Section 242.17. Compliance

(a) The failure of the health care provider to comply with section 701 of the act (40 P. S. § 1301.701) or this chapter will result in notification by the Director to the applicable Licensure Board. Section 701(f) of the act (40 P. S. § 1301.701(f)) provides that failure of a health care provider to comply with section 701 of the act or rules and regulations issued by the Director shall result in the suspension or revocation of the health care provider’s license by the Licensure Board.

(b) A health care provider failing to pay the surcharge or emergency surcharge within the time limits prescribed will not be covered by the Fund in the event of loss.

(c) A health care provider failing to procure increased basic coverage insurance limits under section 701(a) of the act (40 P. S. § 1301.701(a)) and pay the surcharge thereon will not be covered by the Fund in the event of loss.

(d) The Fund will be relieved of its responsibility in the following case:

(1) The Fund will be relieved of its responsibility to a health care provider to defend and indemnify a claim reported to the Fund under section 605 of the act (40 P. S. § 1301.605) if, at the time of the occurrence, the health care provider fails to maintain basic coverage insurance in compliance with the act and this chapter.

(2) Notwithstanding paragraph (1), if at the time of the occurrence the health care provider is insured on a claims made basis and thereafter fails to purchase the reporting endorsement, prior acts coverage or its substantial equivalent upon cancellation or nonrenewal of the claims made policy, and subsequently a claim is reported to the Fund under section 605 of the act (40 P. S. § 1301.605), the Fund will be relieved of its responsibility to the health care provider to defend and indemnify the claim under section 605 of the act.

The provisions of this § 242.17 adopted October 15, 1976, effective October 16, 1976, 6 Pa.B. 2565; renumbered February 9, 1979, 9 Pa.B. 498; amended April 27, 1984, effective April 28, 1984, 14 Pa.B. 1453. Immediately preceding text appears at serial page (72789).

Notation

Authority

The provisions of this § 242.17 issued under section 506 of The Administrative Code of 1929; and sections 701(e)(4) and 702(a) of the Health Care Services Malpractice Act (40 P. S. § § 1301.701(e)(4) and 1301.702(a)).

Notes of Decisions

Malpractice Action

Implicit in grant of authority to the Pennsylvania Medical Professional Liability Catastrophe Loss (CAT) Fund to levy and collect surcharges from health care providers entitled to participate in the fund was the authority to assess penalty for failure of providers to timely pay charges on time; therefore, regulation providing that health care provider who failed to pay fund surcharges would not be covered by fund in event of loss was valid. Lloyd v. CAT Fund, 821 A.2d 1230, 1235 (Pa. 2003).

It was error for the court to hold appellant, Medical Professional Liability Catastrophe Loss Fund, liable for excess liability coverage where the doctor failed to pay the required surcharges, despite appellant’s failure to report the doctor to the applicable licensure board. Dellenbaugh v. Medical Professional Liability Catastrophe Loss Fund and Pennsylvania Medical Society Liability Insurance Co., 756 A.2d 1172 (Pa. 2000).

These provisions provide for resolution of complaints of adverse agency action, and as such, do not provide adequate remedy or preclude litigant from seeking relief in court, where issue is Cat Fund’s failure to pay share of malpractice claim settlement, which places Fund in position of defendant, as opposed to its designed position of participant and/or arbiter. Ohio Cas. Group of Ins. Companies v. Argonaut Ins. Co., 525 A.2d 1195 (Pa. 1987).

Tail Coverage

Patient brought action against Medical Care Availability and Reduction of Error Fund (Fund) and pediatrician, asserting Fund was required to defend and indemnify pediatrician in patient’s medical malpractice action; pediatrician did not purchase tail coverage or its substantial equivalent when he terminated his claims made policy, therefore, Fund was not required to indemnify and defend claims arising after policy termination. Gingerlowski v. Commonwealth Ins. Dept., 961 A.2d 237, 243 (Pa. Cmwlth. 2008).

Validity of Regulation

Regulation providing that health care provider who failed to timely pay fund surcharges would not be covered by fund in event of loss was valid exercise of the Pennsylvania Medical Professional Liability Catastrophe Loss (CAT) Fund’s rulemaking authority. Lloyd v. CAT Fund, 821 A.2d 1230 (Pa. 2003).

Regulations requiring health care provider with claims policy to maintain primary insurance after claims policy expires by purchasing prior acts coverage to maintain Medical Professional Liability Catastrophe Loss Fund coverage for claims involving alleged malpractice occurring during period covered by claims policy, but filed after expiration of claims policy were consistent with the Health Care Services Malpractice Act. Paternaster v. Lee, 863 A.2d 487, 494 (Pa. 2004)