WI Stat § 655.27 (2021)
2021 Wisconsin Statutes & Annotations|Chapter 655 - Health care liability and injured patients and families compensation.|655.27 - Injured patients and families compensation fund.

655.27  Injured patients and families compensation fund. (1) Fund. There is created an injured patients and families compensation fund for the purpose of paying that portion of a medical malpractice claim which is in excess of the limits expressed in s. 655.23 (4) or the maximum liability limit for which the health care provider is insured, whichever limit is greater, paying future medical expense payments under s. 655.015, and paying claims under sub. (1m). The fund shall provide occurrence coverage for claims against health care providers that have complied with this chapter, and against employees of those health care providers, and for reasonable and necessary expenses incurred in payment of claims and fund administrative expenses. The coverage provided by the fund shall begin July 1, 1975. The fund shall not be liable for damages for injury or death caused by an intentional crime, as defined under s. 939.12, committed by a health care provider or an employee of a health care provider, whether or not the criminal conduct is the basis for a medical malpractice claim. (1m)  Peer review activities. (a) The fund shall pay that portion of a claim described in par. (b) against a health care provider that exceeds the limit expressed in s. 655.23 (4) or the maximum liability limit for which the health care provider is insured, whichever limit is greater.(b) A health care provider who engages in the activities described in s. 146.37 (1g) and (3) shall be liable for not more than the limits expressed under s. 655.23 (4) or the maximum liability limit for which the health care provider is insured, whichever limit is greater, if he or she is found to be liable under s. 146.37, and the fund shall pay the excess amount, unless the health care provider is found not to have acted in good faith during those activities and the failure to act in good faith is found by the trier of fact, by clear and convincing evidence, to be both malicious and intentional. (2)  Fund administration and operation. Management of the fund shall be vested with the board of governors. The commissioner shall either provide staff services necessary for the operation of the fund or, with the approval of the board of governors, contract for all or part of these services. Such a contract is subject to ss. 16.753 and 16.765, but is otherwise exempt from subch. IV of ch. 16. The commissioner shall adopt rules governing the procedures for creating and implementing these contracts before entering into the contracts. At least annually, the contractor shall report to the commissioner and to the board of governors regarding all expenses incurred and subcontracting arrangements. If the board of governors approves, the contractor may hire legal counsel as needed to provide staff services. The cost of contracting for staff services shall be funded from the appropriation under s. 20.145 (2) (u). The fund shall pay to the commissioner amounts charged for organizational support services, which shall be credited to the appropriation account under s. 20.145 (1) (g) 2. (3)  Fees. (a)  Assessment. Each health care provider shall pay an annual assessment, which, subject to pars. (b) to (br), shall be based on the following considerations:1. Past and prospective loss and expense experience in different types of practice.2. The past and prospective loss and expense experience of the fund.2m. The loss and expense experience of the individual health care provider which resulted in the payment of money, from the fund or other sources, for damages arising out of the rendering of medical care by the health care provider or an employee of the health care provider, except that an adjustment to a health care provider's fees may not be made under this subdivision prior to the receipt of the recommendation of the injured patients and families compensation fund peer review council under s. 655.275 (5) (a) and the expiration of the time period provided, under s. 655.275 (7), for the health care provider to comment or prior to the expiration of the time period under s. 655.275 (5) (a). 3. Risk factors for persons who are semiretired or part-time professionals.4. For a health care provider described in s. 655.002 (1) (d), (e), (em), or (f), risk factors and past and prospective loss and expense experience attributable to employees of that health care provider other than employees licensed as a physician or nurse anesthetist. 5. The supplemental appropriation under s. 20.145 (2) (a) for payment of claims.(am)  Assessments for peer review council. The fund, a mandatory health care liability risk-sharing plan established under s. 619.04, and a private health care liability insurer shall be assessed, as appropriate, fees sufficient to cover the costs of the injured patients and families compensation fund peer review council, including costs of administration, for reviewing claims paid by the fund or from the appropriation under s. 20.145 (2) (a), by the plan, and by the insurer, respectively, under s. 655.275 (5). The fees shall be set by the commissioner by rule, after approval by the board of governors, and shall be collected by the commissioner for deposit in the fund. The costs of the injured patients and families compensation fund peer review council shall be funded from the appropriation under s. 20.145 (2) (um).(b)  Fees established. 1. The commissioner, after approval by the board of governors, shall set the fees under par. (a). The fees may be paid annually or in semiannual or quarterly installments. In addition to the prorated portion of the annual fee, semiannual and quarterly installments shall include an amount sufficient to cover interest not earned and administrative costs incurred because the fees were not paid on an annual basis. This paragraph does not impose liability on the board of governors for payment of any part of a fund deficit.2. With respect to fees paid by physicians, the commissioner shall provide for no fewer than 4 payment classifications, based upon the amount of surgery performed and the risk of diagnostic and therapeutic services provided or procedures performed.2m. In addition to the fees and payment classifications described under subds. 1. and 2., the commissioner, after approval by the board of governors, may establish a separate payment classification for physicians satisfying s. 655.002 (1) (b) and a separate fee for nurse anesthetists satisfying s. 655.002 (1) (b) which take into account the loss experience of health care providers for whom Michigan is a principal place of practice.(bg)  Fee increase. 1. The commissioner shall provide for an automatic increase in a health care provider's fees, except as provided in subd. 2., if the loss and expense experience of the fund and other sources with respect to the health care provider or an employee of the health care provider exceeds either a number of claims paid threshold or a dollar volume of claims paid threshold, both as established by the commissioner. The commissioner shall specify applicable amounts of increase corresponding to the number of claims paid and the dollar volume of awards in excess of the respective thresholds.2. The commissioner shall provide that the automatic increase does not apply if the board of governors determines that the performance of the injured patients and families compensation fund peer review council in making recommendations under s. 655.275 (5) (a) adequately addresses the consideration set forth in par. (a) 2m.(br)  Limit on fees. The commissioner, in setting fees for a particular fiscal year under par. (b), shall ensure that the fees assessed do not exceed the greatest of the following: 1. The estimated total dollar amount of claims to be paid during that particular fiscal year.2. The fees assessed for the fiscal year preceding that particular fiscal year, adjusted by the commissioner of insurance to reflect changes in the consumer price index for all urban consumers, U.S. city average, for the medical care group, as determined by the U.S. department of labor.3. Two hundred percent of the total dollar amount disbursed for claims during the calendar year preceding that particular fiscal year.(bt)  Report to joint committee on finance. Annually, no later than April 1, the commissioner shall send to the cochairpersons of the joint committee on finance a report detailing the proposed fees set for the next fiscal year under par. (b) and under s. 655.61 (1). If, within 14 working days after the date that the commissioner submits the report, the cochairpersons of the committee notify the commissioner that the committee has scheduled a meeting for the purpose of reviewing the proposed fees, the commissioner may not impose the fees until the committee approves the report. If the cochairpersons of the committee do not notify the commissioner, the commissioner may impose the proposed fees. In addition to any other method prescribed by rule for advising health care providers of the amount of the fees, the commissioner shall post the fees set under par. (b) for the next fiscal year on the office's Internet site and the director of state courts shall post the fees set under s. 655.61 (1) for the next fiscal year on the mediation fund's Internet site.(c)  Collection and deposit of fees. Fees under pars. (a) and (b) and future medical expense payments specified for the fund under s. 655.015 shall be collected by the commissioner for deposit into the fund in a manner prescribed by the commissioner by rule.(d)  Late establishment or approval of fees. If the fees under par. (b) for any particular fiscal year are not established by the commissioner, approved by the board of governors, or approved under par. (bt) by the joint committee on finance before June 2 of that fiscal year, the commissioner may elect to collect fees as established for the previous fiscal year. If the commissioner so elects and the fees for that fiscal year are subsequently established by the commissioner, approved by the board of governors, or approved under par. (bt) by the joint committee on finance, the balance for the fiscal year shall be collected or refunded or the remaining semiannual or quarterly installment payments shall be adjusted except the commissioner may elect not to collect, refund, or adjust for minimal amounts.(e)  Podiatrist fees. The commissioner, after approval by the board of governors, may assess fees against podiatrists for the purpose of paying the fund's portion of medical malpractice claims and expenses resulting from claims against podiatrists based on occurrences before July 1, 1986. (4)  Fund accounting and audit. (a) Moneys shall be withdrawn from the fund, or paid from the appropriation under s. 20.145 (2) (a), by the commissioner only upon vouchers approved and authorized by the board of governors.(b) All books, records and audits of the fund shall be open to the general public for reasonable inspection, with the exception of confidential claims information.(c) Persons authorized to receive deposits, withdraw, issue vouchers or otherwise disburse any fund moneys shall post a blanket fidelity bond in an amount reasonably sufficient to protect fund assets. The cost of such bond shall be paid from the fund.(d) Annually after the close of a fiscal year, the board of governors shall furnish a financial report to the commissioner. The report shall be prepared in accordance with accepted accounting procedures and shall include the present value of all claims reserves, including those for incurred but not reported claims as determined by accepted actuarial principles, and such other information as may be required by the commissioner. The board of governors shall furnish an appropriate summary of this report to all fund participants.(e) The board of governors shall submit a quarterly report to the state investment board and the department of administration projecting the future cash flow needs of the fund. The state investment board shall invest moneys held in the fund in investments with maturities and liquidity that are appropriate for the needs of the fund as reported by the board of governors in its quarterly reports under this paragraph. All income derived from such investments shall be credited to the fund.(f) The board of governors shall submit a functional and progress report to the chief clerk of each house of the legislature, for distribution to the appropriate standing committees under s. 13.172 (3), on or before March 1 of each year.(g) The board of governors may cede reinsurance to an insurer authorized to do business in this state under ch. 611, 613, 614 or 618 or pursue other loss funding management to preserve the solvency and integrity of the fund, subject to approval by the commissioner. The commissioner may prescribe controls over or other conditions on such use of reinsurance or other loss-funding management mechanisms. (5)  Claims procedures. (a)1. Any person may file a claim for damages arising out of the rendering of medical care or services or participation in peer review activities under s. 146.37 within this state against a health care provider or an employee of a health care provider. A person filing a claim may recover from the fund only if the health care provider or the employee of the health care provider has coverage under the fund, the fund is named as a party in the action, and the action against the fund is commenced within the same time limitation within which the action against the health care provider or employee of the health care provider must be commenced.2. Any person may file an action for damages arising out of the rendering of medical care or services or participation in peer review activities under s. 146.37 outside this state against a health care provider or an employee of a health care provider. A person filing an action may recover from the fund only if the health care provider or the employee of the health care provider has coverage under the fund, the fund is named as a party in the action, and the action against the fund is commenced within the same time limitation within which the action against the health care provider or employee of the health care provider must be commenced. If the rules of procedure of the jurisdiction in which the action is brought do not permit naming the fund as a party, the person filing the action may recover from the fund only if the health care provider or the employee of the health care provider has coverage under the fund and the fund is notified of the action within 60 days of service of process on the health care provider or the employee of the health care provider. The board of governors may extend this time limit if it finds that enforcement of the time limit would be prejudicial to the purposes of the fund and would benefit neither insureds nor claimants.3. If, after reviewing the facts upon which the claim or action is based, it appears reasonably probable that damages paid will exceed the limits in s. 655.23 (4), the fund may appear and actively defend itself when named as a party in an action against a health care provider, or an employee of a health care provider, that has coverage under the fund. In such action, the fund may retain counsel and pay out of the fund attorney fees and expenses including court costs incurred in defending the fund. The attorney or law firm retained to defend the fund shall not be retained or employed by the board of governors to perform legal services for the board of governors other than those directly connected with the fund. Any judgment affecting the fund may be appealed as provided by law. The fund may not be required to file any undertaking in any judicial action, proceeding or appeal.(b) It shall be the responsibility of the insurer or self-insurer providing insurance or self-insurance for a health care provider who is also covered by the fund to provide an adequate defense of the fund on any claim filed that may potentially affect the fund with respect to such insurance contract or self-insurance contract. The insurer or self-insurer shall act in good faith and in a fiduciary relationship with respect to any claim affecting the fund. No settlement exceeding an amount which could require payment by the fund may be agreed to unless approved by the board of governors.(c) It shall be the responsibility of any health care provider with a cash or surety bond in effect under s. 655.23 (3) (d) to provide an adequate defense of the fund on any malpractice claim filed or any claim filed under sub. (1m) that may potentially affect the fund. The health care provider shall act in good faith and in a fiduciary relationship with respect to any claim affecting the fund. No settlement exceeding an amount which could require payment by the fund may be agreed to unless approved by the board of governors.(d) A person who has recovered a final judgment or a settlement approved by the board of governors against a health care provider, or an employee of a health care provider, that has coverage under the fund may file a claim with the board of governors to recover that portion of such judgment or settlement which is in excess of the limits in s. 655.23 (4) or the maximum liability limit for which the health care provider is insured, whichever limit is greater. In the event the fund incurs liability for future payments exceeding $1,000,000 to any person under a single claim as the result of a settlement or judgment that is entered into or rendered under this chapter for an act or omission that occurred on or after May 25, 1995, the fund shall pay, after deducting the reasonable costs of collection attributable to the remaining liability, including attorney fees reduced to present value, the full medical expenses each year, plus an amount not to exceed $500,000 per year that will pay the remaining liability over the person's anticipated lifetime, or until the liability is paid in full. If the remaining liability is not paid before the person dies, the fund may pay the remaining liability in a lump sum. Payments shall be made from money collected and paid into the fund under sub. (3) and from interest earned thereon. For claims subject to a periodic payment made under this paragraph, payments shall be made until the claim has been paid in full, except as provided in s. 655.015. Periodic payments made under this paragraph include direct or indirect payment or commitment of moneys to or on behalf of any person under a single claim by any funding mechanism. No interest may be paid by the fund on the unpaid portion of any claim filed under this paragraph, except as provided under s. 807.01 (4), 814.04 (4) or 815.05 (8).(e) Claims filed against the fund shall be paid in the order received within 90 days after filing unless appealed by the fund. If the amounts in the fund are not sufficient to pay all of the claims, claims received after the funds are exhausted shall be paid from the appropriation under s. 20.145 (2) (a). (6)  Purpose and integrity of fund. The fund is established to curb the rising costs of health care by financing part of the liability incurred by health care providers as a result of medical malpractice claims and to ensure that proper claims are satisfied. The fund, including any net worth of the fund, is held in irrevocable trust for the sole benefit of health care providers participating in the fund and proper claimants. Moneys in the fund may not be used for any other purpose of the state.  (7)  Actions against insurers, self-insurers or providers. The board of governors may bring an action against an insurer, self-insurer or health care provider for failure to act in good faith or breach of fiduciary responsibility under sub. (5) (b) or (c).History:  1975 c. 37, 79, 199; 1977 c. 29, 131; 1979 c. 34, 194; 1981 c. 20; 1983 a. 27, 158; 1985 a. 340; 1987 a. 27, 186, 247, 399; 1989 a. 102, 187, 332; 1991 a. 214, 315; 1993 a. 473; 1995 a. 10; 2001 a. 65; 2003 a. 111; 2005 a. 36, 410; 2007 a. 20; 2015 a. 90; 2019 a. 66.The patients compensation fund has the authority to sue an insurer that refuses to contribute to the settlement of a claim against its insured. Wisconsin Patients Compensation Fund v. WHCLIP, 200 Wis. 2d 599, 547 N.W.2d 578 (1996), 95-0865.The denial of a postverdict motion to add the fund to an action where an excess verdict was returned was appropriate. Granting the motion would have denied the fund's right under sub. (5) to appear and actively defend itself in the action. Goff v. Seldera, 202 Wis. 2d 601, 550 N.W.2d 144 (Ct. App. 1996), 95-0135.Sub. (4) (b) does not provide an “explicit and unequivocal" exemption to the open records law. Any denial of an open records request under this section must state with “sufficient specificity" a public policy reason for refusing to release the requested records. Chvala v. Bubolz, 204 Wis. 2d 82, 552 N.W.2d 892 (Ct. App. 1996), 95-3120.When a hospital's violation of the federal Emergency Medical Treatment and Active Labor Act for failure to provide treatment results from a negligent medical act or a decision made in rendering care, the Fund has an obligation to provide excess coverage. When the hospital's violation results from an economic decision, the fund has no duty to provide coverage. Burks v. St. Joseph Hospital, 227 Wis. 2d 811, 596 N.W.2d 391 (1999), 97-0466.A medical malpractice plaintiff is required to name the fund as a party but may do so after the period prescribed in s. 893.55 has passed so long as the health care providers are sued before the statute of limitations has run. Anderson v. Sauk Prairie Memorial Hospital, 2000 WI App 108, 235 Wis. 2d 249, 612 N.W.2d 369, 99-2052.The requirement in sub. (5) (b) that the primary insurer provide the fund an adequate defense does not require that the insurer's attorneys must assume an attorney-client relationship with the fund. Patients Compensation Fund v. Physicians Insurance Co. of Wisconsin, 2000 WI App 248, 239 Wis. 2d 360, 620 N.W.2d 457, 99-1322.Under s. 895.045 (1), the liability of each person found to be less than 51 percent causally negligent is limited to the percentage of the total causal negligence attributed to that person. Thus insurers of doctors less than 51 percent causally negligent can be liable for no more than their insureds. Estate of Capistrant v. Froedtert Memorial Lutheran Hospital, Inc. 2003 WI App 213, 267 Wis. 2d 455, 671 N.W.2d 400, 03-0014.Health care providers have a constitutionally protected property interest in the fund. Sub. (6) defines the fund as an irrevocable trust, and the structure and purpose of the fund satisfy all the elements necessary to establish a formal trust. Because the health care providers are specifically named as beneficiaries of the trust, they have equitable title to the assets of the fund. The transfer of $200 million from the fund to another fund was an unconstitutional taking of private property without just compensation. Wisconsin Medical Society v. Morgan, 2010 WI 94, 328 Wis. 2d 469; 787 N.W.2d 22, 09-0728.