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  JLARC Report Summary
Documents: Report Briefing
  284. Review of the Virginia Birth-Related Neurological Injury Compensation Program
           
(November 2002)
 
The Virginia Birth-Related Neurological Injury Compensation Act was passed by the General Assembly in 1987 in response to malpractice insurance availability problems for providers of obstetric services. The program pays for the medical and certain other expenses of children who have severe neurological injuries resulting from the birthing process. It is, therefore, intended as an alternative to the traditional tort system for obtaining compensation for injuries.

Because a number of concerns have been raised about this program during its 15-year existence, the Joint Legislative Audit and Review Commission (JLARC) directed its staff in January 2002 to conduct an evaluation of the program. In the early years, the program built up a large fund, while very few children benefited from the program. In recent years, there has been a substantial increase in the number of children in the program, raising questions about the financial stability of the fund and the viability of the program's continued existence in its present form. Through this review, JLARC staff assessed the program's structure and operations, and examined the extent to which the program has served its intended purpose.

History of the Birth Injury Program
In the mid-1970s, Virginia along with the rest of the nation experienced its first medical malpractice crisis. As a result of this crisis, almost all states enacted some changes in their tort systems. Most notable among the changes in Virginia was a cap placed on the total amount recoverable in medical malpractice lawsuits.

By the mid-1980s, another medical malpractice crisis was looming, heightening interest in additional tort law changes. The early to mid-1980s saw increasing medical malpractice lawsuits, increasing malpractice insurance premiums, and decreasing insurance availability. This situation led to a "crisis" in obstetrics, in which physicians were reportedly eliminating obstetrical care from their practices. Rural areas of Virginia were reported to be particularly affected by this situation, with some counties having no obstetrical services available. Several changes in tort law were subsequently enacted, including the Virginia Birth-Related Neurological Injury Compensation Act. This act established a unique framework, separate from the court system, for addressing one of the most severe and costly types of medical injuries - birth injuries. Virginia was the first state in the nation to develop a birth injury compensation plan completely removed from the tort system. The only other state to enact a birth injury program is Florida.

Purpose of the Virginia Birth-Related Neurological Injury Compensation Act
The goal of the birth injury act was to alleviate the medical malpractice insurance availability crisis for obstetricians. At its simplest description, the birth injury program was intended to remove malpractice lawsuits from the court system and provide for an alternative way of compensating the plaintiff for his or her medical-related injury. Infants severely injured at birth were singled out for this approach because lawsuits associated with these cases have a relatively high rate of success and the successful cases tend to result in large monetary awards.

To be eligible for the program, an infant must meet the definition in the act for a birth-related neurological injury, and the obstetrical services must have been performed by a physician or at a hospital that specifically participates in the birth injury program. The program was designed as a "no-fault" system of compensation, and therefore, decisions regarding acceptance into the program are not based on a finding of malpractice.

By delivering a baby in a participating hospital and/or through a participating physician, the baby's family automatically waives the right to bring a medical malpractice lawsuit against the participating physician or hospital if the baby incurs a birth injury that meets the definition in the Code. The program was also intended to completely restructure the way injured infants are compensated for their injuries by eliminating the lump sum awards common in malpractice awards and instead, providing payment on a reimbursement basis, after collateral sources are used.

Around the same time as the medical malpractice crisis, the State was experiencing a problem regarding obstetric care for indigent women. To help alleviate this problem, language was included in the birth injury act to require doctors, as a requirement for participation in the program, to work with the Commissioner of Health in developing a program to provide obstetrical care to indigent women and to subsequently participate in its implementation.

Structure of the Birth Injury Program
Administration of the Birth-Related Neurological Injury Compensation Program (birth injury program) involves the program staff and two State agencies. The funding of benefits comes from assessments on physicians, hospitals, and insurers in Virginia.

Division of Responsibilities. There are three main entities involved in the birth injury program and fund. The Workers' Compensation Commission (WCC) conducts hearings and determines eligibility for claimants who seek entry into the program. The State Corporation Commission (SCC) has certain financial responsibilities vis-à-vis the fund. The birth injury board of directors administers the program and the fund.

Program Claimants. As of October 2002, 75 children have been accepted into the program. The children in the program currently range in age from one to 14 years old. By definition, all of the children in the program have severe physical and cognitive disabilities rendering them incapable of independently performing the basic activities of daily living.

Program Benefits. Section 38.2-5009 of the Code of Virginia identifies three broad categories of benefits that the program is to provide. First, it states that compensation will be provided for all "medically necessary and reasonable expenses of medical and hospital, rehabilitative, residential and custodial care and service, special equipment or facilities, and related travel," except those for which the claimant has already received reimbursement either under the laws of another government entity or the policy of another private insurance program. Second, it provides payment (in regular installments) for loss of earnings from the age of 18 until 65. Third, it allows for reimbursement of "reasonable expenses incurred in connection with the filing of a claim . . . including reasonable attorney fees."

Although the program was established in 1987, the first payment to a claimant was not made until 1992. Since then, almost $25.3 million in program assets have been distributed (Chart: Total Actual Claimant Expenses) for claimant expenses through June 2002. (The program spent an additional $7.2 million to purchase trust homes that remain assets of the program but are used by claimants for the duration of their lives. The trust home benefit was eliminated in January 2000.) On average, the dollar value of claimants' benefits per year since 1992 is approximately $62,000 (not including the value of the trust homes).

Funding the Birth Injury Program. The birth injury program is funded primarily through assessments on four sources. These sources are: participating physicians, participating hospitals, non-participating physicians, and liability insurers. Currently, the sources are assessed at the maximum levels allowed by law. As of July 2002, there were 500 participating physicians and 27 participating hospitals in the program. As of June 30, 2002, the fund was valued at $83.6 million.

Impact of the Birth Injury Program Is Mixed
The birth injury program had an immediate impact on medical malpractice insurance availability in Virginia because, once the program was created by the General Assembly, one of the major malpractice insurers immediately lifted its moratorium on writing new policies for obstetricians/gynecologists (ob/ gyns). This action helped ameliorate the lack of available insurance experienced prior to the program's creation due to another insurer's withdrawal from the Virginia market.

While this short-term impact is clear, the program's long-term impact is less clear. It appears that the program has had mixed success in meeting all of its objectives.

The Program Compares Favorably to Virginia's Capped Tort System for Birth-Injured Children. Overall, it appears that the benefits offered by the program are generally more advantageous to birth-injured children than a medical malpractice award in Virginia. In addition to serving more birth-injured children than the tort system, the program provides benefits that exceed the medical malpractice cap for the typical child. There are also major disadvantages to the families, however, including the inability of mothers to receive compensation for injuries caused by their physician during the birthing process. In addition, the program does not always meet the unique needs of individual children.

The Birth Injury Program Benefits Physicians, Hospitals, and Malpractice Insurers. Virginia's significant changes to the tort system (notably the malpractice award cap), along with a relatively low malpractice claims record, made the State an attractive market for medical malpractice insurance companies in the 1990s. It appears that the birth injury program played a role in creating this situation both by minimizing claims for severely birth-injured children and by helping to keep intact the medical malpractice award cap. As a result, ob/gyns in Virginia were able to obtain malpractice insurance at lower rates than their counterparts in many other states. To a lesser extent all physicians benefited from the lower level of indemnity incurred by malpractice insurers. Although malpractice premiums have increased significantly in the past few years, this does not negate the fact that the malpractice cap and birth injury program appear to have had a positive effect on claims costs and subsequent malpractice premiums.

At the same time, the birth injury program has directly benefited some participating physicians because they avoided medical malpractice lawsuits. Others have benefited from insurance discounts for participation that exceed the assessment paid for participating in the program. In other words, they benefit financially simply by participating in the program.

Societal Benefits from Program Are Less Clear. In the 1980s, ob/gyns were reportedly leaving the practice of obstetrics because of the rising malpractice insurance premiums and risk of lawsuits that they faced. Staff of the Medical Society of Virginia noted that a number of rural areas, in particular, had no obstetrics coverage. The rationale for the birth injury program was that by stabilizing medical malpractice premiums for obstetric providers and reducing their exposure to lawsuits, they would decide to continue practicing obstetrics in the State.

Definitive data are not available on the level of obstetric services throughout Virginia over time. However, review of available information suggests that while the program does help stabilize malpractice premiums, the program's existence does not appear to have a significant impact on the availability of obstetric services in the State.

Further, it appears that the annual program assessments are more than the potential awards and associated expenses of the tort system for addressing severe birth injuries, given Virginia's medical malpractice award cap. Total assessments for physicians, hospitals, and insurers in 2002 were almost $15.2 million. In contrast, JLARC staff estimated that potential tort system awards and expenses for severe birth injury cases were about $10.8 million - $4.3 million less than the birth injury program assessments.

Finally, the impact of the program on obstetric services to indigent women is unclear. As directed in the birth injury act, the Department of Health implemented plans in 1988 for ensuring indigent women had access to obstetric services. However, there is no indication that the plans have ever been updated or are currently in effect. Data from the Department of Medical Assistance Services suggests a generally increasing level of obstetric coverage for women with Medicaid coverage. However, this trend does not appear to be related to the provisions of the birth injury act, given that no action has been taken since the late 1980s regarding the birth injury act's indigent care provisions.

The Birth Injury Fund Is Actuarially Unsound, Although There Is No Threat of Short-Term Deficit
When the birth injury fund was established in 1988, the birth injury act mandated the Bureau of Insurance of the State Corporation Commission to undertake actuarial valuations of the assets and liabilities of the fund at least biennially. The most recent actuarial report, released in September 2002, projects the fund will have a balance of $84.7 million as of December 31, 2002. However, it also projects an unfunded liability of more than $88 million at that time.

While forecasts by the actuary point toward an $88 million unfunded liability at the end of 2002, there appears to be no serious threat of a short-term deficit. In fact, according to the actuary, the current fund balance should be sufficient to meet claimant expenses for at least the next 25 years, provided current assessments are maintained. Nevertheless, this projection does not guarantee lifetime support for all current claimants, or for those born but not yet in the program.

The fund's current condition has resulted from a chain reaction of events, some of which were unavoidable. In the early years of the program, the actuary had little or no data on actual claimant expenses and other basic program parameters on which to base its analyses. In hindsight, the parameters it chose to use underestimated the true cost to provide lifetime care to the birth injured children in the program. Only since 2001 has the actuary based its analyses on actual program expenses. The adjustments made to account for the claimant data indicate that the true cost to care for these children is more than double what was originally estimated. Because estimated costs were thought to be so much lower, the perception was that the fund had more than enough money to provide lifetime care for the children.

In addition, JLARC staff identified two main problems with the board's oversight of the fund. First, the board did not sufficiently scrutinize the actuarial assumptions and reports. Second, it failed to recognize an imbalance between fund income and expenses, and make appropriate financial decisions accordingly (Chart: Assessment Income vs. Total Actual Expenses). Historically, it appears that the board has been reactive rather than proactive regarding the conclusions of the actuarial reports. This management approach has negatively affected the fund's income and expenses.

In retrospect, it appears that to have funded the lifetime care for these children in an actuarially sound manner would have required that all of the possible assessment sources - participating physicians, participating hospitals, non-participating physicians, and liability insurers - be assessed for the duration of the program's existence. However, the current funding structure outlined in the birth injury act would not have allowed for maximum assessments, given the earlier actuarial findings that the fund was sound.

Recommendation (1). The General Assembly may wish to consider amending the Code of Virginia to eliminate the sentence in §38.2-5016(F), which states, "The board shall also have the power to reduce for a stated period of time the annual participating physi cian assessment described in subsection A of §38.2-5020 and the annual participating hospital assessment described in subsection C of §38.2-5020 after the State Corporation Commission determines the Fund is actuarially sound in conjunction with actuarial investigations conducted pursuant to §38.2-5021."

Recommendation (2). The board of directors should conduct annual evaluations of the actuarial assumptions, and communicate any concerns identified to the State Corporation Commission. To the extent that the program is unable to conduct such an investigation in-house, it should seek assistance from an independent consulting firm.

Options for the Future of the Birth Injury Program
As described previously, the value of the birth injury program varies on a group and individual basis. The data collected through this review suggests that the program is largely beneficial to Virginia's ob/gyns and hospitals, and to a lesser extent all other physicians. In addition, most (but not all) of the children in the birth injury program fare better than they would have through the tort system with a malpractice award cap in place. However, this program does not appear to have had a major impact in helping the Commonwealth attain its broader goal of maintaining an adequate supply of obstetric services, especially in the rural areas. In addition, annual program assessments are more than estimated awards and expenses associated with Virginia's tort alternative.

There are three primary options that could be pursued depending on the primary goals sought to be attained through the birth injury program:

  • maintain the current overall structure of the program,
  • restructure the program to be mandatory for physician and hospital providers of obstetrics, or
  • eliminate the program.

The body of this report explores the advantages and disadvantages of each approach.

These options suggest the difficult policy choices that must be made by the General Assembly regarding the future of the birth injury program. Two of these options result in the continuation of the program. If the General Assembly wishes to continue the program, then significant improvements will be needed. The remainder of this summary outlines the findings and recommendations related to program eligibility and administration that would need to be addressed. The improvements recommended will help to ensure that the program is successful in serving birth-injured children as intended by the General Assembly.

Relatively Minor Changes to the Definition of Program Eligibility Are Needed
JLARC staff examined the appropriateness of the Virginia Birth-Related Neurological Injury Compensation Act's birth injury definition through interviews with medical professionals, a review of medical literature on birth injuries and cerebral palsy, and a review of WCC files for all birth injury petitions. Overall, the current definition in the act appears to meet the goals of the program by targeting the cases most likely to become the subject of a lawsuit. However, some refinements to the definition would make the eligibility criteria clearer, and may help reduce the contentiousness of the eligibility process. Specifically, the act should exclude children who die shortly after birth and explicitly define the time-frame of a qualifying injury.

Recommendation (3). The General Assembly may wish to consider amending §38.2-5001 of the Code of Virginia to permit families of infants who die within 180 days of birth the option to file suit against a participating physician and/or hospital rather than require applications to the Virginia Birth-Related Neurological Injury Compensation Program.

Recommendation (4). The General Assembly may wish to consider amending §38.2-5001 of the Code of Virginia by replacing the language, "immediate post delivery period" with the more specific language, "within one hour of delivery."

Significant Improvements Needed to the Eligibility Determination Process
This review found that the WCC has done an adequate job in handling the birth injury claims, and should continue hearing these cases. However, a number of changes are needed to improve the eligibility process.

The Program's Role in the Eligibility Hearings Should Be Eliminated. While there is no evidence that the program has inappropriately attempted to exclude cases from the program thus far, its involvement in the eligibility process increases the contentiousness of the proceedings and represents a conflict of interest. Therefore, the program should be removed from the eligibility process.

Recommendation (5). The General Assembly may wish to consider amending §38.2-5004(D) of the Code of Virginia to eliminate the requirement that the Virginia Birth-Related Neurological Injury Compensation Program file a response to petitions and specifically state that the program shall not be a party to any hearing before the Workers' Compensation Commission.

Medical Panel Reviews Need to Be Strengthened. JLARC staff found that the medical panel reviews are not working as originally envisioned. However, with some modifications, it appears that the medical panels are still the appropriate mechanism for obtaining expert opinions in these cases and that many of these problems can be resolved through increased communication between the WCC and the panels.

Recommendation (6). The General Assembly may wish to consider amending the Code of Virginia to require that the Workers' Compensation Commission and the medical panels meet on a yearly basis to discuss the eligibility process and any improvements that may be needed.

Recommendation (7). The Workers' Compensation Commission should provide copies of all birth injury opinions to members of the medical panels.

Recommendation (8). The medical panels should develop a review form, in consultation with the Workers' Compensation Commission, that addresses each aspect of the eligibility definition. This form should be completed by the panels in each case they review for the Workers' Compensation Commission.

Recommendation (9). The deans of the medical schools should develop a plan to include both obstetrical and pediatric specialists who can evaluate whether applicants meet the entire definition in the Virginia Birth-Related Neurological Injury Compensation Act.

Recommendation (10). The General Assembly may wish to consider amending §38.2-5008(B) of the Code of Virginia to change the filing deadline for the medical panels from "at least ten days prior to the date set for hearing" to "30 days from the date the petition was filed at the Workers' Compensation Commission." The Workers' Compensation Commission should clearly communicate the deadline for the medical panel reports in all cases that are sent to the medical panels for review.

Recommendation (11). The General Assembly may wish to consider amending §38.2-5008 of the Code of Virginia to require the Workers' Compensation Commission to forward a copy of the medical panel report to all petitioners.

Recommendation (12). The Workers' Compensation Commission should begin to incorporate Eastern Virginia Medical School into the medical panel review process.

Recommendation (13). The Workers' Compensation Commission should assign cases to the medical panels for review on a continuous rotation basis instead of alternating on a three-year cycle.

Improvements Could Be Made to Assist Families Who Petition for Entry Into the Program. JLARC staff found that some improvements could be made to better assist families during the application process. For example, to make the process more user-friendly for parents, the program could develop a hand-out that explains the hearing process in lay terms, including all deadlines and parties to the process. To encourage better record-keeping and the appropriate release of medical records, cases in which the fetal monitoring strips are withheld or lost should be given a rebuttable presumption that they showed fetal distress. This may result in some children being accepted into the program that would ordinarily be denied. To partially address this added cost, the WCC should be given the discretion to fine hospitals if they withhold a patient's records and the child is accepted into the program. Finally, the WCC should be given discretion to award reasonable attorney fees for all cases, regardless of whether or not the child is admitted into the program, to increase claimant access to legal representation during the process.

Recommendation (14). The Virginia Birth-Related Neurological Injury Compensation Program should develop an easy-to-understand hand-out that explains all aspects of the petition process. The program should also develop an application form for claimants who wish to apply to the program. Both documents should be sent to anyone who inquires about applying to the program. These documents should also be included on the program's website.

Recommendation (15). The General Assembly may wish to remove §38.2-5004(A)(i) and §38.2-5004(A)(j) of the Code of Virginia in order to streamline the process for submitting a petition to the Workers' Compensation Commission.

Recommendation (16). The General Assembly may wish to amend §38.2-5004 of the Code of Virginia to specify that hospitals are required to release all medical records, including fetal monitoring strips, to patients that plan to submit a petition to the Virginia Birth-Related Neurological Injury Compensation Program.

Recommendation (17). The General Assembly may wish to amend §38.2-5004 of the Code of Virginia to specify that claimants will have the rebuttable presumption of fetal distress in the event that fetal monitoring strips are not provided by the hospital.

Recommendation (18). The General Assembly may wish to amend §38.2-5004 of the Code of Virginia to specify that the Workers' Compensation Commission has the authority to require hospitals to pay a fine to the Virginia Birth-Related Neurological Injury Compensation Program in the event that a child whose records are withheld or lost is accepted into the program. This fine should not exceed the hospital's current participation assessment or the amount of the assessment if the hospital had participated.

Recommendation (19). The General Assembly may wish to consider granting the Workers' Compensation Commission discretion to award reasonable attorney fees and expenses for cases filed in good faith, regardless of whether a child is accepted into the Virginia Birth-Related Neurological Injury Compensation Program.

Eligibility Hearings Should Remain at the Workers' Compensation Commission. The eligibility process at the WCC appears to be quite efficient. In addition, reversals of WCC decisions have been rare. Although the WCC should be more stringent in its enforcement of deadlines, it appears that the WCC has done an adequate job of handling the birth injury cases overall. Given the WCC's performance, there appears to be no need to change the venue for hearing birth injury cases.

Recommendation (20). The Workers' Compensation Commission should enforce all deadlines for the birth injury cases.

Medical Reviews of Physicians and Hospitals Should Be More Rigorous
Section 38.2-5004 of the Code of Virginia directs the Board of Medicine and the Virginia Department of Health (VDH) to review all birth injury petitions submitted to the WCC. The Board of Medicine is required to assess whether the physician(s) involved in the petitioner's birth provided substandard care that would warrant disciplinary action by the Board of Medicine. The VDH reviews the petition to determine whether the hospital and its staff provided inadequate medical care that should impact the hospital's license. JLARC staff reviewed the Board of Medicine and VDH records pertaining to birth injury petitions and found that minimal investigations of the circumstances surrounding the birth events were conducted. In the vast majority of cases, the agencies read the petitions but conducted no further investigation. Steps should be taken by the Board of Medicine and VDH to conduct more thorough investigations of these petitions and to communicate the results to all the affected parties.

Recommendation (21). As part of their reviews of birth injury petitions, the Board of Medicine and Virginia Department of Health should routinely interview the claimant families on the events surrounding the births.

Recommendation (22). The Board of Medicine and Virginia Department of Health should routinely notify each claimant family concerning the outcome of the respective medical reviews.

Recommendation (23). The Workers' Compensation Commission should develop a plan for ensuring that all birth injury petitions, whether directly submitted by families of birth-injured children or transferred by the circuit court, are submitted to the Board of Medicine and Virginia Department of Health for review.

Informed Consent Process Needed for Obstetric Patients
The Code of Virginia requires the program to inform obstetrical patients about the program. However, it appears that the program has not been effective in its attempts to notify obstetrical patients. Although the program has supplied brochures to doctors and hospitals for them to distribute to patients, most of the claimant families indicated that they were not informed about the program through this mechanism. In fact, the most common source of information about the program was an attorney, which suggests that many families do not find out about the program unless they pursue a medical malpractice lawsuit. Further, the brochure developed by the program inadequately explains the patients' rights and limitations under the program.

To ensure that participating doctors and hospitals provide information about the program to their patients before they receive services, participating obstetrical providers should be mandated by the act to obtain informed consent regarding program participation from all obstetrical patients under their care. Given that past strategies of notifying obstetrical patients have been weak, the program should also pursue other ways of identifying children who may qualify for the program.

Recommendation (24). The Virginia Birth-Related Neurological Injury Compensation Program should revise the current brochure to better explain the patients' rights and limitations under the program, especially the "exclusive remedy" provision.

Recommendation (25). The General Assembly may wish to amend the Code of Virginia to eliminate the exclusive remedy provision for participating physicians and hospitals that fail to obtain informed consent of obstetrical patients, except for cases in which the patient has an emergency medical condition or when such notice is not practicable.

Recommendation (26). The Virginia Birth-Related Neurological Injury Compensation Program should develop a strategy for informing pediatricians and other health care providers that come into contact with disabled children about the program so that they can make potential referrals and distribute program brochures.

Benefits Have Not Been Well-Managed
One of the most contentious issues with the program is the administration of program benefits. Based on surveys of parents, interviews with program staff and board members, a review of board meeting minutes, and a review of the program guidelines, it appears that benefits have not been appropriately managed. For example, there were no written guidelines describing the benefits for the first nine years of the program. Even after benefit guidelines were developed, however, they were incomplete and inconsistently applied.

While it is understandable that in the early years of the program it would have been difficult to anticipate many of the types of benefits that families would request, the program now has 15 years of experience from which to draw in establishing program policies. Although the program cannot account for every possible request that may be reasonable, it should now be in a position to develop a set of comprehensive guidelines regarding benefits. Developing, maintaining, and implementing an updated and complete set of benefit guidelines would reduce the likelihood of inconsistent policy interpretation in benefit decision-making, which in turn would help to increase the credibility of program staff and board decisions among claimants requesting benefits.

In addition, a number of specific issues vis-à-vis program benefits need to be addressed. Although the current housing renovation policy appears to be fair for homeowners and is a comparable benefit to that which could be obtained through a medical malpractice award, it does not address the needs of non-homeowners. Further, the program needs a consistent policy regarding the payment of primary health insurance premiums for claimants. The program also needs to re-examine its policies related to nursing care to ensure that its guidelines do not contribute to problems in obtaining reliable nursing care. In addition, the program should begin planning for the lost wage benefit. And finally, a codified process for appealing benefit decisions is needed.

Recommendation (27). The Virginia Birth-Related Neurological Injury Compensation Program should develop an updated and comprehensive set of program guidelines. These guidelines should be provided to all families currently in the program and should also be posted on the program's website.

Recommendation (28). The Virginia Birth-Related Neurological Injury Compensation Program should develop a policy to address handicapped accessible housing for children of non-homeowners.

Recommendation (29). The General Assembly may wish to clarify §38.2-5009(A)(1) of the Code of Virginia to explicitly state that claimants in the Virginia Birth-Related Neurological Injury Compensation Program should receive reasonable accommodations for handicap accessible housing, not to include the purchase of a house.

Recommendation (30). The General Assembly may wish to consider amending the Code of Virginia to require claimants in the Virginia Birth-Related Neurological Injury Compensation Program to purchase private health insurance, or for cases in which a claimant cannot afford to pay private health insurance premiums, to allow the program to purchase private insurance for them.

Recommendation (31). The Virginia Birth-Related Neurological Injury Compensation Program should develop a consistent policy for payment of private health insurance premiums for those families who cannot afford or do not have access to their own health insurance.

Recommendation (32). The Virginia Birth-Related Neurological Injury Compensation Program should begin planning for management of the lost wage benefit for children who attain 18 years of age. In part, the program should consider reimbursing families for setting up special needs trusts for all children in the program to ensure eligibility for Medicaid and disability benefits.

Recommendation (33). The General Assembly may wish to consider amending the Code of Virginia to specify that claimants in the Virginia Birth-Related Neurological Injury Compensation Program may appeal benefit decisions by the program to the Workers' Compensation Commission.

The Program Would Benefit from More Accountability
The Code of Virginia does not clearly define the program as a private or governmental organization. Based on interviews with staff from the Attorney General's Office, program staff, and staff from the Division of Legislative Services, it appears that the program does not fall into any particular category of State agency, nor is it a purely private entity. A lack of clarity on this issue has permitted the program to operate with little oversight. Changes to the Code of Virginia are necessary to increase accountability and oversight, including making the program subject to the Administrative Process Act, the Freedom of Information Act (FOIA), and the Public Procurement Act. In order to ensure the accuracy of the program's financial information, the Code of Virginia should also be changed to require an annual
audit by a Certified Public Accountant. Finally, the Code of Virginia should specify that the Office of the Attorney General provide legal counsel to the program.

Recommendation (34). The General Assembly may wish to amend the Code of Virginia to require that the program be subject to the Freedom of Information Act, the Public Procurement Act, and the Administrative Process Act or another public rulemaking process. The Code of Virginia should also be amended so that the program is required to receive an annual audit by a CPA. Finally, the Code of Virginia should be amended so that the Office of the Attorney General is required to provide legal representation for the program.

Program Services Generally Appear Adequate
JLARC staff assessed program services through surveys and interviews with families involved in the program, as well as interviews with program staff and board members. Overall, the program appears to provide adequate services to families in the program, and most families are satisfied with program services. The most frequent complaint about program services relates to the amount of paperwork needed to receive benefits. However, JLARC staff reviewed the required documentation, and found it to be an appropriate mechanism for ensuring that fund dollars are spent according to the intent of the act. Communication, on the other hand, has been a major shortcoming of the program and needs to be improved. In addition, the program needs to address two additional benefit process concerns.

Recommendation (35). The Virginia Birth-Related Neurological Injury Compensation Program should follow existing procedures related to communication more closely to ensure that families in the program are aware of all program policies. The program should also follow through with the existing plan to hold group meetings across the State and obtain input from families on how they can improve communication and service provision. Finally, the program should improve its web site by including more features to help families access information needed to obtain benefits.

Recommendation (36). The Virginia Birth-Related Neurological Injury Compensation Program should provide itemized reimbursement statements to families.

Recommendation (37). The Virginia Birth-Related Neurological Injury Compensation Program should explore options to better address the needs of families in transporting their children.

Structure and Role of the Birth Injury Board Should Be Modified
JLARC staff found that the birth injury board has focused its efforts over the years on benefits and other administrative matters to the detriment of its fiduciary duties. Throughout most of the history of the program, it appears that the board received very little financial information from the fund manager and program staff that would have been necessary to properly oversee the fund. However, the current board has begun to focus more on the funding of the program, and has directed program staff to revise the benefit guidelines. Development of a more detailed benefit guidelines manual (as previously discussed) should enable program staff to make more decisions concerning claimant requests, and allow the board to focus more on its fiduciary duties. In addition, board representation should be changed so that it is less dominated by the interests of the medical community and more inclusive of individuals from the disabled community and those with financial expertise.

Recommendation (38). The General Assembly may wish to consider amending the Code of Virginia to require the birth injury board of directors to obtain advice on the fund's investment strategy, including the asset allocations for its equities and fixed income portfolios, from the Chief Investment Officer of the Virginia Retirement System on a semi-annual basis.

Recommendation (39). The Birth-Related Neurological Injury Compensation Board should direct the fund manager to supply an annual explanation of expected returns on the equities and fixed income portfolios.

Recommendation (40). The Birth-Related Neurological Injury Compensation Board should take steps to minimize its involvement in routine benefit decisions to allow for more focus on its fiduciary responsibilities. At a minimum, the board should set as a high priority the revision of the program's benefit guidelines.

Recommendation (41). The General Assembly may wish to consider amending the Code of Virginia to change the non-participating physician representative on the Birth-Related Neurological Injury Compensation Board to a citizen representative. In addition, the General Assembly may wish to consider requiring the appointment of two citizen representatives with a background in the disabled community, and two citizen representatives with a minimum of five years of professional investment experience. The General Assembly may also wish to consider specifying in the Code of Virginia that persons who have practiced as physicians or who have been representatives of the health care industry or the insurance industry may not be appointed to the board as citizen members.


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