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Entering the year 2003, New Jersey doctors felt overwhelmed by huge increases in
medical liability insurance premiums. Many were relocating to other states, no longer
practicing high-risk procedures or retiring early. New Jersey obstetricians’ premiums
had increased by 67 percent over the previous year, and many were paying in excess
of $100,000 a year for coverage. Other high-risk specialties, like neurosurgeons,
had been equally hard hit. The year prior, there were 85 practicing neurosurgeons
in New Jersey; by 2003, the number shrank to 65.
And the liability problems were not confined to the traditional high-risk specialists.
Primary care practitioners were feeling pressure as they were often dragged into
lawsuits when they refer a patient who encountered a bad outcome. Primary care doctors
in the Garden State also weathered a 75-percent increase in their premiums over
the previous two years.
In response, the Medical Society of New Jersey
organized a weeklong walkout in February of ’03 to illustrate the imminent effect
skyrocketing premiums would have on access to care (an estimated 70 percent of the
state’s 22,000 physicians took part in the walkout).
During the first week February 2003, physicians closed their offices and refused
to see patients except for emergencies. The striking doctors handed out leaflets
to patients that explained the situation, distributed form letters to send their
legislators and circulated petitions. By May, New Jersey legislators would receive
35,000 letters and more than 15,000 phone calls in support of their doctors’ situation.
Following the walkout, a bipartisan committee in the state Senate met to craft a
tort reform bill. A compromise was struck that created a cap on noneconomic damages
of $300,000 for physicians, but established a catastrophic fund for additional damages.
Unfortunately, the bill languished and died in the face of a statewide budget crisis.
Shortly thereafter, New Jersey’s largest malpractice carrier, Princeton Insurance,
which insured more than half of the state’s physicians, had it’s insurance rating
downgraded, was forced to increase premiums to ensure an adequate surplus and then,
finally, announced that it would temporarily suspend writing new policies.
With the writing on the wall, the state legislature revisited the issue in 2004,
and on June 4, then Governor James McGreevey signed into law the “New Jersey Medical
Care Access and Responsibility and Patients First Act,” enacting specific
medical malpractice reforms designed to curb skyrocketing malpractice insurance
premiums and ensure citizens’ access to healthcare.
The New Jersey Medical Care Access and Responsibility and Patients First Act reformed
the state’s healthcare liability climate by:
- allowing physicians to form medical malpractice liability insurance purchasing alliances
in order to negotiate a reduced premium
- requiring insurers to provide a reduced premium for policies that do not include
a “consent to settle” provision
- requiring insurers to offer policies with deductibles of at least $5,000 per claim
and up to $1 million per claim
- prohibiting a carrier from increasing the premium of an insured if the insured is
dismissed from an action alleging medical malpractice within 180 days of the filing
of the action
- requiring all medical malpractice insurers to certify to the Department of Banking
& Insurance as to adequacy of their financial reserves as a way to ensure the safety
and soundness of insurers
- allowing the New Jersey insurance commissioner to order a rate roll back if it is
determined that a carrier’s medical liability rates are not in compliance with the
law.
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