New Jersey Supreme Court Says Patient Cannot Sue Physician For Lack Of Mandatory Malpractice Insurance

162017_132140396847214_292624_nIn its decision filed on September 29, 2015, the Supreme Court of New Jersey (“New Jersey Supreme Court”) held that under N.J.S.A. 45:9-19.17, an injured patient does not have a direct cause of action against a physician who does not possess medical malpractice liability insurance or a suitable letter of credit, and the failure to comply with the statutory liability insurance mandate does not give rise to an informed consent claim. However, the New Jersey Supreme Court also held that a cause of action for negligent hiring may be asserted against a health care facility that grants privileges to a physician who has not complied with the statutorily required insurance provisions.

N.J.S.A. 45:9-19.17

Beginning in 1998, the New Jersey Legislature required physicians licensed to practice medicine in New Jersey to maintain medical malpractice liability insurance, or, if a physician could not obtain insurance, the physician could post a letter of credit. N.J.S.A. 45:9-19.17 was later amended to require physicians to maintain insurance in the amount of at least $1 million per occurrence and $3 million per policy year, or to post a letter of credit for $500,000. The intent of N.J.S.A. 45:9-19.17 is to ensure that New Jersey citizens will have some recourse for adequate compensation in the event of medical malpractice .

A physician who does not obtain medical malpractice insurance or a suitable letter of credit is subject to disciplinary action by the Board of Medical Examiners and civil penalties, but the statute does not expressly provide that an injured patient has a direct cause of action against a treating physician who does not comply with the statutory requirements.

The New Jersey Supreme Court considered the legislative history and statutory language to determine whether an implicit private cause of action existed for violation of the mandatory medical malpractice insurance statute. The New Jersey Supreme Court concluded that N.J.S.A. 45:9-19.17 neither expressly nor implicitly recognizes a direct cause of action by an injured patient against a physician who fails to obtain the statutorily required medical malpractice liability insurance or letter of credit because the New Jersey Board of Medical Examiners was expressly deemed the intended vehicle to ensure compliance with the statutory requirements, a choice which reflects a legislative decision to encourage and force compliance, rather than wait for a complaint by an injured patient. The New Jersey Supreme Court further stated that a post-injury direct claim is reactive and does little to further the goal of creating a source of compensation for patients injured by negligent medical care.

The Informed Consent Claim

The doctrine of informed consent requires a physician to disclose material information that will allow a patient to intelligently assess the nature and risks of a proposed treatment or procedure. A risk is material if a reasonable patient would likely attach significance to it in deciding whether to forego the treatment.

The New Jersey Supreme Court stated that the validity of the consent obtained from a patient normally is confined to disclosure of the associated risks, but consent may, in certain circumstances, be vitiated by a physician’s significant misrepresentations of credentials or experience. In such circumstances, a plaintiff must show that the physician’s more limited experience or credentials could have substantially increased the risk and that the increased risk would cause a reasonably prudent patient not to consent.

The New Jersey Supreme Court stated that a physician’s failure to comply with N.J.S.A. 45:9-19.17 does not necessarily mean that the physician is unskilled and the lack of insurance bears no relation to the risks attendant to a proposed treatment or procedure. The New Jersey Supreme Court therefore declined to extend the relief that the informed consent doctrine may provide to an injured patient in order to address the financial insecurity of a physician.

The Defendant Surgical Center’s Potential Liability

The plaintiffs alleged that the defendant surgical center owed a duty to limit the use of its facility only to those physicians who satisfy the statutory insurance requirements. Generally, a person who engages an independent contractor is not liable for the negligence of that contractor but an exception is made if the contractor is incompetent, although liability is limited to the physical harm that is caused. The lack of financial responsibility, including the absence of insurance, was not considered as indicative of incompetence.

The New Jersey Supreme Court stated that when a task requires specific permits or licenses, retention of a contractor without those necessary credentials subjects the business to liability for hiring an incompetent contractor. Likewise, granting privileges to a physician lacking the appropriate credentials also exposes a health care facility to liability. Because the basic element of competency for any physician seeking surgical privileges at the defendant surgical center is possession of a license to practice medicine in New Jersey, and an essential condition for such a license is possession of a medical malpractice liability insurance policy or an acceptable letter of credit, the defendant surgical center had an initial duty to ascertain that the defendant physician possessed the requisite license and a continuing duty to assure that his license was maintained. Because the defendant surgical center knew that the defendant physician possessed an insurance policy that expressly excluded the procedure performed on the plaintiff, the New Jersey Supreme Court held that summary judgment in favor of the defendant surgical center was inappropriate.

Source  Jarrell, et al., v. Kaul, et al., A-42-13, 072363.

If you or a loved one were harmed due to medical negligence in New Jersey or in another U.S. state, you should promptly find a medical malpractice lawyer in New Jersey or in your state who may investigate your medical malpractice claim for you and represent you in a medical malpractice case, if appropriate.

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This entry was posted on Friday, October 2nd, 2015 at 5:14 am. Both comments and pings are currently closed.


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