Medical Society of New Jersey
2 Princess Road
Lawrenceville NJ 08648

info@msnj.org
Phone: 609-896-1766
Fax: 609-896-1368.

Skip Navigation Links > Advocacy > Healthcare Issues > Medical Liability

Medical Liability

MEDICAL LIABILITY: MIIX Liquidation Meeting on May 2 , 2008

Last week, a New Jersey Superior Court judge entered an order allowing the liquidation of MIIX. The liquidation order allows the State’s Guarantee Fund (the New Jersey Property-Liability Guaranty Association or “PLIGA”) to step in to replace MIIX as the entity that will handle all pending and future claims. In effect, PLIGA becomes the insurer and the policy limits are reduced to $300,000. This ruling may affect members whether or not they have claims pending against them. The order also allows the appointment of the Commissioner of the Department of Banking & Insurance, Steven M. Goldman, as a liquidator; establishes a one year period during which all claims against MIIX must be asserted; and requires that procedures be established for the payment of claims against MIIX.

MSNJ recently met with DOBI officials and representatives of PLIGA. To assist our members with specific questions, MSNJ will be hosting an informational meeting with DOBI Commissioner Steven Goldman, Donald Bryan, Director of Division of Insurance, New Jersey Department of Banking & Insurance (DOBI), and members of their staff on May 2. Representatives from PLIGA will also be available.

This meeting will be open to non-members. We ask that anyone wishing to attend register for the event by e-mailing info@msnj.org or calling 609 896 1766, ext. 0. Please indicate your name, office address, and phone number on the e-mail.

Friday, May 2, 2008 - 1:00 p.m.
Village Square Room, Westin at Forrestal Village, Princeton

The Wrongful Death Act

NJ Senate Judiciary Committee and the Assembly Advance S-176/A-1511, The Wrongful Death Act

The Medical Society of New Jersey strongly believes that the current medical liability tort and insurance systems are broken and in need of significant reform. While policies are generally available at the current time, most physicians have seen the cost of their policies rise over 100%, some much higher, in the last four years. These increases have been for physicians with clean claims, those unfortunate to have had a claim have been forced to pay significantly more. These costs are unsustainable, especially for high risk specialties such as OB and other surgical specialties. Even for primary care, the ratio of cost to income is unacceptable.

MSNJ has advocated for a host of reforms, including caps on non-economic damages. Some reforms were passed by the Legislature in 2004 with the adoption of Assembly Bill No. 50. While some of these reforms have been helpful, including minor subsidies for certain specialties, it has not been enough to solve the problem or restore faith in the legal system. More is needed.

MSNJ is open to a host of possible solutions to this continuing crisis, a crisis that has landed New Jersey on the American Medical Association’s list of “crisis states.” MSNJ is willing to consider and support any proposal that will result in sustained lowered premiums and the fairer administration of justice. Some of the changes we believe may be helpful are listed below.

  • Bad Faith Doctrine – Rova Farms – Elimination of the bad faith doctrine would limit insurance carrier’s liability when they refuse to settle a case thus limiting their liability to policy limits. This would allow them to take more defensible cases to trial. Limiting available insurance moneys also limits an incentive for lawyers to pursue cases and try to force large settlements. The flip side is that if a verdict exceeds policy limits the physician would be personally liable. Also, limiting one person’s payouts may induce lawyers to go after more defendants more vigorously.
  • Periodic Payments – While Assembly Bill No. 50 did adopt a periodic payment rule, it applied only to non-economic damages above $1 million and was also ineffective in its terms. Because these damages are incurred over years, they should be paid out over years. This would allow the insurance company to save the cost of that money before it pays it out.
  • Net Opinion Rule – This proposal would require all expert witnesses to base their testimony on written, authoritative proof of the standard of care. It may also bring more credibility back to the system.
  • Non-economic damage caps – Depending on the level will determine its effectiveness. While many focus on the relatively few cases that actually have damages above cap levels, it is the few cases and the unpredictable nature of these cases that drive up the thousands of settlements behind them.
  • Total Damages Cap – By limiting damages to set policy limits you would have, in effect, done what the bad faith doctrine attempted and also protected physicians from excess liability. Louisiana and a few other states have total damage caps.
  • Statute of Limitations – Further restrictions to get the statute closer to a hard limit would cut down the number of cases filed. Under existing law the two year statute does not begin to run until after a person knew or should have known of an injury and that a physician may have been responsible.
  • Medical Courts – Medical courts are being touted by Common Good and a growing host of opinion makers.   The devil may be in the details as to how these courts are constructed. Juries may or may not be part of the process.
  • Pre-suit Panels – Pre-suit panels are used to screen out non-meritorious cases before they hit the courts. A party that pursues a case against the panel’s findings runs greater economic risks if they lose. Early versions of Assembly Bill No. 50 had pre-suit discovery provisions but we fought to remove them as we believed that, as constructed, it would have allowed for witch hunts and actually drive up costs.
  • Real Subsidies/Patient Surcharges – One way to have society feel the burden of the liability system is to pass along the costs to them. This can be done by taxpayer sponsored subsidies (be careful who pays) or a surcharge on patients. Pennsylvania collects over $200 million year in taxes and charges to pay half of liability premiums.
  • Higher Reimbursements – If physicians received more in reimbursements the cost issue of medical liability premiums would be lessened.
  • Catastrophic Fund – This fund would be used to pay for damages to a patient for injuries above a certain level. It is similar to Florida’s “bad baby” fund. Its intent is to remove the cost of damages from the physician/insurer and place it on society. One question should be how would the fund be funded?
  • PLIGA – The Property-Liability Insurance Guaranty Association will pay only $300,000 if an insurance company becomes insolvent. A defendant who has bought a policy from an insolvent carrier would be liable for the excess. MSNJ has proposed to bring this insurance guaranty up to $1 million, either for medical liability cases or for all insurance cases. The cost of this increased protection would be spread over all property-liability insurance policy holders. MSNJ would also support a cutoff of liability above the PLIGA amount.
  • Establishment of Best Practices – Maine had experimented in the early 1990s with a law that protected physicians from liability if they followed listed treatment protocols. The law was later repealed because few protocols were ever adopted and cases brought always seemed to fall outside their scope.
  • Apology Rule – Many states are now adopting laws to allow health care providers to apologize to patients for errors or bad outcomes and not to allow their statements to be used against them in court. The intent behind the law is the belief that apologizing, showing compassion and explaining facts to injured patients and families actually lessens the incidence of being sued.
  • Early settlement – One of the suggestions of the Institute of Medicine was to allow for health care providers to offer early admissions of wrongdoing and to offer fair settlements. If this is done and accepted there may be a limit on liability although various hospital systems have had success with this approach even without any limits on liability.   The patient would be compensated quickly, would be less angry at the system, and the costs of litigation substantially reduced.
  • Workers Compensation Structure – It has also been suggested that since many injuries are really bad outcomes and not bad practice, that it makes sense to help compensate anyone who has an unexpected outcome or at least anyone who is the victim of malpractice. Only a very small percentage of actual victims ever sue or are compensated. Such a system, like workers compensation, would need limited payments and a structure to determine payouts. While complicated, it has generally worked in the business world or else business would have ended a long time ago.
  • Higher Level of Proof – Current tort law allows a physician to be held liable by a “preponderance of the evidence” standard. This is equivalent to “more likely than not.” Increasing that standard to “clear and convincing evidence” would make it harder for a plaintiff to win a case.
  • Rate Regulation – Trial attorneys, consumer groups, and a growing host of others believe that insurance company practices are largely to blame for the crisis and that they are now overpricing their product.   They point to Proposition 103, rather than MICRA, as the reason rates are somewhat stable in California. However, it is difficult to see how rate regulations would help in an industry that has been losing money each year had has had companies leave the market. Regulations may help in some situations but if they are too burdensome you run the risk of driving out insurers and preventing others from coming in.
  • Rate Restructuring – Some have argued that insurance companies should have less tiers for policy rate setting. This would mean that some lower cost policies would be increased to subsidize higher cost policies which would come down in cost. The rationale is that physicians cannot afford to pay the true cost of the higher priced policies.
  • Other – All of the above policies can have multiple permutations and combinations. There may be many other solutions that creative minds can discover.

For more information concerning the medical liability crisis and possible solutions see the AMA's summary.