CHAPTER 373

FORMERLY

SENATE BILL NO. 578

AS AMENDED BY SENATE AMENDMENT NOS. 1 & 2

AND HOUSE AMENDMENT NO. 5

AN ACT TO AMEND TITLE 18, DELAWARE CODE, RELATING TO HEALTH CARE MALPRACTICE INSURANCE AND LITIGATION AND TITLE 10, DELAWARE CODE, RELATING TO THE REVISION OF VARIOUS ASPECTS OF THE JUDICIAL PROCESS PERTAINING TO HEALTH CARE MALPRACTICE CLAIMS AND PROVIDING AN APPROPRIATION FOR IMPLEMENTING MALPRACTICE REVIEW PANELS AND REQUIRING THE ESTABLISHMENT OF THE DELAWARE HEALTH CARE INJURY INSURANCE STUDY COMMISSION.

WHEREAS, the number of suits and claims for damages both in Delaware and throughout the Nation as well as the necessary costs of defense and the size of judgments and settlements thereon, arising from professional patient care have increased tremendously in the past several years; and

WHEREAS, there has been a tremendous increase in the cost of liability insurance coverage for health care providers in Delaware, and in some instances the withdrawal of liability insurance companies from the business of insuring health care providers in Delaware, endangering the ability of the citizens of Delaware to continue to receive quality health care as well as adequate and just compensation for negligent injuries; and

WHEREAS, the General Assembly determines it is necessary to make certain major modifications to its current legal system as it relates to health care malpractice claims if the citizens of Delaware are to continue to receive a high quality of health care while still assuring that any person who has sustained bodily injury or death as a result of a tort or breach of contract on the part of a health care provider resulting from professional services rendered, or which should have been rendered, can obtain a prompt determination of adjudication of that claim and receive fair and reasonable compensation from financially responsible health care providers who are able to insure their liability, under a strictly construed fault principal as now, at a cost which is not prohibitive and does not lead to the problems and practices described above, while still maintaining Delaware's overall legal system as to health care malpractice claims except as modified by this legislation.

NOW, THEREFORE:

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Amend Title 18, Delaware Code, by adding thereto a new Chapter designated as Chapter 68 to read as follows:

"CHAPTER 68. HEALTH CARE MALPRACTICE INSURANCE AND LITIGATION SUBCHAPTER I. DEFINITIONS §6801. Definitions.

For the purpose of this Chapter the following terms shall have the following meanings:

(1) 'Association' means the joint underwriting association established pursuant to the provisions of this chapter.

(2) 'Category of health care provider' means a type or class of health care provider for which a separate license is required under Delaware law.

(3) 'Commissioner' means the insurance Commissioner of this State.

(0) 'Health Care' means any act, or treatment performed or furnished, or which should have been performed or furnished, by any health care provider for, to or on behalf of a patient during the patient's medical care, treatment or confinement.

(1) 'Health Care Provider' means a person, corporation, facility or institution licensed by this State pursuant to the provisions of Title 24, excluding Chapter 11 thereof, or Title 16 of the Delaware Code to provide health care or professional services or any officers, employees or agents thereof acting within the scope of their employment; provided, however, that the term 'Health Care Provider' shall not mean or include any nursing service or nursing facility conducted by or for those who rely upon treatment solely by spirtual means in accordance with the creed or tenets or any generally recognized church or religious denomination.

(2) 'Informed consent' means the consent of a patient to the performance of health care services by a health care provider given after the health care provider has informed the patient to an extend reasonably comprehensible to general lay understanding, of the nature of the proposed procedure or treatment and of the risks and alternatives to treatment or diagnosis which a reasonable patient would consider material to the decision whether or not to under go the treatment or diagnosis.

(3) 'Malpractice' means any tort or breach of contract based on health care or professional services rendered, or which should have been rendered, by a health care provider, to a patient. The standard of skill and care required of every health care provider in rendering professional services or health care to a patient shall be that degree of skill and care ordinarily employed, under similar circumstances by members of the profession in good standing in the same community or locality, and the use of reasonable care and diligence.

(8) 'Patient' means a natural person who receives or should have received health care from a licensed health care provider, under a contract, express or implied.

(9) 'Net direct premiums' means gross direct premiums, subscription dues, assessments, membership fees or other consideration received for or written on (1) casualty insurance as defined in §906(a), Title 18, Delaware Code, including the liability component of multiple peril policies as computed by the Commissioner; (2) health insurance as defined in §903, Title 18, Delaware Code; and (3) health service contracts of health service corporations subject to the provisions of Chapter 63, Title 18, Delaware Code, less the amount of any such consideration received which is returned on cancelled policies or contracts, the unabsorbed portion of any deposit premium and the amount returned to policyholders as dividends and similar returns, whether paid in cash or credit in reduction of premiums.

SUBCHAPTER II. JURISDICTION OF THE SUPERIOR COURT.

§6802. Jurisdiction of the Superior Court.

(a) The Superior Court of the State of Delaware shall have exclusive jurisdiction of civil actions alleging health care malpractice.

(b) In any civil action alleging malpractice at any time after the filing of an answer or any motion filed in lieu thereof, any party shall have the right to convene a malpractice review panel as herein provided by filing a demand therefor with the prothonotary, all parties and the Commissioner, and the Commissioner shall promptly convene such panel upon such demand, provided that the Court may postpone the convening of such panel for good cause shown by any party.

SUBCHAPTER III. MALPRACTICE REVIEW PANELS

§6803. Establishment of Malpractice Review Panels; Purpose.

Malpractice Review Panels are hereby provided for to the extent necessary to carry out the provisions of this Chapter.

§6804. Composition of Panels; Chairperson.

(a) Each malpractice review panel convened in an action shall be composed of five voting members and shall include two health care provider members, at least one of whom shall be a physician, and the other one of whom shall be, if available, from one of the health care disciplines involved in such action, one attorney, and two lay persons who are not health care providers nor licensed to practice law nor associated with the insurance industry. The attorney member shall act as Chairperson of the panel and shall preside at all meetings.

(b) The Commissioner shall also designate one member of his staff who shall sit as a nonvoting ex-officio member of the panel and who shall have custody of any responsibility for the keeping of all evidence, records and related material used by the panel.

§6805. Method of Selection of Panel Members.

The members of each malpractice review panel shall be selected in the following manner:

(1) The Commissioner shall compile, and keep current, three separate lists as follows: (a) a list of all physicians engaged for not less than three years in the active practice of medicine in the State and who hold a license to practice medicine and surgery; (b) a list of all of the attorneys engaged for not less than three years in the active practice of law in this State and who are admitted to the Bar of this State; and (c) a list of one hundred (100) objective and judicious persons of appropriate education and experience residing in this State who are neither health care providers nor licensed to practice law in this State, nor associated with the insurance industry, who in the Commissioner's opinion would be appropriate to serve as lay members of malpractice review panels. The Commissioner shall compile such additional lists of other categories of health care providers as may be appropriate.

(2) The parties may agree upon one or more members from each of the lists to constitute the malpractice review panel.

(3) In the event that the parties shall not agree upon the selection of any one or more members, such members shall be selected by the Commissioner by lot from the appropriate list. As to each list from which selection is made by lot, each party shall have three peremptory challenges to such selections.

(4) Members selected by agreement or by lot shall be designated by the Commissioner to serve unless disqualified by reason of close relationship with or personal bias toward any party to the action.

(0) Any member from any category so selected to serve shall serve upon the panel unless for good cause shown he or she is excused by the Court. The Court shall excuse a member from any category from serving only if it finds, on the basis of facts set forth in an affidavit submitted by such member, that such service would constitute an unreasonable burden, undue hardship, or that such service would give rise to a conflict of interest.

(1) A party to the proceeding before the malpractice review panel may also challenge any member so selected by submitting an affidavit to the Court setting forth the facts that the party believes show cause for striking such member from the panel. The Court may strike such member from the panel if it finds such cause to exist.

(7) After the Court has excused or struck a member the parties shall select a substitute member from the same list, each party retaining any previously unused peremptory challenge.

§6806. Commissioner to Administer Process of Selection of Malpractice Review Panel Members Rules and Regulations of Malpractice Review Panels.

(a) The Commissioner shall be responsible for the administration of the procedures of selection of candidates for service on malpractice review panels.

(b) The Commissioner shall adopt and publish such rules and regulations as may be necessary to carry out the provisions of this Subchapter and to establish the procedures for the selection and operation of malpractice review panels. Such rules and regulations shall be consistent with the common and statutory law of the State of Delaware and the Rules of Civil Procedure of the Superior Court of the State of Delaware and shall be modified from time to time to reflect the changes in the law or Superior Court Rules. The Commissioner shall publish the initial set of such rules and regulations not later than sixty (60) days after the effective date of this Act.

§6807. Evidence: Duties of Chairman.

The evidence to be considered by the malpractice review panel shall be promptly submitted to the panel and parties in written form wherever practicable. Evidence may consist of medical charts, x-rays, laboratory tests, excerpts of treatises, depositions of witnesses including parties and any other form of evidence allowable by the malpractice review panel. The chairperson of the panel shall advise the panel relative to any legal questions involved in the review proceeding and shall prepare the opinion of the panel as provided in §6811. To the extent practicable, a copy of the evidence shall be sent to each member of the panel. All evidence considered by the malpractice review panel shall constitute a part of the record in the Superior Court.

§6808. Hearing Before Panel; Procedure Before Panel.

Any party or the panel itself, sua sponte, after submission of all evidence and upon ten (10) days' notice to all parties, shall have the right to a hearing before the panel at a time and place agreeable to the members of the panel. At such hearing, any party may adduce evidence by the testimony of witnesses and otherwise and may address the panel concerning any matters relevant to issues to be decided by the panel before the issuance of their report. The panel shall have the authority to subpoena witnesses, administer oaths, and compel the production of documents and all witnesses appearing before it at a hearing shall be sworn and a stenographic record of the proceedings shall be made. The rules of evidence applicable to the Superior Court shall be followed insofar as practicable; provided, however, that evidence will be considered by the panel which, in its opinion, possesses probative value commonly accepted by reasonable prudent persons in the conduct of their affairs.

§6809. Panel's Right to Information; Access of Parties.

The panel shall have the right and duty to obtain any information that the panel deems reasonably necessary. On notice to the parties, the panel may consult experts, text or other authorities. The panel may examine reports of such other health care providers necessary to inform itself regarding the issue to be decided. Both parties shall have full access to any material obtained by or submitted to the panel and shall be given a reasonable opportunity to rebut any such materials submitted to the panel.

§6810. Panel's Appointment and Compensation of Expert Witness.

The panel may appoint persons it determines to be disinterested and qualified experts to make any necessary professional or expert mental or physical examination of the plaintiff or review of the relevant evidentiary matters and testify or submit a report in respect thereto. The panel shall give notice reasonable under the circumstances to all parties of its intent to appoint such experts and shall allow them a reasonable time within which to communicate to the panel any objections they may have to the appointment of such experts. Such expert witnesses shall be allowed resonable and necessary expenses connected with their travel, meals and lodging in connection with their testimony and work on behalf of the panel as well as reasonable fee to be fixed by the panel and paid pursuant to §6813.

§6811. Opinion of Panel; Time for Rendering.

(a) A majority vote of the malpractice review panel shall be required to decide all matters before it.

(b) The panel shall have the duty of making a finding as to whether or not in its opinion the evidence supports the conclusion that the defendant or defendants acted or failed to act within the applicable standards of care. After reviewing all evidence and after any hearing before the panel requested by any party, the panel shall, within thirty (30) days, render to the court a written opinion, including any minority opinion or opinions, signed by the chairperson expressing one or more of the following findings:

(1) The evidence supports the conclusion that the defendant or defendants failed to comply with the appropriate standard of care.

(2) The evidence does not support the conclusion that the defendant or defendants failed to meet the applicable standard of care.

(3) There is a material issue of fact, not requiring expert opinion, bearing on liability for consideration by the court or jury, which issue of fact shall be identified in the opinion.

(4) The conduct complained of was or was not a factor in the resultant damages, and if so, whether the plaintiff suffered: (i) any disability and the extent and duration of the disability, and (ii) any permanent impairment and the percentage of the impairment.

(c) Any opinion rendered by the malpractice review panel shall state the grounds upon which it is based and shall further identify the persons, texts or other authorities which were consulted by the Panel in reaching its conclusion, and shall be admissible as prima facie evidence in any proceeding before the Superior Court.

() Any party aggrieved by the opinion of the panel shall have the right to review by the Superior Court of such opinion, and the evidence considered by the panel. Application for review by the Superior Court shall be by motion with a certified copy of the opinion attached, and shall state the ground for objection thereto. Such motion shall be served by the movant on the Commissioner and the other parties to the action, the proof of such service to be as provided by the Rules of the Superior Court. A motion for review shall be filed within thirty (30) days after the rendering of the opinion by the panel.

(a) Upon receipt of a motion for review, the Prothonotary shall promptly schedule it for consideration by the Court and the Court shall review the panel's opinion on the record made before the Panel and shall strike any portion of the panel's opinion which the Court finds to be based on error of law or not supported by substantial evidence.

(b) The complete record of the proceedings before the panel including all exhibits and evidence introduced before it shall be filed with the Prothonotary at the time the panel renders its opinion. A transcript of such proceedings shall be required only in the event that a motion for review shall be filed.

§6812. Report of Panel Admissible in Evidence; Witnesses, Immunity of Members.

The opinion reached by the malpractice review panel shall be admissible as prima fade evidence in the pending Superior Court action brought by the claimant, but such opinion shall not be conclusive and any party shall have the right to call, at said party's cost, any witness who appeared before or submitted reports to the malpractice review panel, as a witness. If called, the witness shall be required to appear and testify. Members of a malpractice review panel shall have immunity from civil liability for all communications, findings, opinions and conclusions made in the course and scope of their duties prescribed by this Chapter.

§6813. Compensation of Panelists.

Each member of the Malpractice Review Panel shall be paid at the rate of $100 per diem plus actual and necessary expenses incurred in the performance of their official duties, but not to exceed a total of $700 for both expenses and compensation paid to any one member of the panel for one matter. The member of the Commissioner's staff designated to serve as a panel's ex-officio member shall receive only actual and necessary expenses incurred as compensation. Fees of the panel, and reasonable fees of expert witnesses called by the panel, together with travel expenses, shall be paid out of the general funds of the State on vouchers submitted by the President Judge of the Superior Court. The malpractice review panel shall have the authority to assess such costs, up to a maximum amount of one thousand dollars ($1,000), upon the party or parties against whom the majority opinion of the panel is rendered; provided, however, that this power to assess costs shall be discretionary and the panel shall assess such costs only in those cases where they deem it appropriate. The Superior Court shall have the power to waive assessment of fees. In the event that a judgment shall be entered in any Superior Court action on the same matter, the fees and expenses of the panel may be assessed as costs to the extent allowable above and shall follow such judgment.

§6814. Malpractice Review Panels in Federal Court Action.

The Commissioner shall convene malpractice review panels in the manner set forth in this subchapter upon request of a Federal District Court Judge sitting in a civil action in the District of Delaware alleging malpractice in the manner instructed by the said Federal Court but also in a manner as consistent as possible with the process of selecting such panels provided for in Superior Court actions in this chapter. The selection process of any such panel in a Federal Court action and its powers and duties shall be subject to the order of that said Court and/or such rules as the Federal Court system shall designate for the implementation of such panels. The Commissioner shall not, however, convene any such panels at the request of any such Federal Court unless provisions are made for the payment of the compensation and expenses of such panelists and the compensation and expenses of all witnesses called by such panel out of the funds other than those of the General Fund of the State of Delaware.

SUBCHAPTER IV. REPORTING AND REVIEW OF CLAIMS

§6820. Reports; contents; when due.

All malpractice claims settled, or adjudicated to final judgement, against a health care provider shall be reported to the Commissioner by the health care provider or the provider's representative within sixty (60) days following final dispostion of the claim. The report to the Commissioner shall state the following:

(a) nature of the claim;

(b) damages asserted and alleged injury;

(c) attorney's fees and expenses incurred by such health care provider or the provider's representative in connection

with the claim or defense;

(d) the amount of any settlement or judgement.

§6821. Disciplinary action.

(a) The Commissioner shall forward the name of every health care provider against whom a settlement is made or judgement is rendered under this Chapter to the appropriate agency for licensure or professional registration and examination for review of the fitness of the health care provider to practice his profession. In each case involving review of a health care provider's fitness to practice under this Chapter, the agency shall have the power, in appropriate cases, to take the following disciplinary action.

(1) censure, public or private;

(2) imposition of probation for determinate period;

(3) suspension of the health care provider's license for a determinate period;

(4) revocation of the license; or

(5) in the instance of institutional or corporate providers, the ordering of temporary or permanent cessation of the particular program, procedure, or service resulting in the claim or judgement, and/or the ordering, monitoring and evaluation of corrective action necessary to bring such activity into compliance with contemporary standards.

(b) Review of the health care provider's fitness to practice shall be conducted in accordance with the applicable procedures set forth in 16 or 24 Delaware Code, or other applicable provisions and shall include a determination of whether a provider has been shown to be unfit to continue the practice of his profession because of a series of actions presumed to be malpractice, because of verdicts or settlements against the provider, or because of a single case in which the act or omission is considered to include gross negligence on the provider's part.

SUBCHAPTER V. JOINT UNDERWRITING ASSOCIATION

§6830. Temporary Joint Underwriting Association.

(a) A temporary Joint Underwriting Association is hereby provided for which shall consist of two categories of membership whose members shall be designated as Category A members and Category B members. The requirements for membership in, and the liabilities and obligations of membership in, either such category of the association shall be as set forth in sections (b) and (c) of §6830.

() Category A of the association shall consist of all insurers authorized to write and engage in writing, within this State on a direct basis, casualty insurance, including insurers covering such peril package policies, as defined in §906(a), Title 10, Delaware Code. The liabilities and obligations of membership within this category of the association shall be as set forth for members in this subchapter.

(a) Category B of the association shall consist of (1) all insurers authorized to write and engaged in writing, within this State on a direct basis, health insurance as defined in §903, Title 18, Delaware Code; and (2) all health service corporations incorporated and offering insurance and/or health service contracts pursuant to Chapter 63 of Title 18, Delaware Code. The liabilities and obligations of membership within this category of the association shall also be as set forth for members in this subchapter; provided, however, that the members of Category B shall have no liabilities or obligations to the association whatsoever pursuant to this subchapter until such time as the association's aggregate losses, before any attempts have been made by Category A members to recoup such losses and after crediting against such aggregate losses all funds available for payment of such losses in the stabilization reserve fund, exceed five percent (5%) of the net direct premiums paid to all Category A members for insurance written within this State on a direct basis during the most recent year of the Association's existence. In the event that the members of Category B of the association are required to so share in the losses of the association, then all members in both Categories A and B shall participate on the same basis thereafter in all such additional losses of the association above the five percent (5%) losses paid by the members of Category A.

(d) Every such insurer shall be a member of the association and shall remain a member as a condition of its authority to continue to transact such kind of insurance within this State.

(e) The purpose of the association shall be to provide, for a period not exceeding two years from the date it commences underwriting operations, a market for health care malpractice insurance on a self-supporting basis without subsidy from its members.

() The association shall commence underwriting operations only by separate category of health care provider and only after the making by the Commissioner upon due hearing and investigation of the finding that such underwriting operations are necessary and one or more of the following findings:

(1) That health care malpractice insurance is not reasonably available for physicians in the voluntary market. Upon such determination the association shall be authorized to issue policies of health care malpractice insurance to physicians and need not be the exclusive agency through which health care malpractice insurance may be written in this State on a primary basis for physicians.

(2) That general liability insurance or health care malpractice insurance, or both, are not reasonably available

for hospitals in the voluntary market. Upon such determination the association shall be authorized to issue policies of general liability and health care malpractice insurance to hospitals but need not be the exclusive agency through which such insurance may be written on a primary basis in this State.

(3) That health care malpractice insurance is not reasonably available for another specific type or types of licensed health care provider in the voluntary market. Upon such determination the association shall be authorized to issue policies of health care malpractice insurance and need not be the exclusive agency through which health care malpractice insurance may be written in this State on a primary basis for such specific type of health care provider.

(g) If the Commissioner determines at any time that health care malpractice insurance can be made reasonably available in the voluntary market for either (1) physicians,

(2) hospitals, or (3) any specific type of other licensed health care provider, the association shall thereby cease its underwriting operations for any such general liability and health care malpractice insurance it is then writing in respect to which the Commissioner has made such determination.

(h) The association shall, pursuant to the provisions of this chapter and the plan of operation with respect to health care malpractice insurance, have the power on behalf of its members: (1) to issue, or to cause to be issued, policies of insurance to applicants, including incidental coverages and subject to limits as specified in the plan of operation but not to exceed one million dollars for each claimant under one policy and three million dollars for all claimants under one policy in any one year; (2) to underwrite such insurance and to adjust and pay losses with respect thereto, or to appoint a servicing company or companies to perform those functions;

(3) to assume reinsurance from its members; and (4) to cede reinsurance.

the Commissioner to the extent the Commissioner permits and with the association's actual or prospective policyholders on all matters pertaining to the Commissioner's duties and the insurance issued or to be issued by the association.

§6831. Plan of operation.

(a) Within forth-five (45) days following the creation of the association, the directors of the association shall submit to the Commissioner for the Commissioner's review, a proposed plan of operation, consistent with the provisions of this Chapter.

() The plan of operation shall provide for economic, fair and non-discriminatory administration and for the prompt and efficient provision of insurance, and shall contain other provisions including, but not limited to preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers or other servicing arrangements and procedures for determining amounts of insurance to be provided by the association.

(a) The plan of operation shall be subject to approval by the Commissioner after consultation with the directors of the association, representatives of the public and other affected individuals and organizations. If the Commissioner disapproves all or any part of the proposed plan of operation, the directors shall within fifteen (15) days submit for review an appropriate revised plan of operation or part thereof. If the directors fail to do so, the Commissioner shall promulgate a plan of operation or part thereof, as the case may be. The plan of operation approved or promulgated by the Commissioner shall become effective and operational upon order of the Commissioner.

(d) Amendments to the plan of operation may be made by the directors of the association, subject to the approval of the Commissioner, or shall be made at the direction of the Commissioner.

§6832. Policy Forms and rates.

(a) All policies issued by the association shall provide for a continuous period of coverage beginning with their respective effective dates and terminating automatically at 12:01 A.M. two years from the date the association began underwriting operations with respect to their category of coverage, unless sooner terminated in accordance with the provisions of this Chapter. All such policies shall be issued subject to the group retrospective rating plan and the stabilization reserve fund authorized by this Chapter. All such policies shall be written so as to apply only to injury or breach of contract (1) which results from acts or omissions during the policy period and (2) which is discovered and for which written claim is made against the insured not later than one year after the end of the policy period. No policy form shall be used by the association unless it has been filed with the Commissioner and either (1) the Commissioner has approved it or (2) thirty (30) days have elapsed and the Commissioner has not disapproved it as misleading or violative of public policy. All such policies shall be written so as to apply to injury or breach of contract which results from acts or omissions during the policy period, commonly designated as occurrence type policies.

(b) Cancellation of the association's policies shall be governed by procedures as determined by the Commissioner, except that the association may also cancel any of its policies in the event of non-payment of any stabilization reserve fund charge by mailing or delivering to the insured at the address shown on the policy written notice stating when not least than ten (10) days thereafter cancellation shall be effective. Notification of any such cancellation shall be given to the appropriate agency for licensure or professional registration to the extent possible.

(c) The rates, rating plans, rating rules, rating classifications and territories applicable to the insurance written by the association and statistics relating thereto shall be subject to Chapter 25, Title 18, Delaware Code, giving due consideration to the past and prospective loss and expense experience for health care malpractice insurance written and to be written in this State, trends in the frequency and severity of losses, the investment income of the association, and such other information as the Commissioner may require. All rates shall be on an actuarially sound basis, giving due consideration to the group retrospective rating plan and the stabilization reserve fund, and shall be calculated to be self-supporting. The Commissioner shall take all appropriate steps to make available to the association the loss and expense experience of insurers previously writing health care malpractice insurance in this State.

(d) All policies issued by the association shall be subject to a non-profit group retrospective rating plan to be approved by the Commissioner under which the final premium for all policyholders of the association, as a group, will be equal to the administrative expenses, loss and loss adjustment expenses and taxes, plus a reasonable allowance for contingencies and servicing. Policyholders shall be given full credit for all investment income, net of expenses and a reasonable management fee, on policyholder supplied funds. The standard premium (before retrospective adjustment) for each policy issued by the association shall be established for portions of the policy period coinciding with the association's fiscal year on the basis of the association's rates, rating plans, rating rules, rating classifications and territories then in effect. The maximum final premium for all policyholders of the association, as a group, shall be limited as provided in this Act. Subject to the non-profit group retrospective rating plan required by this subsection, there shall be a strong presumption that the rates filed and premiums for the business of the association are not unreasonable or excessive.

() The Commissioner shall examine the business of the association as often as the Commissioner deems appropriate to make certain that the group retrospective rating plan is being operated in a manner consistent with this section. If the Commissioner finds that it is not being so operated, the Commissioner shall issue an order to the association, specifying in what respects its operation is deficient and stating what corrective action shall be taken.

(f) The association shall certify to the Commissioner the estimated amount of any deficit remaining after the stabilization reserve fund has been exhausted in payment of the maximum final premium for all policyholders of the association. Within sixty (60) days after such certification the Commissioner shall authorize the members of the association to commence recoupment of their respective shares of the deficit by one of the following procedures: (1) applying to a surcharge to be determined by the association at a rate not to exceed two percent of the annual premiums on future policies affording those kinds of insurance which form the basis for their participation in the association under procedures established by the association, or (2) deducting their share of the deficit from past or future premium taxes due the State of Delaware. If the Commissioner fails within sixty (60) days to authorize one of the above procedures, each member of the association may commence recoupment of its deficit by the second procedure described above. The association shall amend the amount of its certification of deficit to the Commissioner as the values of its incurred losses become finalized and the members of the association shall amend their recoupment procedure accordingly.

(g) In the event that sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in subsection (f) of this section, all members shall, on a temporary basis, contribute to the financial requirements of the association in the manner established by this Act. Any such contribution shall be reimbursed to the members by recoupment as provided in subsection (1) of this section.

§6833. Stabilization Reserve Fund.

(a) There is hereby created a stabilization reserve fund. The fund shall be administered by three directors, one of whom shall be the Commissioner or his deputy. The remaining two directors shall be appointed by the Commissioner. One shall be a representative of the association; the other a representative of its policyholders.

(b) The directors shall act by majority vote with two directors constituting a quorum for the transaction of any business or the exercise of any power of the fund. The directors shall serve without salary, but each director shall be reimbursed for actual and necessary expenses incurred in the performance of his or her official duties as a director of the fund. In the absence of fraud or willful misconduct, the directors shall not be subject to any personal liability or accountability with respect to the administration of the fund.

(c) Each policyholder shall pay to the association a stabilization reserve fund charge equal to one third of each premium payment due for insurance through the association. Such charge shall be separately stated in the policy. The association shall cancel the policy of any policyholder who fails to pay the stabilization reserve fund charge.

() The association shall promptly pay to the trustee of the fund all stablization reserve fund charges which it collects from its policyholders and any retrospective premium refunds payable under the group retrospective rating plan authorized by this subchapter.

(a) All monies received by the fund shall be held in trust by a corporate trustee selected by the directors. The corporate trustee must be authorized to act as a corporate trustee in the State of Delaware. The corporate trustee may invest the monies held in trust, subject to the approval of the directors. All investment income shall be credited to the fund. All expenses of administration of the fund shall be charged against the fund. The monies held in trust shall be used solely for the purpose of discharging when due any retrospective premium charges payable by policyholders of the association under the group retrospective rating plan authorized by this Chapter. Payment of retrospective

premium charges shall be made by the directors under certification to them by the association of the amount due. If all monies accruing to the fund are finally exhausted in payment of retrospective premium charges, all liability and obligations of the association's policyholders with respect to the payment of retrospective premium charges shall thereupon terminate and shall be conclusively presumed to have been discharged. Any monies remaining in the fund after all such retrospective premium charges have been paid shall be returned to policyholders in proportion to their policy premiums under procedures authorized by the directors.

§6834. Procedures.

(a) Any licensed physician, hospital, or other licensed health care provider shall, on or after the effective date of the plan of operation, be entitled to apply to the association for such coverage.

(b) If the association determines that the applicant meets the underwriting standards of the association as prescribed in the plan of operation and there is no unpaid, uncontested premium due from the applicant for prior insurance (as shown by the insured having failed to make written objection to the premium charges within thirty days after billing) then the association, upon receipt of the premium, or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of health care malpractice insurance.

§6835. Participation.

All insurers which are members of the association shall participate in its writings, expenses, servicing allowance, management fees and losses in the proportion that the net direct premiums of each such member (excluding that portion of premiums attributable to the operation of the association) written during the preceding calendar year bears to the aggregate net premiums written in this state by all members of the association. Each insurer's participation in the association shall be determined annually on the basis of such net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner.

§6836. Directors.

The association shall be governed by a board of eleven directors, to be elected annually. Eight directors shall be elected by cumulative voting by the members of the association whose votes in such election shall be weighted in accordance with each member's net direct premiums written in the areas of insurance determining membership in the association during the preceding calendar year. Three directors shall be appointed by the commissioner as representatives of health care providers. The eight member companies serving on the first board shall be elected at a meeting of the members held at a time and place designated by the commissioner. The commissioner shall appoint the other three directors serving on the first board on or before the date of such meeting from lists of names tendered to the commissioner by all interested health care provider groups.

§6837. Appeals and Judicial Review.

(a) Any applicant to the association, any person insured pursuant to this subchapter, or their representatives, or any affected insurer, may appeal to the commissioner within thirty days after any ruling, action or decision by or on behalf of the association with respect to those items the plan of operation defines as appealable matters.

(b) All orders of the commissioner made pursuant to this chapter shall be subject to judicial review as provided in Section 333, Title 18, Delaware Code.

§6838. Annual Statements.

The association shall file in the office of the commissioner annually on or before the first day of March, a statement which shall contain information with respect to transactions, condition, operations and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed and shall be in such form as is approved by the commissioner. The commissioner may, at any time, require the association to furnish additional information with respect to its transactions, condition or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation and experience of the association.

§6839. Examinations.

The commissioner shall make an examination into the affairs of the association at least annually. Such examination shall be conducted and the report thereon filed in the manner prescribed in Chapter 3, Title 18, Delaware Code of the insurance law. The expenses of every such examination shall be borne and paid by the association in the manner prescribed by Section 326, Title 18, Delaware Code.

§6840. Privileged Communications.

There shall be no liability on the part of, and no cause of action of any nature shall arise against the association, the commissioner, or his authorized representatives or any other person or organization, for any statements made in good faith by them during any proceeding or concerning any matters within the scope of this chapter.

§6841. Public Officers or Employees.

No member of the board of directors of the stabilization reserve fund who is otherwise a public officer or employee shall suffer a forfeiture of his or her office or employment or any loss or diminution in the rights and privileges appertaining thereto, by reason of membership on the board of directors of the stabilization reserve fund.

SUBCHAPTER VI. GENERAL PROVISIONS

§6850. Legal Terms as at Common Law.

Any legal term or word of art used in this Chapter, not otherwise defined, shall have such meaning as is consistent with the common law.

§6851. Agreement Assuring Result to be in Writing.

No liability shall be imposed upon any health care provider on the basis of an alleged breach of contract, express or implied, assuring results to be obtained from undertaking or not undertaking any diagnostic or therapeutic procedure in the course of health care, unless such contract is set forth in writing and signed by such health care provider or by an authorized agent of such health care provider.

§6852. Informed Consent.

(a) No recovery of damages based upon a lack of informed consent shall be allowed in any action for malpractice unless:

(1) The injury alleged involved a non-emergency treatment, procedure or surgery, and

(2) The injured party proved by a preponderence of evidence that the health care provider did not supply information regarding such treatment, procedure or surgery to the extent customarily given to patients, or other persons authorized to give consent for patients, by other licensed health care providers with similar training and/or experience in the same or similar health care communities as that of the Defendant at the time of the treatment, procedure or surgery.

(b) In any action for malpractice, in addition to other defensed provided by law, it shall be a defense to any allegation that such health care provider treated, examined or

otherwise rendered professional care to an injured party without his or her informed consent that:

(1) A person or ordinary intelligence and awareness in a position similar to that of the injured party could reasonably be expected to appreciate and comprehend hazards inherent in such treatment; or

(2) The injured party assured the health care provider he or she would undergo the treatment regardless of the risk involved or that he or she did not want to be given the information or any part thereof to which he or she could otherwise be entitled; or

(3) It was reasonable for the health care provider to limit the extent of his or her disclosures of the risks of the treatment, procedure or surgery to the injured party because further disclosure could be expected to affect adversely and sbustantially, the injured party's condition, or the outcome of the treatment, procedure or surgery.

§6853. Requirement of Expert Medical Testimony.

No liability shall be based upon asserted negligence unless expert medical testimony is presented as to the alleged deviation from the applicable standard of care in the specific circumstances of the case and as to the causation of the alleged personal injury or death, except that such expert medical testimony shall not be required if a malpractice review panel has found negligence to have occurred and to have caused the alleged personal injury or death and the opinion of such panel is admitted into evidence; provided, however, that a rebuttable inference that personal injury or death was caused by negligence shall arise, where evidence is presented that the personal injury or death occurred in any one or more of the following circumstances: (1) a foreign object was unintentionally left within the body of the patient following surgery., or (2) an explosion or fire originating in a substance used in treatment occurred in the course of treatment, or (3) a surgical procedure was performed on the

wrong patient or the wrong organ, limb, or part of the patient's body. Except as otherwise provided herein, there shall be no inference or presumption of negligence on the part of a health care provider.

§6854. Expert Witness.

No person shall be competent to give expert medical testimony as to applicable standards of skills and care unless such person is familiar with that degree of skill ordinarily employed in the community or locality where the alleged malpractice occurred, under similar circumstances, by members of the profession practiced by the health care provider; provided, however, that any such expert witness need not be licensed in the State of Delaware.

§6855. Punitive Damages.

In any action for malpractice, punitive damages may be awarded only if it is found that the injury complained of was maliciously intended or was the result of willful or wanton misconduct by the health care provider and may be awarded only if separately awarded by the trier of fact in a separate finding from any finding of compensatory damages which separate finding shall also state the amounts being awarded for each such category of damages. Injuries shall not be considered maliciously intended in instances in which unforeseen damage or injury results from intended medication, manipulation, surgery, treatment or the intended omission thereof, administered or omitted without actual malice or if the intended treatment is applied or omitted by mistake to or for the wrong patient or wrong organ.

§6856. General Limitations.

No action for the recovery of damages upon a claim against a health care provider for personal injury, including personal injury which results in death, arising out of malpractice shall be brought after the expiration of two years from

the date upon which such injury occurred; provided, however, that (i) solely in the event of personal injury the occurence of which, during such period of two years, was in-known to and could not in the exercise of reasonable diligence have been discovered by the injured person, such action may be brought prior to the expiration of three years from the date upon which such injury occurred, and not thereafter and (ii) a minor under the age of six (6) years shall have until the latter of time for bringing such an action as provided for hereinabove or until the minor's sixth (6th) birthday in which to bring an action.

§6857. Savings Clause.

The provisions of this Chapter apply to actions, cases and proceedings brought after the effective date of this Chapter and also apply to any further conduct of actions, cases, and proceedings then pending, except to the extent that application of the provisions of this Chapter would not be feasible, or would work injustice, in which event former procedures apply.

SUBCHAPTER VII. COMPENSATION FOR HEALTH CARE INJURIES

§6861. Advance Payment, Evidence Thereof.

(a) Any advance payment made by a defendant health care provider or the provider's insurer to or for a plaintiff or any other person, shall not be construed as an admission of liability for injuries or damages suffered by the Plaintiff or anyone else in an action brought for health care malpractice.

(b) Evidence of an advance payment shall not be admissible unless there is a final judgment in favor of the plaintiff, in which event the Court shall reduce the judgment to the plaintiff to the extent of the advance payment. The advance payment shall insure to the exclusive credit of the defendant or the defendant's insurer making the payment. In the event the advance payment exceeds the liability of the

defendant or the insurer making it, the Court shall order any adjustment necessary to equalize the amount which each defendant is obligated to pay, exclusive of costs. In no case shall an advance payment in excess of an award be repayable by the person receiving it.

§6862. Collateral Source.

In any medical malpractice action for damages because of property damage or bodily injury, including death resulting therefrom, there may be introduced, and if introduced, the trier of facts shall consider evidence of: (1) any and all facts available as to any public collateral source of compensation or benefits payable to the person seeking such damages (including all sums which will probably be paid payable to such person in the future) on account of such property damage or bodily injury and (2) any and all changes, including prospective changes, in the marital, financial or other status of any persons seeking or benefiting from such damages known to the parties at the time of trail; provided, however, the provisions of this section shall not be applicable to life insurance or private collateral sources of compensation or benefits.

§6863. Non-assignability of Claims.

A claim for compensation under this Chapter is not assignable; provided, however, that rights of subrogation shall not be deemed to constitute assignment.

§6864. Periodic payments; Reduction of Awards in Event of Certain Contingencies.

(a) Where a person recovers a judgment against a health care provider, the Court may, after making a determination as to the amount of such judgment which was awarded as compensation for future pain and suffering, if any, the amount of such judgment awarded for future expenses of care of the injured party made necessary by reason of the in-

injury involved, if any, and the amount of such judgment awarded as compensation for any other damages, if any, direct that:

(1) There shall be deducted from the award, and paid to the Plaintiff, an amount sufficient to cover the Plaintiff's attorney's fees, expenses related to the litigation, expenses incurred for past health care, and pain and suffering incurred as of the date of said payment;

(0) The remainder of the award shall be paid to the Plaintiff in equal or unequal monthly installments to be fixed by the Court for a period of time to be fixed by the Court; provided, however, that in addition thereto medical expenses incurred and paid by Plaintiff not otherwise reimbursed shall also be paid to Plaintiff from the undistributed portion of the award;

(1) Each monthly installment shall, in addition, include a payment of interest on the then unpaid balance at a rate to be fixed by the Court:

(b) If a Plaintiff receiving installment payments of a judgment shall die before the expiration of a twenty year period from the date of the award, and prior to the receipt by the Plaintiff or on the Plaintiff's behalf of all such installment payments, the Court shall deduct from the total of the installment payments then remaining unpaid the amount thereof representing compensation for future pain and suffering and future expenses of care made necessary by the injury involved, shall cause the balance of all such installments after such deduction to be paid to the estate of the Plaintaff so dying, and shall cause such judgment to be marked satisfied.

() If the Plaintiff receiving installment payments shall die after the expiration of a twenty year period from the date of the award, then the payment shall automatically terminate as of the date of the Plaintiff's death.

§6864. Limitation on Attorney's Fees.

(a) The amount of the claimant's attorney's fees may not exceed the amounts in the following schedule:

(1) 35% of the first $100,000 of damages;

(2) 25% of the next $100,000 of damages;

(3) 10% of the balance of any awarded damages.

(b) Notwithstanding the provisions of subsection (a), a claimant has the right to elect to pay for the attorney's services on a mutually satisfactory per diem basis. The election, however, must be exercised in written form at the time of employment.

SUBCHAPTER VIII. STUDY COMMISSION §6870. Study Commission.

(a) The Delaware Health Care Injury Insurance Study Commission is hereby created, consisting of the following members: The Commissioner, the Secretary of Health and Social Services, and thirteen members to be appointed by the Governor two shall be representatives of the joint underwriting association if one is established pursuant to this act or otherwise be from the insurance industry and familiar with health care malpractice problems and not an agent or broker; two shall be licensed to practice medicine; one shall be a representative of a licensed hospital; one shall be from a category of health care provider not represented above; two shall be members of the legal profession; one shall be a licensed insurance agent or broker; and four shall be representatives of the general public, unaffiliated with the insurance or health care industries or the health care or legal professions.

(b) The Commission shall be the chairperson of the commission. Nine of the commission members then in office shall constitute a quorum for the transaction of any business

or the exercise of any power or function of the commission. The affirmative vote by a majority of the commission members present a duly called and noticed meeting at which there is a quorum shall be required to exercise any power or function of the commission. Each member shall be entitled to one vote on all matters which may come before the commission. The commission may delegate to one or more of its members such duties as it deems proper.

(c) The Commissioner and the Secretary of Health and Social Services may designate a deputy or other officer of their agencies to exercise their power and perform their duties, including the right to vote on the commission.

(d) Each member of the commission shall be allowed the necessary and actual expenses which the member shall incur in the performance of the member's duties under this chapter.

§6871. Submission of Reports and Proposed Legislation.

(a) On or before May first, nineteen hundred seventy-seven, the commission, in cooperation and consulation with appropriate state and federal agencies, the health care and legal professions, the insurance industry and representatives of the general public, shall prepare and submit to the Governor and General Assembly its report and recommendations as to the effectiveness of this act and any recommendations it may deem appropriate as to any aspect of the health care system, including the form of suggested legislation.

(b) The goal of the commission shall be to review this system created by this act and determine if it is then in need of modification and to review and make recommendations as to any other aspects of Delaware's health care system.

SUBCHAPTER IX. SEVERABILITY

§6880. Invalidity of Part Not to Invalidate Whole.

If a provision of this Chapter or its application to a person or circumstance is held invalid, the invalidity shall not affect other provisions or application, and to this end the provisions of this Chapter shall be severable."

Section 2. Amend Title 10, Delaware Code, by adding thereto a new section to be designated as §570 to read as follows:

§570. Health Care Malpractice Litigation.

(a) All health care malpractice claims shall be brought in the Superior Court by the means of filing a complaint in the Superior Court in the manner set forth in Chapter 68 of Title 18, Delaware Code.

(b) The Judges of the Superior Court or a majority of them, may, from time to time, adopt a promulgate such rules as they are permitted to promulgate in Chapter 68, Title 18, Delaware Code, or which they deem necessary for the regulation of the practice and procedure relating to the commencement, trial, hearing and determination of civil actions in the Superior Court and especially relating to the malpractice review panels provided for in subchapter 3 of Chapter 68, Title 18, Delaware Code, in health care malpractice litigation. Such rule making power shall be in addition to all such rule making powers otherwise granted to the Judges of the Superior Court in this Title."

Section 3. Further amend Title 10, Delaware Code,

by adding thereto a new section to be designated as §8130 to read as follows:

§8130. Health Care Malpractice Actions Limitations.

No action for the recovery of damages upon a claim based upon alleged health care malpractice, whether in the nature of a tort action or breach of contract action, shall be brought after the expiration of the time period for bringing such action set forth in §6856 of Title 18, Delaware Code."

Section 4. The sum of fifty thousand dollars

($50,000.00) is hereby appropriated from the General Fund of the State of Delaware for payment of sums due pursuant to the operations of malpractice review panels as provided in this Chapter. This appropriation shall be considered as a supplementary appropriation and shall be paid by the State Treasurer from funds not otherwise appropriated and shall revert if not used at the end of the fiscal year.

Section 5. This Act shall become effective im-

mediately upon enactment into law.

Approved April 26, 1976