A BILL TO BE ENTITLED
AN ACT to ensure access to health care by establishing a reasonable two hundred fifty thousand dollar limit on noneconomic damages, accounting for certain collateral source payments, authorizing the periodic payment of future economic damages, providing the form of verdicts and awards of damages, and regulating attorney contingency fees in medical malpractice actions; and to provide that certain confidentiality requirements apply to documents regarding nursing home quality of care.
Whereas, the United States Department of Health and Human Services recently labeled North Carolina a "State in Crisis" due to the dramatic increase in professional liability insurance premiums in this State; and
Whereas, the American Medical Association has named North Carolina a "State in Crisis" due to reports showing that the State's current medical malpractice liability system is adversely affecting medical care; and
Whereas, North Carolina hospitals have experienced premium increases of four hundred to five hundred percent (400‑500%) for medical liability insurance over the last three years, with the greatest increases impacting small, rural hospitals; and
Whereas, North Carolina nursing homes receiving liability coverage from one of the State's largest insurers have experienced on average a one thousand five hundred forty‑two percent (1,542%) rate increase since 1998; and
Whereas, according to statistics from the National Association of Insurance Commissioners, the medical‑loss ratio for North Carolina medical malpractice insurers has increased so that insurers are now paying one dollar and thirteen cents ($1.13) in claims for every dollar ($1.00) in premiums received, a ratio that is sixteen percent (16%) higher than the national average; and
Whereas, many medical malpractice insurers have stopped providing insurance coverage in North Carolina; and
Whereas, the United States Department of Health and Human Services reports that a leading cause of the national professional liability insurance crisis is the recent explosion in multimillion dollar litigation awards and the resulting instability this creates in the professional liability insurance market; and
Whereas, the United States Department of Health and Human Services cites North Carolina as tied with Nevada for having the most "mega" malpractice awards in recent years; and
Whereas, in 1975, California enacted comprehensive reforms to stabilize its professional liability insurance market, including establishing a two hundred fifty thousand dollar ($250,000) limit on noneconomic damages, accounting for collateral source payments, regulating attorney contingency fees, and providing for periodic payments of future damages; and
Whereas, since the enactment of these comprehensive reforms in California, the national average increase in professional liability insurance premiums has been three hundred percent (300%) greater than the premium increases experienced in California, allowing California patients to avoid the health care access problems experienced by neighboring states; and
Whereas, the United States Department of Health and Human Services reports that states without limits on noneconomic damages have experienced much larger average increases in professional liability insurance premiums as compared to states with such limits and estimates that limiting excessive damages could significantly reduce overall health care costs; Now, therefore,
The General Assembly of North Carolina enacts:
SECTION 1.  Article 1B of Chapter 90 of the General Statutes is amended by adding the following new sections to read:
"§ 90-21.18.  Limitation on noneconomic damages in medical malpractice actions.
(a)	As used in this section and G.S. 90-21.18C, 'noneconomic damages' includes all damages to compensate mental anguish; emotional distress; emotional pain and suffering; loss of consortium; loss of society, companionship, comfort, guidance, kindly offices, or advice; pain and suffering; inconvenience; disfigurement; physical impairment; and any other nonpecuniary damages.
(b)	In any medical malpractice action, the plaintiff may be entitled to recover noneconomic damages. The total amount of all noneconomic damages shall not exceed two hundred fifty thousand dollars ($250,000) per plaintiff.
(c)	Any award of damages in a medical malpractice action shall be stated in accordance with G.S. 90-21.18C. If a jury is determining the facts, the court shall not instruct the jury with respect to the limit on noneconomic damages under subsection (b) of this section, and neither the attorney for any party nor a witness shall inform the jury or potential members of the jury panel of that limit.
"§ 90-21.18A.  Accounting for certain collateral source payments in medical malpractice actions.
(a)	As used in this section, 'collateral source payments' means any current or future payments or benefits paid to or for the benefit of the plaintiff or that are otherwise made available to the plaintiff, by a federal, State, or local government agency for medical care, custodian care, education, therapy, disability, loss of income, or other similar benefits for expenses or losses alleged in the medical malpractice action. 'Collateral source payments' does not include life or health insurance benefits, including health insurance benefits provided to a public employee, or any other private benefits paid as a result of a contract entered into and paid for, by, or on behalf of, the plaintiff.
(b)	In any medical malpractice action, the court shall allow into evidence, if requested by a defendant, collateral source payments paid to or for the benefit of the plaintiff, or that are otherwise made available to the plaintiff, related to the losses or damages alleged in the medical malpractice action.
"§ 90-21.18B.  Periodic payment of future economic damages in medical malpractice actions.
(a)	As used in this section and G.S. 90-21.18C:
(1)	'Future economic damages' includes all economic damages for future medical treatment, care or custody, loss of future earnings, loss of bodily function, and any other pecuniary damages of the plaintiff following the date of the verdict or award.
(2)	'Periodic payments' means the payment of money or delivery of other property to the plaintiff at regular intervals.
(b)	Upon the award of damages in any medical malpractice action, the presiding judge shall, at the request of either party, enter a judgment ordering that money damages or its equivalent for future economic damages of the plaintiff be paid in whole or in part by periodic payments rather than by a lump‑sum payment when the award exceeds one hundred thousand dollars ($100,000) in future economic damages. In entering a judgment ordering the payment of future economic damages by periodic payments, the court shall make a specific finding of fact as to the dollar amount of periodic payments that will compensate the plaintiff for such future economic damages.  As a condition to authorizing periodic payments of future economic damages, the court shall, in its order of judgment, require that such payments be made through the establishment of a trust fund or the purchase of an annuity for the life of the plaintiff or during the continuance of the compensable injury or disability of the plaintiff. The establishment of a trust fund or the purchase of an annuity, as approved by the court, shall satisfy the defendant's judgment for future economic damages.
(c)	The judgment ordering the payment of future economic damages by periodic payments shall specify the recipient 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 payment shall be made. Such payments shall only be subject to modification by the court in the event of the death of the plaintiff as provided in subsection (d) of this section.
(d)	In any judgment that orders future economic damages payable in periodic payments, liability for payment of future economic damages not yet due shall terminate upon the death of the plaintiff; however, the court that rendered the original judgment may modify the judgment to provide that damages awarded for loss of future earnings shall not be reduced or payments terminated by reason of the death of the plaintiff, but shall be paid to persons to whom the plaintiff owed a duty of support, as provided by law, immediately prior to the plaintiff's death.
(e)	In the event the court finds that the defendant has exhibited a continuing pattern of failing to make the payment specified in subsection (b) of this section, the court shall find the defendant in contempt of court and, in addition to the required periodic payments, shall order the defendant to pay the plaintiff all damages caused by the failure to make such periodic payments, including court costs and attorneys' fees.
"§ 90-21.18C.  Verdicts and awards of damages in medical malpractice actions; form.
In any medical malpractice action, any verdict or award of damages, if supported by the evidence, shall indicate specifically what amount is awarded for each of all of the following:
(1)	Noneconomic damages.
(2)	Present economic damages.
(3)	Future economic damages.
If applicable, the court shall instruct the jury on the definition of noneconomic damages under G.S. 90-21.18 and the definition of future economic damages under G.S. 90-21.18B. If applicable, the court shall instruct the jury that present economic damages are those damages for medical treatment, care or custody, loss of future earnings, loss of bodily function, and any other pecuniary damages of the plaintiff up to the date of the verdict or award.
"§ 90-21.18D.  Regulation of contingency fees in medical malpractice actions.
(a)	As used in this section, 'recovered' means the net sum recovered after deducting any disbursements or costs incurred in connection with the litigation, arbitration, or settlement of the claim. The sum recovered shall include any punitive damages awarded under Chapter 1D of the General Statutes.
(b)	No attorney shall contract for or collect a contingency fee for representing any person seeking damages in connection with a medical malpractice action in excess of the following limits:
(1)	Forty percent (40%) of the first fifty thousand dollars ($50,000) recovered.
(2)	Thirty-three and one-third percent (33 1/3%) of the next fifty thousand dollars ($50,000) recovered.
(3)	Twenty-five percent (25%) of the next five hundred thousand dollars ($500,000) recovered.
(4)	Fifteen percent (15%) of any amount for which the recovery exceeds six hundred thousand dollars ($600,000).
(c)	The limits under subsection (b) of this section apply regardless of whether recovery is by settlement, arbitration, or judgment, or whether the person for whom the recovery is made is a responsible adult or a person who is under a disability as provided in G.S. 1-17.
(d)	If periodic payments are awarded to the plaintiff pursuant to G.S. 90-21.18B, the court shall place a total value on these payments based upon the projected life expectancy of the plaintiff and use this amount in computing the total award from which attorneys' fees are calculated under this section."
SECTION 2.  G.S. 131E‑101 is amended by adding a new subdivision to read:
"(8)	'Quality assurance committee' means a committee, agency, or department of a State or local professional organization, of a medical staff of a licensed hospital, of nurses or aides on the staff of a nursing home, of physicians having privileges within the nursing home, or of a peer review corporation or organization that is formed for the purpose of evaluating the quality, cost of, or necessity for health care services under applicable federal and State statutes, regulations, and rules."
SECTION 3.  G.S. 131E‑105 is amended by adding two new subsections to read:
"(d)	The results of any inspection of a nursing home that is conducted in accordance with this section and rules adopted by the Commission, including any statement of deficiencies and all findings and deficiencies cited in the statement on the basis of the inspection, and all plans of correction responding to a statement of deficiencies, shall be used solely to determine the nursing home's compliance with this Article. The results of an inspection, the statement of deficiencies, the findings and deficiencies cited in that statement, and all plans of correction responding to that statement shall not be used in any court or in any action or proceeding that is pending in any court and are not admissible in evidence in any action or proceeding.
(e)	For purposes of this section, 'inspection' means a standard survey, an extended survey, a partial extended survey, a post-survey revisit, an initial certification survey as defined by the United States Department of Health and Human Services, and any investigation of a complaint under G.S. 131E-124."
SECTION 4.  G.S. 131E‑107 reads as rewritten:
"§ 131E‑107.  Quality assurance, medical, or peer review committees.
(a)	A member of a duly appointed quality assurance, medical, or peer review committee shall not be subject to liability for damages in any civil action on account of any act, statement or proceeding undertaken, made, or performed within the scope of the functions of the committee, if the committee member acts without malice or fraud, and if such peer review committee is approved and operates in accordance with G.S. 131E‑108.
(b)	The proceedings of a quality assurance, medical, or peer review committee, the records and materials it produces, and the materials it considers shall be confidential wherever located, shall not be considered 'public records' within the meaning of G.S. 132‑1, ' "Public records" defined,' and shall not be subject to discovery or introduction into evidence in any civil action against a nursing home or a provider of professional health services that results from matters that are the subject of evaluation and review by the committee. No person who was in attendance at a meeting of the committee shall be required to testify in any civil action as to any evidence or other matters produced or presented during the proceedings of the committee or as to any findings, recommendations, evaluations, opinions, or other actions of the committee or its members."
SECTION 5.  G.S. 131E‑124 is amended by adding two new subsections to read:
"(e)	The results of any inspection of a nursing home that is conducted in accordance with this section and rules adopted by the Commission, including any statement of deficiencies and all findings and deficiencies cited in the statement on the basis of the inspection, and all plans of correction responding to a statement of deficiencies shall be used solely to determine the nursing home's compliance with this Article. The results of an inspection, the statement of deficiencies, the findings and deficiencies cited in that statement, and all plans of correction responding to that statement shall not be used in any court or in any action or proceeding that is pending in any court and are not admissible in evidence in any action or proceeding.
(f)	For purposes of this section, 'inspection' has the same meaning as defined in G.S. 131E-105."
SECTION 6.  G.S. 90‑21.11 reads as rewritten:
"§ 90‑21.11.  Definitions.
As used in this Article, the term 'health care provider' means without limitation any person who pursuant to the provisions of Chapter 90 of the General Statutes is licensed, or is otherwise registered or certified to engage in the practice of or otherwise performs duties associated with any of the following: medicine, surgery, dentistry, pharmacy, optometry, midwifery, osteopathy, podiatry, chiropractic, radiology, nursing, physiotherapy, pathology, anesthesiology, anesthesia, laboratory analysis, rendering assistance to a physician, dental hygiene, psychiatry, psychology; or a hospital, nursing home, or adult care home; or any other person who is legally responsible for the negligence of such person, hospital, nursing home, or adult care home; or any other person acting at the direction or under the supervision of any of the foregoing persons, hospital, nursing home, or adult care home.
As used in this Article, the term 'medical malpractice action' means a civil action for damages for personal injury or death arising out of the furnishing or failure to furnish professional services in the performance of medical, dental, or other health care by a health care provider."
SECTION 7.  The provisions of this act are severable.  If any portion of this act is declared unconstitutional or unenforceable or if the application of a portion of this act to any person or circumstances is held invalid, then the remaining portions of this act shall remain valid and enforceable.
SECTION 8.  This act is effective when it becomes law, and G.S. 90‑21.18, 90‑21.18A, 90‑21.18B, 90‑21.18C, and 90‑21.18D, as enacted by Section 1 of this act, apply to causes of actions arising on or after that date and to contingency fee agreements entered into on or after that date.