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NJ Supreme Court to Decide if Physicians Must Disclose Insurance Coverage to Patients

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The New Jersey Supreme Court recently heard arguments as to whether a physician must disclose his medical malpractice coverage for a procedure to be performed on his patient.  The Court also heard arguments that, in the event that a physician did not have coverage, could the medical facility be liable for damages related to a negligently performed surgery.   

Plaintiff, a long-time sufferer of back and right leg pain, sued an anesthesiologist for performing a lumbar fusion on him when the anesthesiologist’s insurance policy did not cover fusions.  Under New Jersey law, doctors must carry medical liability coverage of at least $1 million per occurrence per policy year.  To the extent that insurance may not be available, a physician must also have a $500,000 letter of credit.  Here, the defendant anesthesiologist supplied the medical facility with the letter of credit, but his insurance did not cover lumbar fusions.  Currently, when obtaining informed consent, a physician is not required to disclose his insurance coverage. 

Following the lumbar fusion, the plaintiff developed increasing left leg pain to the point where he could not lift his left foot and sustained several falls.  The plaintiff sued the anesthesiologist for malpractice, as well as for deceit, misrepresentation, and outrageous conduct for failing to disclose that he was not insured to perform spine surgery.  In fact, the anesthesiologist’s policy contained an explicit exclusion for spinal surgery and his attempt at securing insurance for lumbar surgery had failed.  The plaintiff argued that, because of the lack of insurance, he did not give informed consent to the procedure and thus the anesthesiologist’s surgery amounted to battery.  The plaintiff further alleged that the surgical center wrongfully facilitated the surgery despite the anesthesiologist’s inadequate coverage.

The trial judge dismissed the coverage-related claims against the anesthesiologist and the surgical center because the plaintiff could not produce an expert to testify that the center breached the standard of care by allowing the anesthesiologist to perform the surgery without coverage.  The court ultimately found for the plaintiff, awarding him $500,000 in compensatory damages, his wife $250,000 in consortium damages, and medical expenses plus interest.  The Appellate Division affirmed the award but noted that the New Jersey coverage statute does not contemplate a cause of action for a noncompliant physician.  Rather, the Board of Medical Examiners has the right to pursue disciplinary actions.  Both the trial and appellate courts ruled that the plaintiff could not sue for deceit and battery.

Plaintiff appealed the ruling as to his coverage claims and his attorney asserted to the Supreme Court that a ruling in his client’s favor was necessary “to deter conduct which leaves patients unprotected from gross negligence or unscrupulous practitioners.”  While arguments for the plaintiff centered on a plaintiff’s ability to recover for medical malpractice, the anesthesiologist’s lawyer advised that a physician could protect himself through bankruptcy if he does not have the assets to satisfy an award.  Further, he argued that the current New Jersey law provided no duty to disclose whether a procedure was insured and that requiring surgeons to inform all patients of the extent of their coverage would have a chilling effect on the physician-patient relationship. 

As for the surgical center, plaintiff argued that the center knew that the anesthesiologist was not fully insured and should thus be held accountable for the physician’s negligence.  The New Jersey Association for Justice presented as an amicus and its attorney argued that surgical centers should be held to the same standard as hospitals when it comes to ensuring its practitioners comply with the coverage laws. 

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