HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 1165 Florida Birth-Related Neurological Injury Compensation Plan
SPONSOR(S): Judiciary Committee, Civil Justice & Property Rights Subcommittee, Koster
TIED BILLS: IDEN./SIM. BILLS: CS/SB 1786
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Civil Justice & Property Rights Subcommittee 15 Y, 0 N, As CS Brascomb Jones
2) State Administration & Technology 14 Y, 0 N Lee Topp
Appropriations Subcommittee
3) Judiciary Committee 20 Y, 0 N, As CS Brascomb Kramer
SUMMARY ANALYSIS
During the 1970s and 1980s, medical liability insurance in Florida had become so expensive that, although
technically available, it was functionally unavailable. The Florida Legislature determined that obstetrician-
gynecologists (ob-gyns) disproportionately accounted for medical liability claims, both in number of claims and
amount of payout. In 1985, ob-gyns in Florida paid an average medical malpractice liability premium of
$185,460, compared to a national average of $23,300.
The Florida Birth-Related Neurological Injury Compensation Plan (Plan) was part of the Legislature's efforts to
manage both rising medical malpractice costs and diminishing availability of liability insurance by creating a
hybrid no-fault and tort medical liability system. The Plan pays for the care of infants born with certain
neurological injuries and is available to eligible families without litigation.
CS/CS/HB 1165 makes several changes to the Plan. Specifically, the bill:
Requires the Florida Birth-Related Neurological Injury Compensation Association (NICA) to administer
the Plan in a manner that promotes and protects the health and best interests of birth-injured children.
Raises the maximum amount that may be awarded to parents or legal guardians of an infant who has
sustained a birth-related neurological injury from $100,000 to $250,000 for pending petitions or claims
filed on or after January 1, 2021, with the amount to be incrementally increased annually.
Raises the death benefit for an infant who sustained a neurological injury from $10,000 to $50,000.
Specifies that a Plan beneficiary may file a petition to dispute reimbursements of actual expenses.
Increases the number of directors on NICA’s board from five to seven by adding two directors who are
parents or guardians of child beneficiaries.
Prohibits a director from serving more than six consecutive years on NICA’s board.
Requires the Agency for Health Care Administration to conduct a review and develop policies and
procedures regarding Medicaid third party benefits payable by and recoverable from the Plan.
Requires NICA to:
o Furnish annually to each parent receiving benefits under the Plan a list of expenses
compensable under the Plan.
o Publish a report on its website by January 1, 2022, and every year thereafter that includes:
The names and terms of each board member and executive staff member.
The amount of compensation paid to each NICA employee.
A summary of reimbursement disputes and resolutions.
A list of expenditures for attorney fees, lobbying fees, and other expenses to oppose
each Plan claim with any personal identifying information removed.
o Provide adequate notice and opportunity to be heard with respect to its meetings.
Requires the Auditor General to perform a financial and operational audit of NICA every three years.
The bill does not appear to have an impact on state or local governments. See Fiscal Comments.
The bill provides an effective date of July 1, 2021.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1165d.JDC
DATE: 4/20/2021
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Medical Malpractice Crisis
During the 1970s and 1980s, medical liability insurance in Florida had become so expensive that,
although technically available, it was functionally unavailable.1 The Florida Legislature determined that
obstetrician-gynecologists (ob-gyns) disproportionately accounted for medical liability claims, both in
number of claims and amount of payout.2 Therefore, in 1986, the Legislature created a special task
force to study the Florida medical malpractice crisis and address the ob-gyn impact on that crisis.3 The
task force evaluated the rising insurance costs and reported that litigation costs and attorney's fees had
increased between 1975 and 1986, but there was no particular change in substantive law to account for
the change.4 Moreover, some physicians became reluctant to treat high-risk patients and practice
certain high-risk specialties altogether.5 In 1985, ob-gyns in Florida paid an average medical
malpractice liability premium of $185,460, compared to a national average for ob-gyns of $23,300.6
Florida Birth-Related Neurological Injury Compensation Plan
The Florida Birth-Related Neurological Injury Compensation Plan (Plan) was part of the Legislature's
efforts to manage both rising medical malpractice costs and diminishing availability of liability insurance
by creating a hybrid no-fault and tort medical liability system.7 The Plan was created to pay for the care
of infants born with certain neurological injuries and is available to eligible families without the need for
litigation. By eliminating costly legal proceedings, the Plan aims to ensure that birth-injured infants
receive the care they need while reducing the financial burden on both medical providers and families.
Florida Birth-Related Neurological Injury Compensation Association
In February 1988, the Legislature created the Florida Birth-Related Neurological Injury Compensation
Association (NICA) to manage the Plan.8 NICA is an independent association. Although it is not a state
agency, NICA is subject to regulation and oversight by the Office of Insurance Regulation (OIR) and the
Joint Legislative Auditing Committee. Directors on NICA’s board are appointed by the Chief Financial
Officer for staggered terms of 3 years or until their successors are appointed, but there is no limit on the
number of terms a director may serve.9 The board of directors is composed of:
One citizen representative.
One representative of participating physicians.
One representative of hospitals.
One representative of casualty insurers.
One representative of physicians other than participating physicians.10
The board of directors may:
Administer the Plan.
Administer the funds collected on behalf of the Plan.
1 Sandy Martin, NICA - Florida Birth-Related Neurological Injury Compensation Act, 26 Nova L. R. 609 (2002),
https://core.ac.uk/download/pdf/51081713.pdf (last visited Apr. 19, 2021).
2 Id.
3 Id.
4 Id.
5 Id.
6 Id.
7 Id.
8 S. 766.315, F.S. and ch. 88-1, s. 74, Laws of Fla.
9 Id.
10 Id.
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Administer the payment of claims on behalf of the Plan.
Direct the investment and reinvestment of any surplus funds over losses and expenses,
provided that any investment income generated thereby remains credited to the Plan.
Reinsure the risks of the Plan in whole or in part.
Sue, be sued, appear, and defend in all actions relating to the Plan.
Exercise all powers necessary to effect any of the purposes for which the Plan is created.
Enter into such contracts as are necessary or proper to administer the Plan.
Employ or retain such persons as are necessary to perform the administrative and financial
transactions and responsibilities of the Plan.
Take such legal action as may be necessary to avoid payment of improper claims.
Indemnify any person acting on behalf of the Plan in an official capacity, provided that such
person acted in good faith.11
Annually, NICA must furnish audited financial reports to:
Any Plan participant upon request;
The OIR; and
The Joint Legislative Auditing Committee.12
The reports must be prepared in accordance with accepted accounting procedures. The OIR or the
Joint Legislative Auditing Committee may conduct an audit of the Plan at any time.13
Eligibility
An administrative law judge (ALJ) within the Florida Division of Administrative Hearings14 hears all
claims under the Plan and determines whether a claim is compensable.15 To qualify, there must have
been a birth injury to the brain or spinal cord of a live infant in which:
The birth occurred in a hospital;
The infant weighed 2500g at birth for single gestation or 2000g for multiple gestation at birth;
There was oxygen deprivation or mechanical injury;
The injury occurring during labor, delivery or resuscitation efforts in the immediate post delivery
period;
The infant experienced permanent and substantial mental and physical impairment;
The injury was not caused by genetic or congenital abnormality; and
The physician is participating in the Plan.16
A participating physician under the Plan is a licensed Florida physician who either practices obstetrics
or performs obstetrical services on a full or part-time basis and pays a yearly NICA assessment.17 If the
physician did not pay his or her assessment for the year in which the injury occurred, there is no NICA
coverage. Hospitals that allow doctors who do not participate in NICA to deliver babies are subject to
multi-million dollar catastrophic injury lawsuits despite having paid into the NICA fund.18
Benefits
Once an ALJ determines a child is eligible under the Plan, the child is covered for life, and no other
compensation from a medical malpractice lawsuit or settlement is available.19 Instead, there are lifetime
benefits and care available through the Plan, which include actual expenses for:
Medical and hospital services;
Rehabilitation, therapy, and training;
11 Id.
12 Id.
13 Id.
14 S. 766.302, F.S. The Division of Administrative Hearings is housed within the Florida Department of Management Services.
15 S. 766.304, F.S.
16 S. 766.302(2), F.S.
17 S. 766.314, F.S.
18 S. 766.302(7), F.S.
19 Id.
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Family residential or custodial care;
Professional residential and custodial care;
Medications;
Special equipment and facilities; and
Related travel expenses.20
The Plan may also provide:
A one-time cash award, not to exceed $100,000, to the infant's parents or guardians.
A $10,000 death benefit for the infant.21
Compensation for reasonable expenses incurred for filing the claim, including attorney's fees.22
Exclusions
The Plan does not reimburse or pay expenses that might otherwise be covered by insurance or any
private or governmental programs, unless such exclusion is prohibited by federal law.23 Many children
with birth-related injuries are either covered by programs such as Children’s Medical Services or
Medicaid. Under current state and federal law, Medicaid is the payor of last resort for medically
necessary goods and services furnished to Medicaid recipients; therefore, current law appears to
prohibit NICA from shifting covered costs onto Medicaid.24 However, recent court filings allege that
NICA may have shifted some costs that the Association is statutorily required to pay onto Medicaid.25
Funding
In July 1988, the Legislature authorized a transfer of $20 million to NICA from the Department of
Insurance (the predecessor agency to OIR)26 to provide initial funding to administer the Plan. Currently,
the Plan is funded by a combination of physician fees and hospital assessments.27 A participating
physician is required to pay a $5,000 fee each year for coverage which runs January 1 through
December 31.28 All licensed Florida physicians pay a mandatory fee of $250, regardless of specialty.
Hospitals pay $50 for each live birth during the previous calendar year. Certain exemptions apply to all
of these categories, including resident physicians, retired physicians, government physicians, and
facilities.29 In 2019, NICA collected $26,989,960 in hospital and physician assessments; in 2020, NICA
collected $27,000,000.30
Section 766.314, F.S., requires OIR to maintain a $20 million reserve in the Insurance Regulatory Trust
Fund. If the assessments collected and the appropriation of funds provided by section 41 of ch. 88-277,
Laws of Florida, to the Plan from the trust fund are insufficient to maintain the Plan on an actuarially
sound basis, OIR is authorized to transfer an additional amount up to $20 million to NICA from the
Insurance Regulatory Trust Fund reserve.31
One-time Case Award
20 S. 766.31, F.S.
21 S. 766.31(1)(b)2., F.S. In 2003, the $10,000 death benefit for an infant replaced the requirements to pay funeral expenses up to
$1,500. (Ch. 2003-416, s. 78, Laws of Fla.)
22 S. 766.31(1)(c), F.S.
23 S. 766.31(1)(a), F.S.
24 S. 409.910, F.S.; 42 C.F.R. s. 433.136; 42 U.S.C. s. 1396a.
25 United States ex rel Arven v. Florida Birth-Related Neurological Injury Comp. Ass’n., No. 19-61053-CIV, 2020 WL 5540367 at *1
(S.D. Fla. Sep. 8, 2020); see also Carol Marbin Miller and Daniel Chang, When births go terribly wrong, Florida protects doctors and
forces parents to pay the price, Miami Herald (Apr. 8, 2021), https://www.miamiherald.com/news/state/florida/article247417990.html
(last visited Apr. 19, 2021); Daniel Chang and Carol Marbin Miller, Mom was consumed with caring for brain-damaged son, Miami
Herald (Apr. 8, 2021), https://www.miamiherald.com/news/state/florida/article247417990.html (last visited Apr. 19, 2021); Florida Birth-
Related Neurological Injury Compensation Association, NICA responds to Miami Herald series (Apr. 8, 2021),
https://www.nica.com/downloads/NICA_Statement_040821.pdf (last visited Apr. 19, 2021).
26 Ch. 88-277, s. 41, Laws of Fla.
27 S. 766.314, F.S.
28 Id.
29 Id.
30 Turner Consulting, Inc., Proposed Increase in Parental Award – Section 766.31 (1) (b) (1), Florida Statutes (Jan. 14, 2020).
31 S. 766.314(5)(b), F.S.
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Since its inception in 1989 (the first birth year covered under the Plan), the one-time parental award
has not been increased or adjusted for inflation. In 2020, NICA commissioned an actuarial study to
determine the impact if the Legislature increased the current parental award from $100,000 to
$250,000 per accepted claim in 2020, followed by an annual increase of 3 percent each subsequent
year.32 Specifically, the study examined the impact of inflation on the fixed award established in the
original NICA statute.33 The initial award amount of $100,000 in 1989 adjusted for inflation based on an
average annual increase of 3 percent over 31 years is equal to $250,008 in 2020.34
The report found that increasing the parental award to $250,000 would result in additional costs of
approximately $2.7 million for the 2020 birth year.35 However, the report noted that given NICA’s
current net assets of approximately $393.2 million, plus the better-than-expected inflation levels, a
parental award increase is not likely to significantly impact NICA’s overall financial position in the short-
term.36 Alternatively, the report also states “that volatility in the prospective investment results and/or
increases in benefit inflation levels may require assessment level increases at some point in the longer
term.”37
Auditor General
Article III, s. 2 of the State Constitution establishes the office of the Auditor General. The Auditor
General is appointed by a majority vote of the members of the Joint Legislative Auditing Committee,
subject to confirmation by both houses of the Legislature, and serves at the Legislature’s pleasure.38
The Auditor General must conduct audits, examinations, or reviews of government programs as well as
audit the accounts of state agencies, state universities, state colleges, district school boards, and
others as directed by the Joint Legislative Auditing Committee.39 The Auditor General conducts
operational and performance audits on public records and information technology systems and reviews
all audit reports of local governmental entities, charter schools, and charter technical career centers.40