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The Florida Senate

2023 Florida Statutes (including 2023C)

SECTION 105
Florida Patient’s Compensation Fund.
F.S. 766.105
766.105 Florida Patient’s Compensation Fund.
(1) DEFINITIONS.The following definitions apply in the interpretation and enforcement of this section:
(a) The term “fund” means the Florida Patient’s Compensation Fund. The fund is not a state agency, board, or commission. However, for the purposes of s. 199.183(1) only, the fund shall be considered a political subdivision of this state.
(b) The term “health care provider” means any:
1. Hospital licensed under chapter 395.
2. Physician or physician assistant licensed under chapter 458.
3. Osteopathic physician or physician assistant licensed under chapter 459.
4. Podiatric physician licensed under chapter 461.
5. Health maintenance organization certificated under part I of chapter 641.
6. Ambulatory surgical center licensed under chapter 395.
7. “Other medical facility” as defined in paragraph (c).
8. Professional association, partnership, corporation, joint venture, or other association by the individuals set forth in subparagraphs 2., 3., and 4. for professional activity.
(c) The term “other medical facility” means a facility the primary purpose of which is to provide human medical diagnostic services or a facility providing nonsurgical human medical treatment and in which the patient is admitted to and discharged from such facility within the same working day, and which is not part of a hospital. However, a facility existing for the primary purpose of performing terminations of pregnancy, or an office maintained by a physician or dentist for the practice of medicine, shall not be construed to be an “other medical facility.”
(d) The term “hospital” means a hospital licensed under chapter 395.
(e) The term “health maintenance organization” means any health maintenance organization certificated under part I of chapter 641.
(f) The term “occurrence” means an accident or incident, including continuous or repeated exposure to conditions, which results in patient injuries not intended from the standpoint of the insured.
(g) The term “per claim” means all claims per patient arising out of an occurrence.
(h) The term “committee” means a committee or board of trustees of a health care provider or group of health care providers established to make recommendations, policy, or decisions regarding patient institutional utilization, patient treatment, or institutional staff privileges or to perform other administrative or professional purposes or functions.
(i) The term “house physician” means any physician, osteopathic physician, podiatric physician, or dentist except: a physician, osteopathic physician, podiatric physician, or dentist with staff privileges at a hospital; a physician, osteopathic physician, podiatric physician, or dentist providing emergency room services; an anesthesiologist, pathologist, or radiologist; or a physician, osteopathic physician, podiatric physician, or dentist who performs a service for a fee.
(2) COVERAGE.
(a) Each hospital, unless exempted under this paragraph or paragraph (c), shall, and each health care provider other than a hospital may, pay the yearly fee and assessment or, in cases in which such hospital or health care provider joined the fund after the fiscal year had begun, a prorated fee or assessment into the fund pursuant to subsection (3). Any hospital operated by an agency, subdivision, or instrumentality of the state is exempt from the provisions of this section and is not required to participate in the fund.
(b) Whenever a claim covered under subsection (3) results in a settlement or judgment against a health care provider, the fund shall pay to the extent of its coverage if the health care provider has paid the fees and any assessments required pursuant to subsection (3) for the year in which the incident occurred for which the claim is filed, provides an adequate defense for the fund, and pays the initial amount of the claim up to the applicable amount set forth in paragraph (f) or the maximum limit of the underlying coverage maintained by the health care provider on the date when the incident occurred for which the claim is filed, whichever is greater. Coverages for such claims shall be provided on an occurrence basis by the fund independently for each fiscal year, such fiscal year to run from January 1 to December 31. The fund may also provide coverages for portions of each fiscal year. The limits of such coverage afforded by the fund for each health care provider other than a hospital may not exceed the total limits for both entry level and fund coverage of $1 million per claim with a $3 million annual aggregate, or $2 million per claim with a $4 million annual aggregate, as selected by the health care provider. In the case of coverage for a hospital, the limit of coverage afforded by the fund may not exceed the total limits for both entry level and fund coverage of $2.5 million per claim with no annual aggregate. The health care provider is responsible for the payment of any amount of a claim in excess of the elected limit. The fund is not responsible for the payment of punitive damages awarded for actual or direct negligence of the health care provider member. The health care provider shall have the same responsibility for punitive damages it would have if it were not a member of the fund. A health care provider may have the necessary funds available for payment when due or may provide underlying financial responsibility by one of the following methods:
1. A bond purchased from a licensed surety company, which bond is in the applicable amount set forth in paragraph (f) per claim and 3 times the applicable per-claim limit in the aggregate per year, plus an additional amount which is sufficient to meet claims defense and expenses; however, a total bond amount for all years equal to reserved loss and expense amounts for known cases plus 3 times the applicable amount set forth in paragraph (f) plus $45,000 shall be the maximum bond amount required;
2. An adequate escrow account in the applicable amount set forth in paragraph (f) per claim and 3 times the per-claim limit in the aggregate per year, plus an additional amount which is sufficient to meet claims defense and expenses; however, a total escrow account for all years equal to reserved loss and expense amounts for known cases plus 3 times the applicable amount set forth in paragraph (f) plus $45,000 shall be the maximum escrow amount required;
3. Medical malpractice insurance in the applicable amount set forth in paragraph (f) or more per claim from a private insurer or the Joint Underwriting Association established under s. 627.351(4); or
4. Self-insurance as provided in s. 627.357, providing coverage in the applicable amount set forth in paragraph (f) or more per claim and 3 times the applicable per-claim limit in the aggregate per year.
(c) Any hospital that can meet one of the following provisions for demonstrating financial responsibility to pay claims and costs ancillary thereto arising out of the rendering of or failure to render medical care or services and for bodily injury or property damage to the person or property of any patient arising out of the activities of the hospital in this state or arising out of the activities of covered individuals listed in paragraph (e) is not required to participate in the fund:
1. Post bond in an amount equivalent to $10,000 per claim for each hospital bed in such hospital, not to exceed a $2.5 million annual aggregate.
2. Establish an escrow account in an amount equivalent to $10,000 per claim for each hospital bed in such hospital, not to exceed a $2.5 million annual aggregate, to the satisfaction of the Agency for Health Care Administration.
3. Obtain professional liability coverage in an amount equivalent to $10,000 or more per claim for each bed in such hospital from a private insurer, from the Joint Underwriting Association established under s. 627.351(4), or through a plan of self-insurance as provided in s. 627.357. However, no hospital may be required to obtain such coverage in an amount exceeding a $2.5 million annual aggregate.
(d)1. Any health care provider who participates in the fund and who does not meet the provisions of paragraph (b) shall not be covered by the fund.
2. Annually, the Agency for Health Care Administration shall require documentation by each hospital that such hospital is in compliance, and will remain in compliance, with the provisions of this section.
(e) The coverage afforded by the fund for a participating hospital or ambulatory surgical center shall apply to the officers, trustees, volunteer workers, trainees, committee members (including physicians, osteopathic physicians, podiatric physicians, and dentists), and employees of the hospital or ambulatory surgical center, other than employed physicians licensed under chapter 458, physician assistants licensed under chapter 458, osteopathic physicians licensed under chapter 459, dentists licensed under chapter 466, and podiatric physicians licensed under chapter 461. However, the coverage afforded by the fund for a participating hospital shall apply to house physicians, interns, employed physician residents in a resident training program, or physicians performing purely administrative duties for the participating hospitals other than the treatment of patients. This coverage shall apply to the hospital or ambulatory surgical center and those included in this subsection as one health care provider.
(f) Each health care provider shall be responsible for paying the amount of each settlement or judgment for each claim up to the fund entry level amount it selects. The selected entry level amount shall be not less than the following:
1. As of July 1, 1983: $150,000 per claim or $500,000 per occurrence.
2. As of January 1, 1987: $200,000 per claim or $500,000 per occurrence.
3. As of January 1, 1990: $250,000 per claim or $500,000 per occurrence.

As of January 1, 1990, the minimum entry level amount shall be indexed to the medical component of the consumer price index and shall be adjusted by the fund each year thereafter accordingly.

(3) THE FUND.
(a) Purposes.There is created a “Florida Patient’s Compensation Fund” for the purpose of paying that portion of any claim arising out of the rendering of or failure to render medical care or services, or arising out of activities of committees, for health care providers or any claim for bodily injury or property damage to the person or property of any patient, including all patient injuries and deaths, arising out of the members’ activities for those health care providers set forth in subparagraphs (1)(b)1., 5., 6., and 7. which is in excess of the fund entry level selected and less than the limit selected under paragraph (2)(b). The fund shall be responsible only for payment of claims against health care providers who are in compliance with the provisions of paragraph (2)(b), of reasonable and necessary expenses incurred in the payment of claims, and of fund administrative expenses.
(b) Fund administration and operation.
1. The fund shall operate subject to the supervision and approval of the Chief Financial Officer or his or her designee.
2. There shall be no liability on the part of, and no cause of action of any nature shall arise against, the fund or its agents or employees, professional advisers or consultants, the Chief Financial Officer or his or her designee, or the Department of Financial Services or the Office of Insurance Regulation of the Financial Services Commission or their representatives for any action taken by them in the performance of their powers and duties pursuant to this section.
(c) Powers of the fund.The fund has the power to:
1. Sue and be sued, and appear and defend, in all actions and proceedings in its name to the same extent as a natural person.
2. Adopt, change, amend, and repeal a plan of operation, not inconsistent with law, for the regulation and administration of the affairs of the fund. The plan and any changes thereto shall be filed with the Office of Insurance Regulation of the Financial Services Commission and are all subject to its approval before implementation by the fund. All fund members, board members, and employees shall comply with the plan of operation.
3. Have and exercise all powers necessary or convenient to effect any or all of the purposes for which the fund is created.
4. Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this section.
5. Employ or retain such persons as are necessary to perform the administrative and financial transactions and responsibilities of the fund and to perform other necessary or proper functions unless prohibited by law.
6. Take such legal action as may be necessary to avoid payment of improper claims.
7. Indemnify any person acting on behalf of the fund in an official capacity, for expenses, including attorney’s fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with any action, suit, or proceeding, including any appeal thereof, arising out of his or her capacity in acting on behalf of the fund, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the fund and, with respect to any criminal action or proceeding, he or she had reasonable cause to believe his or her conduct was lawful.
(d) Fees and assessments.Each health care provider, as set forth in subsection (2), electing to comply with paragraph (2)(b) for a given fiscal year shall pay the fees and any assessments established under this section relative to such fiscal year, for deposit into the fund. Those entering the fund after the fiscal year has begun shall pay a prorated share of the yearly fees for a prorated membership. Actuarially sound membership fees payable annually, semiannually, or quarterly with appropriate service charges shall be established by the fund before January 1 of each fiscal year, based on the following considerations:
1. Past and prospective loss and expense experience in different types of practice and in different geographical areas within the state;
2. The prior claims experience of the members covered under the fund; and
3. Risk factors for persons who are retired, semiretired, or part-time professionals.

Such fees shall be based on not more than three geographical areas, not necessarily contiguous, with five categories of practice and with categories which contemplate separate risk ratings for hospitals, for health maintenance organizations, for ambulatory surgical facilities, and for other medical facilities. The fund is authorized to adjust the fees of an individual member to reflect the claims experience of such member. Each fiscal year of the fund shall operate independently of preceding fiscal years. Participants shall only be liable for assessments for claims from years during which they were members of the fund; in cases in which a participant is a member of the fund for less than the total fiscal year, a member shall be subject to assessments for that year on a pro rata basis determined by the percentage of participation for the year. The fund shall submit to the Office of Insurance Regulation the classifications and membership fees to be charged, and the Office of Insurance Regulation shall review such fees and shall approve them if they comply with all the requirements of this section and fairly reflect the considerations provided for in this section. If the classifications or membership fees do not comply with this section, the Office of Insurance Regulation shall set classifications or membership fees which do comply and which give due recognition to all considerations provided for in this section. Nothing contained herein shall be construed as imposing liability for payment of any part of a fund deficit on the Joint Underwriting Association authorized by s. 627.351(4) or its member insurers. If the fund determines that the amount of money in an account for a given fiscal year is in excess of or not sufficient to satisfy the claims made against the account, the fund shall certify the amount of the projected excess or insufficiency to the Office of Insurance Regulation and request the office to levy an assessment against or refund to all participants in the fund for that fiscal year, prorated, based on the number of days of participation during the year in question. The Office of Insurance Regulation shall approve the request of the fund to refund to, or levy any assessment against, the participants, provided the refund or assessment fairly reflects the same considerations and classifications upon which the membership fees were based. The assessment shall be in an amount sufficient to satisfy reserve requirements for known claims, including expenses to satisfy the claims, made against the account for a given fiscal year. In any proceeding to challenge the amount of the refund or assessment, it is to be presumed that the amount of refund or assessment requested by the fund is correct, if the fund demonstrates that it has used reasonable claims-handling and reserving procedures. Additional assessments may be certified and levied in accordance with this paragraph as necessary for any fiscal year. If a fund member objects to his or her assessment, he or she shall, as a condition precedent to bringing legal action contesting the assessment, pay the assessment, under protest, to the fund. The fund may borrow money needed for current operations, if necessary to pay claims and related expenses, fees, and costs timely for a given fiscal year, from an account for another fiscal year until such time as sufficient funds have been obtained through the assessment process. Any such money, together with interest at the mean interest rate earned on the investment portfolio of the fund, shall be repaid from the next assessment for the given fiscal year. If any assessments are levied in accordance with this subsection as a result of claims in excess of $500,000 per occurrence, and such assessments are a result of the liability of certain individuals and entities specified in paragraph (2)(e), only hospitals shall be subject to such assessments. Before approving the request of the fund to charge membership fees, issue refunds, or levy assessments, the Office of Insurance Regulation shall publish notice of the request in the Florida Administrative Register. Pursuant to chapter 120, any party substantially affected may request an appropriate proceeding. Any petition for such a proceeding shall be filed with the Office of Insurance Regulation within 21 days after the date of publication of the notice in the Florida Administrative Register.

(e) Fund accounting and audit.
1. Money shall be withdrawn from the fund only upon a voucher as authorized by the Chief Financial Officer or his or her designee.
2. All books, records, and audits of the fund shall be open for reasonable inspection to the general public, except that a claim file in possession of the fund, fund members, and their insurers is confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution until termination of litigation or settlement of the claim, although medical records and other portions of the claim file may remain confidential and exempt as otherwise provided by law. Any book, record, document, audit, or asset acquired by, prepared for, or paid for by the fund is subject to the authority of the Chief Financial Officer or his or her designee, who shall be responsible therefor.
3. Persons authorized to receive deposits, issue vouchers, or withdraw 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.
4. Annually, the fund shall furnish, upon request, audited financial reports to any fund participant and to the Office of Insurance Regulation and the Joint Legislative Auditing Committee. The reports shall be prepared in accordance with accepted accounting procedures and shall include income and such other information as may be required by the Office of Insurance Regulation or the Joint Legislative Auditing Committee.
5. Any money held in the fund shall be invested in interest-bearing investments. However, in no case may any such money be invested in the stock of any insurer participating in the Joint Underwriting Association authorized by s. 627.351(4) or in the parent company of, or company owning a controlling interest in, such insurer. All income derived from such investments shall be credited to the fund.
6. Any health care provider participating in the fund may withdraw from such participation only at the end of a fiscal year; however, such health care provider shall remain subject to any assessment or any refund pertaining to any year in which such member participated in the fund.
(f) Claims procedures.
1. Any person may file an action against a participating health care provider for damages covered under the fund, except that the person filing the claim may not recover against the fund unless the fund was named as a defendant in the suit. The fund is not required to actively defend a claim until the fund is named therein. If, after the facts upon which the claim is based are reviewed, it appears that the claim will exceed the applicable amount set forth in paragraph (2)(f) or, if greater, the amount of the health care provider’s basic coverage, the fund shall appear and actively defend itself when named as a defendant in the suit. In so defending, the fund shall retain counsel and pay out of the account for the appropriate year attorneys’ fees and expenses, including court costs incurred in defending the fund. In any claim, the attorney or law firm retained to defend the fund may not be retained to defend the Joint Underwriting Association authorized by s. 627.351(4). The fund is authorized to negotiate with any claimant having a judgment exceeding the applicable amount set forth in paragraph (2)(f) to reach an agreement as to the manner in which that portion of the judgment exceeding such amount is to be paid. Any judgment affecting the fund may be appealed under the Florida Rules of Appellate Procedure, as with any defendant.
2. It is 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 on any claim filed which potentially affects the fund, with respect to such insurance contract or self-insurance contract. The insurer or self-insurer shall act in a fiduciary relationship toward the fund with respect to any claim affecting the fund. No settlement exceeding the applicable amount set forth in paragraph (2)(f), or any other amount which could require payment by the fund, may be agreed to unless approved by the fund.
3. A person who has recovered a final judgment against the fund or against a health care provider who is covered by the fund may file a claim with the fund to recover that portion of such judgment which is in excess of the applicable amount set forth in paragraph (2)(f) or the amount of the health care provider’s basic coverage, if greater, as set forth in paragraph (2)(b). The amount of liability of the fund under a judgment, including court costs, reasonable attorney’s fees, and interest, shall be paid in a lump sum, except that any claims for future special damages, as set forth in 1s. 768.48(1)(a) and (b), shall be paid periodically as they are incurred by the claimant. If a claimant dies while receiving periodic payments, payment for future medical expenses shall cease, but payment for future wage loss, if any, shall continue at a rate of not more than $100,000 per year. The fund may pay a lump sum reflecting the present value of future wage losses in lieu of continuing the periodic payments.
4. Payment of settlements or judgments involving the fund shall be paid in the order received within 60 days after the date of settlement or judgment, unless appealed by the fund. If the account for a given year does not have enough money to pay all of the settlements or judgments, those claims received after the funds are exhausted shall be payable in the order in which they are received. However, no claimant has the right to execute against the fund to the extent that the judgment is for a claim covered in a membership year for which the fund has insufficient assets to pay the claim, as determined by membership fees for such year, investment income generated by such fees, and assessments collected from members for such year. When the fund has insufficient assets to pay claims for a fund year, the fund will not be required to post a supersedeas bond in order to stay execution of a judgment pending appeal. The fund shall retain a reasonable sum of money for payment of administrative and claims expense, which money will not be subject to execution.
5. Except to the extent of the appropriate fund entry level amount selected, if a judgment is entered against the fund for a year in which there are insufficient assets to satisfy the claim, an automatic stay of execution and collection in favor of the fund member shall exist for that portion of the judgment which exceeds the selected entry level amount, and for which fund coverage exists. Such stay shall only be granted to those members who have fully complied with the requirements of fund membership, and such stay shall remain in effect until adequate assessments are collected by the fund to pay the claim. Upon competent proof that the portion of any claim covered by the fund is uncollectible from the fund, the member’s stay of execution may be vacated by the court, upon application by the plaintiff and hearing thereon.
6. If a health care provider participating in the fund has coverage in excess of the applicable amount set forth in paragraph (2)(f), such health care provider shall be liable for losses up to the amount of his or her coverage, and such health care provider shall receive an appropriate reduction of the fees and assessments for participation in the fund. Such reduction shall be granted only after such health care provider has proved to the satisfaction of the fund that such health care provider had such coverage during the period of membership of the fiscal year.
7. The manager of the fund or his or her assistant is the agent for service of process for the plan.
(g) Risk management program.The fund shall establish a risk management program as part of its administrative functions. All health care providers, as defined in subparagraphs (1)(b)1., 5., 6., and 7., participating in the fund shall comply with the provisions of the risk management program established by the fund. The risk management program shall include the following components:
1. The investigation and analysis of the frequency and causes of general categories and specific types of adverse incidents causing injury to patients;
2. The development of appropriate measures to minimize the risk of injuries and adverse incidents to patients;
3. The analysis of patient grievances which relate to patient care and the quality of medical services;
4. The development and implementation of an incident reporting system based upon the affirmative duty of all health care providers and all agents and employees of health care providers and health care facilities to report injuries and incidents; and
5. Auditing of participating health care providers to assure compliance with the provisions of the risk management program.

The fund shall establish a schedule of fee surcharges which it shall levy upon participating health care providers found to be in violation of the provisions of the risk management program. Such schedule shall be subject to approval by the Office of Insurance Regulation and shall provide an escalating scale of surcharges based upon the frequency and severity of the incidents in violation of the risk management program. No health care provider shall be required to pay a surcharge if it has corrected all violations of the provisions of the risk management program and established an affirmative program to remain in compliance by the time its next fee or assessment is due.

(h) Nonavailability of coverage.The fund shall determine, no later than 7 days before the beginning of each fiscal year, whether the total amount of the membership fees to be charged for the fiscal year to health care provider applicants other than hospitals exceeds $5 million and whether the total amount of the membership fees to be charged to hospital applicants exceeds $12.5 million. If the total amount of the membership fees to be charged to health care provider applicants other than hospitals does not exceed $5 million, the fund shall return the membership fees collected from such providers and shall, not later than the day before the beginning of the fiscal year, notify all such providers, advising them that coverage will not be available from the fund. Thereafter, the fund may not issue coverage to any health care provider, including any hospital, for that fiscal year. If the total amount of the membership fees to be charged to hospital applicants for the fiscal year does not exceed $12.5 million, the fund shall return the membership fees collected from the hospitals and shall, not later than the day before the beginning of the fiscal year, notify such hospitals that coverage of hospitals will not be available from the fund. Thereafter, the fund may not issue coverage to any hospital for that fiscal year. If the fund ceases to provide coverage to hospitals, hospitals shall continue to meet the financial responsibility requirements of subparagraph (2)(c)1., subparagraph (2)(c)2., or subparagraph (2)(c)3. An application for fund membership for a particular fiscal year does not guarantee coverage for that year, and the fund is not liable for coverage of an applicant for any fiscal year in which the fund does not provide coverage in accordance with the provisions of this paragraph.
(i) Dissolution of the fund.The fund shall operate subject to the supervision of the Chief Financial Officer or his or her designee, pursuant to the policies and procedures and under the auspices of the Department of Financial Services’ Division of Rehabilitation and Liquidation, until the department executes a legal dissolution of the fund on or before December 31, 2023. Before the legal dissolution of the fund, the Department of Financial Services must:
1. Obtain all existing records and retain necessary records of the fund pursuant to law.
2. Identify all remaining property held by the fund and attempt to return such property to its owners and, for property that cannot be returned to the owner, transfer such property to the Department of Financial Services’ Division of Unclaimed Property.
3. Make a final accounting of the finances of the fund.
4. Ensure that the fund has met all its obligations pursuant to structured settlements, annuities, or other instruments established to pay covered claims and, if the fund has not done so, attempt to meet such obligations before final and complete dissolution of the fund.
5. Sell or otherwise dispose of all physical assets of the fund.
6. Execute a legal dissolution of the fund.
7. Transfer any remaining money or assets of the fund to the Chief Financial Officer for deposit in the General Revenue Fund.
(4) REPEAL.This section is repealed January 1, 2024.
History.s. 15, ch. 75-9; s. 3, ch. 76-168; s. 6, ch. 76-260; s. 4, ch. 77-64; s. 1, ch. 77-174; s. 1, ch. 77-457; s. 2, ch. 78-47; ss. 1, 2, ch. 79-178; ss. 1, 2, ch. 80-91; s. 1, ch. 80-328; ss. 2, 3, ch. 81-318; ss. 1, 2, 3, ch. 82-236; s. 809(2nd), ch. 82-243; ss. 80, 81, ch. 82-386; s. 2, ch. 82-391; s. 2, ch. 83-206; s. 50, ch. 83-215; ss. 1, 2, ch. 84-163; s. 67, ch. 85-62; s. 1, ch. 88-192; s. 31, ch. 91-110; s. 14, ch. 91-156; s. 4, ch. 91-429; s. 1, ch. 94-84; s. 88, ch. 95-211; s. 423, ch. 96-406; s. 33, ch. 97-93; s. 1799, ch. 97-102; s. 63, ch. 97-264; s. 10, ch. 98-49; s. 231, ch. 98-166; s. 285, ch. 99-8; s. 1899, ch. 2003-261; s. 57, ch. 2013-14; s. 63, ch. 2022-138; s. 124, ch. 2023-8.
1Note.Repealed by s. 68, ch. 86-160.
Note.Former s. 627.353; s. 768.54.