Dr. Kevin Williams v. Louisiana Patients' Comp. Fund Oversight Board

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

05-782

DR. KEVIN WILLIAMS

VERSUS

LOUISIANA PATIENTS’ COMPENSATION FUND OVERSIGHT BOARD

**********
APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 20045586
HONORABLE GLENNON P. EVERETT, DISTRICT JUDGE
**********

GLENN B. GREMILLION
JUDGE

**********

Court composed of Sylvia R. Cooks, Glenn B. Gremillion, and Elizabeth A. Pickett,
Judges.

AFFIRMED.

Marc W. Judice
Judice & Adley
P. O. Box 51769
Lafayette, LA 70505-1769
(337) 235-2405
Counsel for Plaintiff/Appellee:
Dr. Kevin Williams, DDS

Larry M. Roedel
David A. Woolridge, Jr.
Carlton Jones
Roedel, Parsons, Koch, Blache, Balhoff & McCollister, A.L.C.
8440 Jefferson Hwy, Ste 301
Baton Rouge, LA 70809-7652
(225) 929-7033
Counsel for Defendant/Appellant:
Louisiana Patients’ Compensation Fund Oversight Board

GREMILLION, Judge.

A medical malpractice claim was filed against the plaintiff, Dr. Kevin

Williams, D.D.S., by Anita Washington, on behalf of her minor son, Curtis. Although

Dr. Williams was enrolled in the Patient’s Healthcare Compensation Fund (the Fund),

the defendant, the Louisiana Patients’ Compensation Fund Oversight Board (the

Board), determined that there was a gap in his enrollment due to the untimely

remittance of his annual Patient’s Compensation Fund surcharge. Thereafter, Dr.

Williams filed suit against the Board seeking a declaratory judgment that he was

enrolled in the fund and that no lapse existed in his enrollment. Judgment was

granted in his favor and the Board appealed. For the following reasons, we affirm.

FACTS

Curtis, Washington’s sixteen-year-old son, was seen by Dr. Williams for

a complaint of swollen glands in January 2002. Washington informed Dr. Williams

that she felt Curtis might have cancer in his mouth and requested that he perform a

biopsy. However, Dr. Williams advised her that Curtis was only suffering from tartar

buildup and extracted his tooth. He did not perform a biopsy. Curtis remained under

Dr. Williams care through March 2002. Thereafter, he was diagnosed as having a

cancerous tumor in his mouth, which had spread to his neck. After undergoing

surgery, chemotherapy, and radiation treatment, Curtis passed away in May 2003.

Dr. Williams was enrolled as a qualified health care provider with the

Fund through his provision of proof of financial responsibility, via a

$100,000/$300,000 medical malpractice policy from Continental Casualty Company,

and payment of his annual surcharge, as determined by the Board. His coverage ran

1

from June 16, 2001 through June 16, 2002. Thereafter, the Board received a

Certificate of Insurance for Dr. Williams from Continental Casualty on September 19,

2002, notifying it of his policy renewal through June 16, 2003. However, Dr.

Williams did not submit his $533 surcharge payment until August 23, 2002,

approximately two months after his renewal date. Thereafter, the Board reactivated

his enrollment in the Fund, this time with an effective date of August 23, 2002, and

refunded a portion of the surcharge back to him after prorating the amount. This

resulted to a gap in his enrollment with the Fund, from June 16, 2002 through August

23, 2002.

On August 2, 2002, Washington filed a medical malpractice claim with

the Fund, against Dr. Williams. As this fell within the gap created by his late

surcharge payment, the Board notified Washington that Dr. Williams was not a

qualified health care provider enrolled in the Fund at the time her claim was filed.

Washington then filed suit against Dr. Williams in the Civil District Court for the

Parish of Orleans on January 2, 2003. As a result, Dr. Williams filed the instant

Petition for Declaratory Judgment against the Board in the Fifteenth Judicial District

Court seeking a judgment stating that there was no lapse in his enrollment in the

Fund. Following a hearing on the matter, the trial court rendered judgment in favor

of Dr. Williams finding that no gap existed in his enrollment and ordered the Board

to issue a Certificate of Enrollment stating such. This suspensive appeal by the Board

followed.

2

ISSUE

On appeal, the Board argues that the trial court erred in finding that no

gap existed in Dr. Williams’ enrollment with the Fund despite his failure to timely

submit his annual surcharge payment to Continental Casualty within thirty days of his

renewal date, as required by La.R.S. 40:1299.42(A) and La.Admin.Code tit. 37:III,

§ 517(A)(1)(b).

MEDICAL MALPRACTICE ACT

The Medical Malpractice Act confers two advantages to qualified health

care providers, as explained in Bennett v. Krupkin, 00-0023, pp. 6-7 (La.App. 1 Cir.

3/28/02), 814 So.2d 681, 685-86, writ denied, 02-1208 (La. 6/21/02), 819 So.2d 338:

First, the liability of a qualified health care provider for all malpractice
claims for injuries to or death of any one patient may not exceed
$100,000, and the total amount recoverable from all defendants and the
PCF for all malpractice claims for injuries to or death of any one patient,
exclusive of future medical care and related benefits, may not exceed
$500,000, plus interest and costs. LSA-R.S. 40:1299.42(B). Second, as
stated above, no action for malpractice against a qualified health care
provider or his insurer may be commenced in a court of law before the
complaint has been presented to a medical review panel and the panel
has rendered its expert opinion on the merits of the complaint, unless the
parties agree to waive this requirement. LSA-R.S. 40:1299.47(A); Dunn
[v. Bryant], 96-1765[, ] pp. 5-6 [(La.App. 1 Cir. 9/9/97)], 701 So.2d
[696,] 699.

Health care providers may take advantage of these benefits only
if they qualify under the Act by meeting certain statutory requirements
as set forth in LSA-R.S. 40:1299.42(A). These benefits are bestowed on
health care providers as long as they remain qualified under the Act.
LSA-R.S. 40:1299.45(A). The burden is on a defendant to prove
prematurity and initial immunity from suit as a qualified health care
provider under the Medial Malpractice Act. Dunn, 96-1765 at p. 6, 701
So.2d at 699.

Pursuant to La.R.S. 40:1299.42(A), a qualified health care provider is

one who “(1) [files] with the board proof of financial responsibility as provided by

3

Subsection E of this Section,” and “(2) [pays] the surcharge assessed by this Part on

all health care providers according to R.S. 40:1299.44.” Qualification of a self-

insured is effective “upon acceptance of proof of financial responsibility by and

payment of the surcharge to the board. Qualification shall be effective for all others

at the time the malpractice insurer accepts payment of the surcharge.” La.R.S.

40:1299.42(A)(3).

Proof of financial responsibility is satisfied by filing with the Board

proof of coverage by a medical malpractice policy in the amount of $100,000 per

claim, “with qualification under this Section taking effect and following the same

form as the policy of malpractice liability insurance of the health care provider,” or

by depositing $125,000 with the Board if the health care provider is self-insured.

La.R.S. 40:1299.42(E)(1).

Pursuant to La.R.S. 40:1299.44, the Fund is supported by annual

surcharges levied against all qualified health care providers. La.R.S.

40:1299.44(A)(2)(a). These surcharges are collected in the same manner as premiums

and are payable to the Fund within forty-five days after receipt of the premium by the

insurer from the health care provider. La.R.S. 40:1299.44(A)(2)(d) and (3)(a).

La.R.S. 40:1299.44(A)(3)(b) provides:

It shall be the duty of the insurer, risk manager, or surplus line
agent to remit the surcharge to the patient’s compensation fund within
forty-five days of the date of payment by the health care provider.
Failure of the insurer, risk manager, or surplus line agent to remit
payment within forty-five days shall subject the insurer, risk manager,
or surplus line agent to a penalty of twelve percent of the annual
surcharge and all reasonable attorney’s fees. Upon the failure of the
insurer, risk manager, or surplus line agent to remit as provided herein,
the board is authorized to institute legal proceedings to collect the
surcharge, together with penalties, legal interest, and attorney’s fees.

4

In order to effectuate the provisions of the Medical Malpractice Act, the

Board also has the authority to adopt and promulgate necessary rules, regulations, and

standards. La.R.S. 40:1299.44(D)(3). In furtherance of this aim, the Board

promulgated La.Admin.Code tit. 37:III with regard to enrollment in the Fund. At the

time of this incident, Section 517 provided that enrollment in the Fund by a non-self-

insured qualified health care provider terminated “on and as of the effective date and

time of termination of the policy period of the health care provider’s professional

liability insurance coverage.” Enrollment terminated as to a self-insured qualified

health provider at “11:59 p.m., central standard time, at the conclusion of one year

from the date on which enrollment became effective.” La.Admin.Code tit. 37:III, §

517(A)(1) and (2).

The Board has further promulgated rules with regard to the payment of

surcharges to the Fund. La.Admin.Code tit. 37:III, § 711 provides:

A. Applicable surcharges for enrollment with the fund shall be
collected on behalf of the fund by commercial professional health care
liability insurance companies and approved self-insurance trust funds
from insured health care providers electing to enroll with the fund. Such
surcharges shall be collected by such insurers and funds at the same time
and on the same basis as such insurers’ collection of premiums from
such insureds. Surcharges collected by commercial insurance
underwriters and funds on behalf of the fund shall be due and payable
and remitted to the fund by commercial insurance underwriters and
funds within 45 days from the date on which such surcharges are
collected from any insured, whether such surcharges are collected from
the providers early, timely, or late. Remittance of surcharges to the fund
shall be made in such form and accompanied by records in such forms
or on such forms as may be prescribed by the executive director so as to
provide for proper accounting of remitted surcharges and the identity
and class of health care providers on whose behalf such surcharges are
remitted. Commercial professional health care providers liability
insurance companies, commercial insurance underwriters, and approved
self-insurance trust funds remitting surcharges to the fund shall certify
to the fund, at the time of remitting such surcharge to the fund, the date

5

that the surcharges were collected by them from the health care
providers. The payment of surcharges by an approved self-insurance
trust that does not collect premiums from insureds will be governed by
§713 hereof.

B. Failure of the commercial professional health care liability
insurers, commercial insurance underwriters, and approved self-
insurance trust funds to remit payment within 45 days of collecting such
annual surcharge shall subject the commercial professional liability
insurers, commercial insurance underwriters, and approved self-
insurance trust funds to a penalty of 12 percent of the annual surcharge
and all reasonable attorney’s fees. Upon the failure of the commercial
professional health care liability insurers, commercial insurance
underwriters and approved self-insurance trust funds to remit as
provided in §711, the board may institute legal proceedings to collect
the surcharge, together with penalties, legal interest, and attorney’s fees.

....

D. It is the purpose of §711 that insurance companies remit
surcharges collected from their providers on behalf of the fund to the
fund timely. The provisions of §711 are not intended to affect the
effective date of fund coverage.

A recent First Circuit Court of Appeal opinion dealt with the effect

caused by a late surcharge payment. In Griffin v. Patient’s Compensation Fund

Oversight Board, 04-613, 04-614 (La.App. 1 Cir. 3/24/05), 907 So.2d 90, the Board

declared a lapse in the qualified health care provider’s enrollment with the Fund as

a result of a late surcharge payment. As in this instance, a medical malpractice claim

was filed against the qualified health care provider during the lapsed period of time;

thus, the Board found that he was not entitled to the protection of the Medical

Malpractice Act. The qualified health care provider sought and obtained a judgment

declaring that his enrollment in the Fund had not lapsed as a result of the untimely

surcharge payment.

6

On appeal, the first circuit, after reviewing the pertinent statutes,

administrative rules, and jurisprudence, held that the Fund was without authority to:

[T]erminate or otherwise restrict the insured health care provider’s
qualification under the MMA if an untimely or late surcharge is
collected or even if a surcharge is not collected by the insurer.
Furthermore, the statutes and regulations promulgated in furtherance of
the MMA make it clear that any dispute over the computation of or
collection of the surcharge is to be resolved between the PCF and the
insurer. See La. R.S. 40:1299.44(A)(3)(b) and Bennett [v. Krupkin, 00-
0023 (La.App. 1 Cir. 3/28/02)], 814 So.2d 681,] 687.

Id. at 96. As La.Admin.Code tit. 37:III, § 517 hinged termination in the Fund upon

the termination of the underlying medical malpractice insurance policy, the court held

that no lapse in the qualified health care provider’s enrollment occurred when the

underlying medical malpractice insurance policy continued without interruption, even

if the surcharge was paid late. See also Bennett, 814 So.2d 681; Brown v. St. Paul

Fire & Marine Ins. Co., 31,777 (La.App. 2 Cir. 3/31/99), 731 So.2d 953, writ denied,

99-1211 (La. 6/4/99), 744 So.2d 634; In re Medical Review Proceedings, Jack

Catalanotto v. Lifemark Hosps. of Louisiana, Inc., 94-403 (La.App. 5 Cir. 12/14/94),

648 So.2d 970.

We agree with our colleagues’ interpretation of the rules pertaining to

the enrollment and termination of a qualified health care provider with the Fund. We

further note that effective March 2003, Section 517 was amended to provide that the

enrollment of qualified health care provider in the fund, who is not self-insured,

terminates on (1) “the effective date and time of termination of the policy period of

the health care provider’s professional liability insurance coverage,” or (2) “the last

day of the applicable period for which the prior annual surcharge applied in the

event that the annual surcharge for renewal coverage is not paid by the health care

provider to the insurer on or before 30 days following the expiration of the

7

enrollment period.” (Emphasis added). However, as this amendment is substantive

in nature, it only applies prospectively from March 2003. Landry v. Avondale Indus.,

Inc., 03-0719, 03-0993, 03-1002 (La. 12/3/03), 864 So.2d 117.

Accordingly, we find that the Board was proscribed by its own rules

from declaring that a lapse existed in Dr. Williams’ enrollment with the Fund from

June 16 through August 23, 2002. As his medical malpractice insurance policy with

Continental Casualty continued during this time period, as evidenced by the coverage

date of June 16, 2002 through June 16, 2003 listed on the Certificate of Insurance

forwarded to the Board, so did his enrollment. Based on this determination, we find

no error in the trial court’s judgment in favor of Dr. Williams.

CONCLUSION

For the foregoing reasons, the judgment of the trial court is affirmed.

The costs of this appeal are assessed to the defendant-appellant, the Louisiana

Patients’ Compensation Fund Oversight Board, in the amount of $496.16.

AFFIRMED.

8