Payment but not Remittance is Required to Secure MCARE Fund Coverage

Author: Marc L. Penchansky

In order to defray escalating malpractice premiums, Pennsylvania established the Medical Care Availability and Reduction of Error (MCARE) Fund. 40 P.S. 1303.712. The MCARE Fund provides secondary coverage for professional liability claims. Participating health care providers are required to have $500,000 in primary liability coverage. The second $500,000 of liability comes from the MCARE Fund. The MCARE Fund is supported by annual assessments paid by participating health care providers. Providers pay their assessment to their primary insurer who is required to remit the payment to the MCARE Fund. There is no mechanism for a health care provider to pay their assessment directly to the MCARE Fund. 31 Pa.Code § 242.6(a)(3). Any provider who fails to pay their assessment within sixty days will not be covered by the MCARE Fund. 31 Pa.Code § 242.17(b). So this leads to the question: Will the MCARE Fund cover a provider for their loss when the provider timely paid the assessment but the primary insurance company, unbeknownst to the provider, failed to timely remit the assessment to the MCARE Fund?

This very scenario played out for the facility sued in Scampone v. Grane Health Care, et al, 11 A.3d 967 (Pa. Super. 2010), allocatur granted, 15 A.3d 427 (2011). As noted in an earlier blog entry, the Scampone matter concerns allegedly deficient care provided at a nursing facility. The facility, Highland Park Care Center, timely paid its assessment to its primary insurer but the carrier did not remit the assessment within the required sixty days. After the facility was sued, the primary insurer submitted a request to the MCARE Fund for excess coverage for the facility. The MCARE Fund denied the request because the assessment was not paid on time.

A Hearing Examiner found that the MCARE Fund was required to provide coverage to the facility. The Hearing Examiner noted that the facility did everything right and that the late Assessment was the “result of the MCARE Fund’s ‘collection and remittance’ system whereby medical care providers are directed to pay the carrier but they are not warned or otherwise notified of a carrier’s failure to remit the assessment on time.” See Highland Park Care Center v. Medical Care Availability and Reduction of Error (MCARE) Fund, — A.3d —, 2012 WL 280576, *1 (Pa.Cmwlth., 2012) (publishing prior unpublished opinion).

The MCARE fund appealed to the Commonwealth Court asserting that the Hearing Examiner’s ruling was contrary to applicable statutes, regulations and state law. In Highland Park Care Center, the Commonwealth Court agreed with the Hearing Examiner. The Court ruled that the statute requires only payment of the assessment with sixty days. Id. at *2. The act of remittance from the primary insurer to the MCARE Fund is a separate act that does not bear on coverage. Id.

This case is a common-sense result. With all the i’s that providers must dot and t’s they must cross, it is refreshing to see that providers will not now be required to track their payment and assure that their carrier was compliant.

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