Respondent. )
) TALLAHASSEE MEMORIAL REGIONAL ) MEDICAL CENTER, ET. AL., )
vs. ) CASE NO. 82-571
) STATE OF FLORIDA, DEPARTMENT OF ) INSURANCE AND FLORIDA PATIENT'S ) COMPENSATION FUND, )
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a formal hearing in this cause on March 30 - April 1, 1982, in Tallahassee, Florida.
For Petitioners, John D. Buchanan, Jr., Esquire Tallahassee Memorial 118 South Monroe Street Regional Medical Post Office Drawer 1049 Center, et al.: Tallahassee, Florida 32302
Jacob D. Varn, Esquire Martha J. Cook, Esquire
For Petitioners, Ben Wilkinson, Esquire and Southeast Volusia . Neil H. Butler, Esquire
Hospital District, 325 John Knox Road, Building L-101 et al.: Post Office Box 3985
For Petitioners, Bruce Hill, Esquire Southeast Volusia 1200 Hartford Building Hospital District, 200 East Robinson Street et al.: Orlando, Florida 32801
For Respondent, David A. Yen, Esquire
State of Florida, Room 413-B, Larson Building Department of Tallahassee, Florida 32301 Insurance:
For Respondent, Richard B. Collins, Esquire and Florida Patient's Samuel R. Neel, III, Esquire Compensation Fund: 702 Lewis State Bank Building
Kenneth G. Oertel, Esquire 646 Lewis State Bank Building Tallahassee, Florida 32301
By Assessment Notices dated January 22, 1982; February 1, 1982; and February 17, 1982, the State of Florida, Department of Insurance ("Department") proposes to levy assessments pursuant to Section 768.54(3)(c), Florida Statutes, on health care providers who were members of the Florida Patient's Compensation Fund ("Fund") for the Fund years 1977-1978 and 1978-1979. This proceeding arises from three separate cases which were consolidated for final hearing.
Petitioners in each of these cases are health care providers, as that term is defined in Section 768.54(1), Florida Statutes, and have objected to the method by which the Insurance Commissioner ("Commissioner") proposes to levy these assessments.
The final hearing in this cause was scheduled for March 30 - April 1, 1982, by Notice of Hearing dated March 8, 1982. At the final hearing, the Department and the Fund called John W. Odem and Jerome Vogel as their witnesses. The Department offered Respondent Department's Exhibits 1 and 2, and the Fund offered Respondent Fund's Exhibits 1 through 23, each of which was received into evidence. Petitioners called George A. Ruddick, William Schneider, Gilbert G. Wooten, Fred C. Sikes, Tony Dorsey and Robert B. Atkins as their witnesses and offered Petitioners' Exhibits 1 through 12 and 14 through 51, which were received into evidence.
Counsel for all parties submitted proposed findings of fact for consideration by the Hearing Officer in entering this Recommended Order. To the extent that those proposed findings of fact are not contained in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this proceeding, or as not having been supported by evidence of record.
In 1975 the Florida Legislature passed the Medical Malpractice Reform Act, Chapter 75-9, Laws of Florida, now codified in Chapter 768, Florida Statutes. Part of this legislative package included the creation of the Fund. This legislation was passed in response to a medical malpractice insurance crisis which arose when the primary underwriter for the Florida Medical Association sought to stop issuing medical malpractice policies in Florida, thus making it difficult, if not impossible, for physicians or hospitals to obtain
medical malpractice insurance coverage at reasonable rates. As a result of this problem, many physicians began to practice defensive medicine, curtail or abandon their practices or practice without coverage of any kind.
The Fund is a private not-for-profit organization, participation in which is totally voluntary for its member health care providers. Insofar as Petitioners are concerned, membership in the Fund is but one of several options available to provide legally required evidence of financial responsibility in order to obtain licensure as a hospital facility in Florida. In fact, of the approximately 260 hospitals in Florida, only 125 satisfy their financial responsibility requirement via membership in the Fund. Physicians, hospitals, health maintenance organizations and ambulatory surgical centers who become members of the Fund must maintain at least $100,000 in primary professional liability insurance. Membership in the Fund grants to each participant a limitation of liability above the $100,000 in primary coverage. To the extent that any settlement or judgment exceeds the primary coverage of the participant, it is paid by the Fund without limitation.
The Fund is operated subject to the supervision and approval of a board of governors whose membership is required by law to consist of representatives of the insurance industry, the legal and medical professions, physicians' insurers, hospitals, hospitals' insurers and the general public. The Department is charged by statute with certain regulatory functions concerning the Fund.
The base fee for Fund membership is set by statute at $500 for physicians, after an initial $1,000 enrollment fee for the first year of participation, and at
$300 per bed for hospital members. The statute requires the Department to set additional fees based upon the classifications of health care providers contained in the statute. In the event that base fees are insufficient to pay all claims asserted against the Fund for a given Fund year, the Department is empowered, upon request of the Board of Governors of the Fund, to order additional assessments against Fund participants to meet any such deficiency.
Under the original legislation, all classes of health care providers could be assessed unlimited amounts to make up any deficiencies. As a result of legislative amendments in 1976, however, the amount which participants, other than hospitals, could be assessed was limited to the amount each Fund member had paid to join the Fund for that particular coverage year.
1976 legislative amendments also required that each fiscal year of the Fund be operated independently of preceding fiscal years, and further required that occurrences giving rise to claims in a particular Fund year be paid only from fees or investment income on these fees collected for that particular year. Thus, it is entirely possible for the Fund to experience deficits in a given year, and yet hold surplus funds for other years.
The dispute in these consolidated proceedings arises from assessments for deficits incurred for the Fund years
1977-1978 and 1978-1979.
Each of the hospitals named as Petitioners in the Petition for Administrative Proceedings in Case No. 82-776 were members of the Fund during the Fund year 1977-1978.
Each of the hospitals named in the style and listed on Exhibit "A" to the Amendment to Petition for Administrative Proceedings in Case Nos. 82-530 and 82-571 were members of the Fund during the Fund year 1978-1979.
On October 31, 1981, the Fund certified to the Department a deficiency in the amount of $1,350,672 for the Fund year 1977-1978. On January 18, 1982, the Fund certified to the Department an additional deficiency for the Fund year 1977-1978 in the amount of $1,759,591.
On January 18, 1982, the Fund certified to the Department a deficiency of $13,935,927 for the Fund year
1978-1979.
On January 13, 1982, the Department issued an "order" assessing various classes of health care providers the deficiency originally certified by the Fund for the Fund year 1977-1978.
The "order" of January 13, 1982, was amended by the "order" of February 1, 1982, for the Fund year 1977-1973. The amended order contained the same dollar amount of assessments, but altered the amount charged to various classes of Fund members.
On February 17, 1982, the Department issued its "order" granting the second assessment for the Fund year 1977-1978.
On January 22, 1982, the Department issued its "order" granting the assessment for the 1978-1979 Fund year.
The Department has not promulgated any rules pursuant to Chapter 120, Florida Statutes, pertaining to its regulation of or duties in conjunction with the Fund under Section 768.54, Florida Statutes.
As members of the Fund, each of the Petitioners' interests are substantially affected by the Orders of January 13, 1982; January 22, 1982; February 1, 1982; and February 17, 1982.
For the Fund year 1977-1978 the total assessment ordered by the Department is $3,110,263.
The total assessment for the Fund year 1978-1979 is $13,935,972.
For the Fund year 1977-1978, physicians and professional association members are proposed to be assessed $1,730,207.
During the Fund year 1977-1978, hospital members paid into the Fund, exclusive of interest earned on the fees, the amount of $5,292,498.
For the Fund year 1977-1978, physicians and professional association members paid into the Fund the sum of $2,326,541.
For the Fund year 1978-1979, hospital members paid into the Fund, exclusive of interest earned on their fees, the sum of $5,627,553. Interest earned through December 31, 1981, on these fees is $1,725,845.
For the Fund year 1978-1979, physicians and professional association members paid into the Fund, exclusive of interest earned on their fees, the sum of $2,411,205. Interest earned through December 31, 1981, on the fees contributed by physicians and professional associations is $739,463.
For the Fund year 1977-1978, the proposed assessments against hospital members of the Fund is $1,374,827.
For the Fund year 1978-1979, the Fund retained the services of an independent actuarial firm to study and recommend appropriate additional fees to charge its members. The following table reflects the statutory base fees, the fees recommended by the actuary, the fees sought by the Fund and the fees ordered by the Department of Insurance for the 1977-1978 Fund year.
Base Fees Actuary's Additional Additional Paid Recommended Fees Fees Pursuant Additional Requested Ordered to Stat. Fees by FPCF By DOI
Class I Physicians $ |
| $ | $ | $ |
Dade/Broward Co. | 500.00 | 2,233.00 | 2,233.00 | -0- |
Rest of State | 500.00 | l,749.00 | 1,749.00 | -0- |
Class II Physicians Dade/Broward Co. |
500.00 |
4,420.00 |
4,420.00 |
-0- |
Rest of State | 500.00 | 3,549.00 | 3,549.00 | -0- |
Class III Physicians |
|
|
|
|
Dade/Broward Co. | 500.00 | 12,619.00 | 12,619.00 | -0- |
Rest of State | 500.00 | 10,297.00 | 10,297.00 | -0- |
Hospitals (per occupied bed) |
300.00 |
222.00 |
222.00 |
-0- |
Ambiatory Surgical Centers |
-0- |
22.00 |
22.00 |
-0- |
(per 100 patients) |
|
|
|
|
Health Maintenance
Organizations -0- 150.00 150.00 -0-
(per 100 subscribers)
Professional -0- 20 percent of
additional (SAME) -0- fee to be
paid by each individual member
For the Fund year 1978-1979, the Department made no independent actuarial study of the recommended fees proposed by the independent actuary employed by the Fund, and no member of the Casualty Actuarial Society evaluated the Fund's recommendations on behalf of the Department.
The independent actuary employed by the Fund was the only actuary who presented any evidence at the hearing conducted by the Department on the Fund's fee increase request for the Fund year 1978-1979.
Each year since the Fund year 1977-1979 the Fund has employed the services of an actuary who, among other things, projected the expected losses above the claims previously paid and reserves established for known claims. These expected losses are reported as IBNR ("incurred but not reported") for each Fund year.
The IBNR projected by the actuary employed by the Fund in the most recent report (October 1981) for the Fund year 1977-1978 is $6,306,036, and for the Fund year 1978-1979 is $15,965,324.
The Department computed the portion of the assessment to be paid by the different classes of health care providers for the Fund year 1977-1978 based upon an approach known as the "indicated rate method." It is concluded from the record that this method is the most feasible of all suggested alternatives under existing law for reflecting the statutory classifications and, at the same time, providing immediate funds necessary to meet all claims against the Fund. This method is represented by the following formula:
The Department started with rates which should have been charged each class in 1981-1982. This is called the "indicated rate by class." (The indicated rates were taken from the October, 1980 report by the Fund actuary.)
The Department then applied the following formula for each class:
Indicated Rate by Class x Number of Members in the Class = Total indicated fees by Class
Total Indicated Fees by Class - Total Indicated Fees for ALL Classes Percentage of Indicated Fees by Class.
Percentage of Indicated Fee by Class x Total Expected Loss for ALL Classes Expected Loss by Class.
(Expected loss is all losses for the fund year included claims previously paid, reserves established on claims asserted and IBNR (incurred but not reported)
Expected Loss by Class - Actual Fees paid by Class = Potential Loss Assessment by Class.
Potential Loss Assessment by Class - Potential Loss Assessment for ALL Classes Percentage of Potential Loss Assessment by Class.
Percentage of Potential Loss Assessment by Class x Total Assessment to be Ordered
by the DOI = Amount of Assessment by Class.
The following chart shows the amount each class would have paid under the "indicated rate method" for the Fund year 1977-1978, and the amount actually
proposed to be assessed in | the "orders" of the
Indicated Rate Assessment | Department:
Actual Assessment |
a) Class I Physicians | $ 146,487.00 | $ 138,000.00 |
b) Class II Physicians | 213,502.00 | 438,297.00 |
c) Class III Physicians | 2,195,383.00 | 813,048.00 |
d) Hospitals | 521,560.00 | 1,374,827.00 |
e) HMO | 614.00 |
|
Surgical Centers 1,381.00 79,953.00
Professional Associations 28,336.00
Based upon the "indicated rate method" and based upon the application of Section 768.54, Florida Statutes, employed by the Department, assessments for the Fund year 1977-1978 which would otherwise be attributable to physician members of the Fund in the approximate amount of $1,500,000 were not charged to any class of physician.
Based upon the "indicated rate method" and based upon the application of Section 768.54, Florida Statutes, employed by the Department, assessments for the Fund year 1978-1979 otherwise attributable to physician members of the Fund in the approximate amount of $9,000,000 were not charged to any class of physicians.
The assessments described in the "orders" of the Department for the Fund year 1977-1978 which could not be applied to physician members, based upon the Department's interpretation of Section 768.54, Florida Statutes, were spread among the other classes of health care providers based upon their percentage of "expected losses."
The Petitioners in this case, each of whom are members of the Fund, consist of 30 government hospitals, 43 private, nonprofit hospitals, and seven private, for-profit hospitals.
During the Fund years 1977-1978 and 1978-1979, the Fund consisted of the following classes and numbers of members:
1977-1978 | 1978-1979 |
a) Class I Physicians 1392 | 1516 |
b) Class II Physicians 814 | 971 |
c) Class III Physicians 1584 | 1690 |
d) Hospitals 120 | 130 |
e) HMO 2 | 3 |
f) Surgical Centers 11 | 14 |
g) Professional Associations 572 | 855 |
The "orders" of the Department dated January 13, 1982; January 22, 1982; February 1, 1982; and February 17, 1982, were the first time any member of the Fund has been assessed under Section 768.54, Florida Statutes.
The fees paid into the Fund; the investment income earned through December 31, 1981, on such fees; the expenses incurred through December 31, 1981; the amounts paid on claims through December 31, 1981; reserves established through and the IBNR for each Fund year for 1975-1976 through 1980-1981 are reflected on the table on page 10a. (IBNR figures are projections of future losses prepared by the Fund's actuary in October 1981.)
The rates applicable to physicians and hospital members of the Fund for the years 1977-1978 and 1978-1979 were the base fees provided in Section 768.54, Florida Statutes. No additional fees were set for those Fund years.
The rate order for the 1978-1979 year entered by the Department on June 9, 1978, was not appealed.
The Fund in fact experienced deficits in both Fund years in controversy in this proceeding.
The Fund certified to the Department the amount of its projected deficit for the years in question.
The amount of money ultimately certified by the Fund to the Department accurately reflects the amounts derived from the following formula:
FUND YEAR: | 1975-1976 | 1976-1977 | 1977-1978 |
FEES PAID | $2,928,672 | $6,303,257 | $7,467,605 |
INTEREST EARNED | 1,475,41 | 3,000,118 | 2,592,179 |
ADMINISTRATIVE EXPENSES | (54,846) | (95,002) | (148,113) |
NET FUNDS AVAILABLE | 4,349,227 | 9,208,373 | 9,911,671 |
TO PAY LOSSES |
|
|
|
LOSSES PAID TO DATE |
(3,004,273) |
(6,869,395) |
(8,271,696) |
INDEMNITY EXPENSES | (300,334) | (343,433) | (391,858) |
RESERVED LOSSES | (971,733) | (4,249,604) | (3,663,348) |
RESERVED EXPENSES | (57,584) | (111,466) | (172,869) |
PRESENT SURPLUS/DEFICIT | (14,697) | (2,365,525) | (2,588,100) |
LOSSES INCURRED NOT YET REPORTED (IBNR) (AS OF 6/30/81) | (1,189,136) | (3,878,887) | (7,970,235) |
FUND YEAR: | 1978-1979 | 1979-1980 | 1980-1981 |
FEES PAID | $8,060,374 | $9,836,157 | $11,225,275 |
INTEREST EARNED | 2,543,698 | 2,589,547 | 1,882,319 |
ADMINISTRATIVE EXPENSES | (128,556) | (279,838) | (406,641) |
NET FUNDS AVAILABLE | 10,475,506 | 12,145,866 | 12,700,953 |
TO PAY LOSSES |
|
|
|
LOSSES PAID TO DATE |
(9,760,650) |
(3,410,358) |
(37,500) |
INDEMNITY EXPENSES | (532,197) | (206,616) | (32,619) |
RESERVED LOSSES | (13,782,271) | (6,445,000) | (3,750,000) |
RESERVED EXPENSES | (267,932) | (342,787) | (114,417) |
PRESENT SURPLUS/DEFICIT | (13,867,544) | (1,741,105) | (8,766,417) |
LOSSES INCURRED NOT YET | (14,979,237) | (28,295,428) | (51,500,564) |
REPORTED (IBNR) (AS OF 6/30/81)
FUND YEAR: | TOTALS |
FEES PAID | $45,821,340 |
INTEREST EARNED | 14,083,262 |
ADMINISTRATIVE EXPENSES | (1,113,006) |
NET FUNDS AVAILABLE | 58,791,596 |
TO PAY LOSSES |
|
LOSSES PAID TO DATE |
(31,353,872) |
INDEMNITY EXPENSES | (1,837,057) |
RESERVED LOSSES | (32,861,956) |
RESERVED EXPENSES | (1,067,055) |
PRESENT SURPLUS/DEFICIT | (8,328,344) |
LOSSES INCURRED NOT YET | (107,813,487) |
REPORTED (IBNR) (AS OF 6/30/81)
Total fees paid during the Fund Year
+ Investment Income attributable to the Fund Year
Expenses allocated to that Fund Year
Amount paid on claims for that Fund Year
Amount reserved for all known claims for that Fund Year.
The Department entered orders levying the assessments on January 13, 1982; January 22, 1982; February 1, 1982; and February 17, 1982. The parties to this proceeding stipulated that the assessments entered by the Department for 1977-1978 and 1978-1979 are to be considered to be proposed agency action as to such parties.
The Department limited the amount assessed against any physician member to an amount equal to the annual membership fee paid by the physician for the year giving use to the assessment.
According to the "orders" of the Department for the Fund year 1977- 1978, Class III physicians' share of the assessment, based upon the assessment formula utilized, was in excess of the amount of membership fees paid by that group, and the balance was spread over the rest of the classes of health care providers.
According to the "orders" of the Department for the Fund year 1978- 1979, Class I, II, and III physicians' share of the assessment, based upon the assessment formula utilized, was in excess of the amount of membership fees paid by those groups, and the balance was spread among those health care providers described in Section 768.54(1)(b)l.,5.,6., and 7., Florida Statutes.
The Department, by order dated June 9, 1978, denied the Fund's request for additional fees for the year 1978-1979.
In April 1981, at the request of the Department, the Fund filed a "Retrospective Rating Plan." This plan provided that at such time as the Fund dropped below 25 percent of the original fees paid in any fund year an assessment would be triggered. The plan further provided for the assessment to be based upon all settlements or final judgments entered but unpaid at the time of the assessment, and all reserves established by the Fund at the time of the assessment.
This "Retrospective Rating Plan" was approved by the Department, but not adopted pursuant to Chapter 120, Florida Statutes. Although the Fund sought to amend the plan both before and after the assessments now at issue, the original plan remained in effect at all times material to this cause.
Although Petitioners have not disputed the amount of the reserves set by the Fund, such reserves constitute a substantial portion of the assessment amounts requested by the Fund. The Department has not made any evaluation of the accuracy of the case reserves, nor has the Department made any analysis of the method employed by the Fund in setting case reserves.
There was some evidence that the cash shortages experienced by the Fund for the Fund years 1977-1978 and 1978-1979 may have been caused in part by the manner in which the Fund has paid claims. In 1976 the Florida Legislature limited the amount which the Fund could payout on claims to $100,000 per person, per year. In addition, the law provides that reasonable attorneys' fees and costs shall be paid to a successful claimant within the first 90 days following a judgment or settlement.
In most instances, the Fund does not inquire into the fee arrangement between plaintiffs and their attorneys. Moreover, no claim for attorneys' fees is required to be submitted to the Fund or the trial court to set a reasonable percent fee for such services. The Fund has indicated that for claims paid for the Fund years 1977-1978 and 1978-1979, the Fund simply assumed that attorneys' fees and costs equalled 40 percent of the amount of the settlement or judgment. In most cases, the Fund does not consider any portion of the attorneys' fees as having been paid by the primary insurance carrier.
In some instances, it appears that payments made by the Fund may have disregarded the $100,000 per person, per year payout limitation, and in other instances the Fund has been ordered to pay amounts in excess of the statutory limit and has not pursued an appeal of such orders. In still other instances the Fund has purchased annuities to fund settlements or judgments, the cost of which annuities exceeded the $100,000 payout limitation. The Fund does not consider such payments to be subject to the payout limitation although no rights of ownership in the annuities are retained by the Fund.
It is possible that the cumulative effect of these practices has been significant. Petitioners adduced evidence estimating "excess payments" by the Fund for 1977-1978 over the statutory limit could be as high as $2,684,737. For the Fund year 1978-1979 these "excess payments" could be as high as $4,827,690.
Under the Department's application of Section 768.54, Florida Statutes, no physician member will again be assessed for the Fund years 1977- 1978 and 1978-1979. Yet, based upon the latest estimates by the Fund's consulting actuary, additional claims for those two years which have not yet been reported could reach as high as $22,949,472. Under the Department's construction of the statute, hospital members will have to pay all of these additional losses, if the actuary's projections prove correct.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 12D.57(1), Florida Statutes.
Section 768.54(3)(c), Florida Statutes, which governs the imposition of fees and assessments by the Fund, provides in pertinent part as follows:
Annually, each health care provider, as set forth in subsection (2) electing to comply with paragraph (2)(b) shall pay the fees established under this act, for deposit into the fund, which shall be remitted for deposit in a manner prescribed by the Insurance Commissioner. The limitation of liability provided by the fund shall begin July 1, 1975, and run thereafter on a fiscal-year basis.
For the first year of membership, each participating health care provider shall pay a base fee for deposit into the fund in the amount of $1,000 for any individual, or $300 per bed for any hospital. Those entering the fund after the fiscal year has begun shall pay a prorated share of the yearly fees for a prorated membership. The base fee charged after the first year of participation shall be $500 for any individual, or $300 per bed
for any hospital . . . In addition, after the first year of operation, additional fees may be charged but shall be appropriately prorated for the portion of the year for which the health care provider participated in the fund, based on the following considerations:
Past and prospective loss and expense experience in different types of practice and in different geographical areas within the state;
The prior claims experience of the member covered under the fund; and (3) Risk factors for persons who are retired, semi-retired, or part-time professionals.
Such base fees may be adjusted downward for any fiscal year in which a lesser amount would be adequate and in which the additional fee would not be necessary to maintain the solvency of the fund. Such additional fee shall be based on not more than two geographical areas with
three 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. 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 . . . The fund shall be maintained at not more than
$15,000,000 per fiscal year. Additional fees, assessments, or refunds shall be set by the Insurance Commissioner after consultation with the board of governors of the fund 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 Insurance Commissioner and request the Insurance Commissioner 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 Insurance Commissioner shall order such refund to, or levy such assessment against, such participants in amounts that fairly reflect the classifications prescribed above and are sufficient to obtain the money necessary to meet all claims for said fiscal year. In no case shall any assessment for a
particular year against any health care provider, other than those health care providers defined
in subparagraphs (1)(b) l., 5., 6., and 7., exceed an amount equal to the fees originally paid by such health care provider for participation in the fund for the year giving rise to such assessment. (Emphasis is added.)
The above-quoted statute provides the Fund with three mechanisms to obtain monies with which to operate: "base" fees; "additional" fees; and "assessments." The amount of "base" fees that may be charged physicians and hospitals are set by statute at $1,000 for the first year and $500 for subsequent years insofar as physician members are concerned; and $300 per bed for hospital participants. There appears to be no upper limit on the amount of "additional" fees which might be charged members of the Fund, so long as the criteria contained in the statute for imposing such fees are met. With respect to "assessments," however, the 1975 Legislature amended Section 768.54(3)(c) to prohibit any assessment against physicians, osteopaths and podiatrists from exceeding the membership fees paid for the year giving rise to the assessment. It is specifically concluded, as a matter of law, that this amendment imposed a "cumulative" cap on the liability of physicians, osteopaths and podiatrists for assessments for deficits for a given coverage year, so that those participants are liable only for a maximum of either $1,000 or $500 in assessments, depending upon whether the year in question was their first year or a subsequent year of participation in the Fund.
The Petitioners in this proceeding have not contested the amount of the deficits certified by the Fund to the Department for the 1977-1978 and 1978- 1979 Fund years. They have, however, contended that the amounts of these deficits might be related to certain managerial practices of the Fund in paying
claims, such as exceeding the $100,000 per person, per year payout limitation, and paying excessive amounts for claimants' attorneys' fees. While these practices might appear to be questionable, they are outside the scope of this proceeding, which is limited to determining whether the amounts requested are necessary to meet claims for the years in question, and whether the method of assessment fairly reflects the classifications described in the statutes. It is further concluded, as a matter of law, that the notices of assessments dated February 1, 1982; February 17, 1982; and January 22, 1982, do "fairly reflect" the statutory classifications; that the amounts requested are necessary to meet claims against the Fund for the years in question; and that the procedure used by the Department in spreading liability for these assessments in light of the statutory cap on the liability of physicians, osteopaths and podiatrists is appropriate. The factual findings contained in this order concerning the Fund's claim payment procedures are included only for the purpose of informing the Commissioner of the existence of these practices so that remedial measures, if any are deemed necessary, might be taken.
Accordingly, based upon the foregoing Findings of Fact and Conclusions of Law, it is
That a final order be entered by the Department of Insurance levying assessments in-accordance with the notices of assessment dated February 1, 1982; February 17, 1982; and January 22, 1982, for the Fund years 1977-1978 and 1978-
1979.
DONE AND ENTERED this 22nd day of June, 1982, in Tallahassee, Florida.
WILLIAM E. WILLIAMS
Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 1982.
John D. Buchanan, Jr. Esquire David A. Yon, Esquire
Jacob D. Varn, Esquire Richard B. Collins, Esquire Martha J. Cook, Esquire Samuel R. Neel, III, Esquire
410 Lewis State Bank Building Post Office Drawer 5286 Post Office Drawer 190 Tallahassee, Florida 32302 Tallahassee, Florida 32302
Ben Wilkinson, Esquire Kenneth G. Oertel, Esquire Neil H. Butler, Esquire Oertel & Laramore, P.A.
Bruce Hill, Esquire Honorable William Gunter #1200 Hartford Building Treasure and Insurance
