Va. Birth-Related Neurological Injury Compensation Fund On Financial Watch

October 7, 2003

An actuarial review of the Virginia Birth-Related Neurological Injury Compensation Fund reportedly finds that the outlook for the program’s ability to meet future claims payments has deteriorated. However, the State Corporation Commission (SCC) says the fund is still capable of paying claims and should be able to do so for approximately 14 years.

The 2003 actuarial analysis of the fund was conducted by an independent consultant for the SCC’s Bureau of Insurance. The analysis determined that the program faces a projected deficit of $80.4 million as of Dec. 31, 2002. However, this deficit is expected to reach $148.3 million by Dec. 31, 2005.

The increase in the estimated deficit is based to a large extent on projected increases in liability for future claims payments. A new law effective July 1, 2003, may encourage more potential claimants to apply to the program. The actual impact is uncertain and will only be measurable after several years.

The Virginia Birth-Related Neurological Injury Compensation Program was created 16 years ago by the General Assembly. The program cares for children who incur a lifetime brain or spinal cord injury resulting from an accident that occurs during birth. It was formed as an alternative means of compensation rather than malpractice lawsuits against doctors or hospitals and their liability insurance carriers. Claims against the fund are reviewed and awarded by the Virginia Workers’ Compensation Commission.

All licensed physicians, participating hospitals, and liability insurance carriers in Virginia must contribute annually to the state’s Birth-Related Neurological Injury Compensation Fund. Obstetricians who participate in the Program now pay an annual fee of $5,000. The assessment on participating hospitals is $50 per live birth up to a maximum of $150,000 annually. Licensed physicians other than those who participate in the program are assessed an annual fee of $250. Liability insurance carriers are assessed one quarter of one percent of their net direct liability insurance premiums written in Virginia.

The Commission will reportedly continue to conduct annual reviews of the actuarial soundness of the fund until the program’s financial position stabilizes. The report is provided to the General Assembly leadership, the board of directors of the program, and the Virginia Workers’ Compensation Commission.

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