the practice of their profession or trade, the Board of Examiners. Section 2.- This Act shall take effect immediately after its approval.

10 CERTIFICATION I hereby certify to the Secretary of State that the following Act No. 228 (H.B. 3592) (Conference) of the 7 th Session of the 14 th Legislature of Puerto Rico: AN ACT to amend Article of the Puerto Rico Insurance Code of 1957, in order to exempt health services professionals from being included as defendants in actions for damages involving medical malpractice, fault or negligence when rendering services in the fields of obstetrics, orthopedics, general surgery and trauma exclusively in medical-hospital facilities property of the Commonwealth of Puerto Rico, its dependencies, instrumentalities and/or municipalities, regardless of whether said institutions are being administered or operated by some private enterprise, has been translated from Spanish to English and that the English version is correct. In San Juan, Puerto Rico, today 29 th of September of Francisco J. Domenech Director