N.J. Senate Passes Med-Mal Fund

March 31, 2004

With strong backing from Democrats and one Republican, the New Jersey Senate passed (22-15) legislation to provide doctors with an estimated $26 million each year for the next three years to help them pay for malpractice insurance and assist hospitals with the cost of free care. The insurance fund would be fed by a $3 per employee tax on employers and $75 surcharges on medical professionals and lawyers for the next three years.

It does not place any limits on malpractice awards but does tighten lawsuit filing rules and gives the state insurance department more leeway in curtailing insurance rate increases.

A similar bill has already passed the Assembly, which will now have to consider the Senate version before a final measures ends up on Gov. James McGreevey’s desk for his signature. The Assembly does not meet again until May.

Sen. Joseph Vitale (D-Middlesex), a co-sponsor of the bill, called it “a collaborative effort on the part of many” that will “stabilize the malpractice insurance market and bring relief to doctors across the Garden State.”

But Senate Minority Leader Leonard Lance (R-Hunterdon) said the bill would do “precious little” to keep obstetricians and other specialists from being driven out of state by rising malpractice premiums. He said the bill should go further and place a limit on jury awards in medical malpractice cases.

The legislation was sponsored by Senators Joseph F. Vitale and Raymond J. Lesniak.

“Through countless hours of work, I believe we have crafted a bill that adequately addresses doctors’ concerns in regards to medical malpractice liability insurance,” said Senator Vitale, D-Middlesex. “This bill represents a collaborative effort on the part of many, and I think we have come up with a good bill which will stabilize the malpractice insurance market and bring relief to doctors across the Garden State.”

While not its major focus, the bill, a Senate Committee substitute for S-50 and S-551, would make several tort reforms. The statute of limitations for injuries sustained at birth would be reduced so that legal action would have to be taken before a minor’s thirteenth birthday, as opposed to the previous rule requiring action before the twentieth birthday. The bill also puts greater emphasis on complimentary dispute resolution, such as court-mandated mediation and settlement proceedings, provides for an affidavit of noninvolvement to allow doctors who are misidentified in a legal action to have the case against them dismissed, and expands the criteria for expert witnesses testifying in malpractice cases.

“It’s necessary to alleviate the high cost of medical malpractice insurance for much-needed specialties like obstreticians and neurosurgeons who are having an extremely hard time meeting the rising costs of their practice,” said Senator Lesniak, D-Union. “I think the tort reforms appropriately address this concern, by providing relief to doctors without unduly penalizing patients who have suffered from malpractice.”

The bill also expands the Good Samaritan Act, so that health care professionals who respond in good faith and provide emergency assistance above and beyond their normal duty are protected from civil liability, and requires greater reporting standards to the State Board of Medical Examiners.

“Doctors should be able to practice medicine without fear of repercussion, especially in emergency situations, where time is of the essence,” said Senator Vitale. “By expanding the Good Samaritan protections, we are allowing doctors to aid those in emergency situations without having to second guess their every action.”

Finally, the bill makes reforms to the medical malpractice liability insurance system, such as allowing doctors to aggregate in purchasing alliances for greater negotiating power over insurance rates, requiring that insurers cannot increase medical malpractice insurance premiums on health care professionals if their malpractice suit is dismissed, and establishing a three-year subsidy fund of $26.1 million annually.

The subsidy fund is created through a $75 fee on doctors, chiropractors, dentists, optometrists and lawyers, as well as a $3 per employee fee on all employers covered under the state’s unemployment compensation law. It would allocate $17 million to provide relief for health care providers who have seen excessive premium increases, $6.9 million to hospitals to provide charity care, $1 million to reimburse obstetricians and gynecologists who agree to practice for four years in underserved areas, and $1.2 million to provide funding for the FamilyCare program to pregnant women who cannot afford health care but do not qualify for Medicaid reimbursement.

“This bill has been bogged down in politics for too long, and while we’ve debated this provision or that provision, the malpractice insurance crisis has only gotten worse,” said Senator Lesniak. “This bill is a very good start in addressing the situation faced by doctors in high-risk specialties, and will ensure more stability in the health care system in New Jersey.”

The bill now heads back to the Assembly for concurrence with amendments to the subsidy fund. The amendments were made after fiscal review by the Department of Labor and the nonpartisan Office of Legislative Services indicated that with the original fee of $50, the fund would not collect the $30 million it was originally estimated to collect. If the Assembly concurs with the Senate’s amendments, it would then go to the Governor’s desk for final approval.

The Senate also unanimously approved Senator Vitale’s bill, S-557, known as the “Patient Safety Act,” which would require greater reporting to the State of medical errors and serious preventable adverse events, and require hospitals and other health care providers to identify a patient safety plan. The bill now heads to Gov. McGreevey for final approval.

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