A50

ASSEMBLY, No. 50

STATE OF NEW JERSEY

211th LEGISLATURE

INTRODUCED MARCH 4, 2004

Sponsored by:

Assemblyman JOSEPH J. ROBERTS, JR.

District 5 (Camden and Gloucester)

Assemblyman NEIL M. COHEN

District 20 (Union)

Assemblywoman LORETTA WEINBERG

District 37 (Bergen)

Assemblyman JOHN F. MCKEON

District 27 (Essex)

SYNOPSIS

"New Jersey Medical Care Access and Responsibility and Patients First Act."

CURRENT VERSION OF TEXT

As introduced.

An Act concerning medical professional liability, insurance reform and patient protection and revising parts of the statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) This act shall be known and may be cited as the "New Jersey Medical Care Access and Responsibility and Patients First Act."

2. (New section) The Legislature finds and declares that:

a. One of the most vital interests of the State is to ensure that high-quality health care continues to be available in this State and that the residents of this State continue to have access to a full spectrum of health care providers, including highly trained physicians in all specialties;

b. The State's health care system and its residents' access to health care providers are threatened by a dramatic escalation in medical malpractice liability insurance premiums, which is creating a crisis of affordability in the purchase of necessary liability coverage for our health care providers;

c. One particularly alarming result of rising premiums is that there are increasing reports of doctors retiring or moving to other states where insurance premiums are lower, dropping high-risk patients and procedures, and practicing defensive medicine in a manner that may significantly increase the cost of health care for all our citizens;

d. The reasons for the steep increases in the cost of medical malpractice liability insurance are complex and involve issues related to: the State's tort liability system; the State's health care system, which includes issues related to patient safety and medical error reporting; and the State's regulation and requirements concerning medical malpractice liability insurers;

e. It is necessary and appropriate for the State to take meaningful and prompt action to address the various interrelated aspects of these issues that are impacted by, or impact on, the State's health care system; and

f. To that end, this act provides for a comprehensive set of reforms affecting the State's tort liability system, health care system and medical malpractice liability insurance carriers to ensure that health care services continue to be available and accessible to residents of the State and to enhance patient safety at health care facilities.

3. N.J.S.2A:14-2 is amended to read as follows:

2A:14-2. Every action at law for an injury to the person caused by the wrongful act, neglect or default of any person within this [state] State shall be commenced within 2 years next after the cause of any such action shall have accrued; except that an action by or on behalf of a minor that has accrued for medical malpractice for injuries sustained at birth shall be commenced prior to the minor's 11th birthday.

(cf: N.J.S.2A:14-2)

4. N.J.S.2A:14-21 is amended to read as follows:

2A:14-21. If any person entitled to any of the actions or proceedings specified in [sections] N.J.S.2A:14-1 to 2A:14-8 or [sections] N.J.S.2A:14-16 to 2A:14-20 [of this title] or to a right or title of entry under [section] N.J.S.2A:14-6 [of this title] is or shall be, at the time of any such cause of action or right or title accruing, under the age of 21 years, or insane, such person may commence such action or make such entry, within such time as limited by [said sections] those statutes, after his coming to or being of full age or of sane mind. Notwithstanding the provisions of this section to the contrary, an action by or on behalf of a minor that has accrued for medical malpractice for injuries sustained at birth shall be commenced prior to the minor's 11th birthday, as provided in N.J.S.2A:14-2.

(cf: N.J.S.2A:14-21)

5. (New section) The judge presiding over a medical malpractice action, or the judge's designee, shall, within 30 days after the discovery end date, determine whether referral to a complementary dispute resolution mechanism may encourage early disposition or settlement of the action. If the judge makes such a determination, the matter shall be referred to complementary dispute resolution pursuant to Rule 1:40 of the Rules Governing the Courts of the State of New Jersey.

Nothing in this section shall be construed to limit the authority of the judge to refer an action to complementary dispute resolution prior to the discovery end date.

6. (New section) a. A health care provider named as a defendant in a medical malpractice action may cause the action against that provider to be dismissed upon the filing of an affidavit of noninvolvement with the court. The affidavit of noninvolvement shall set forth, with particularity, the facts that demonstrate that the provider was misidentified or otherwise not involved, individually or through its servants or employees, in the care and treatment of the claimant, and was not obligated, either individually or through its servants or employees, to provide for the care and treatment of the claimant, and could not have caused the alleged malpractice, either individually or through its servants or employees, in any way.

b. A codefendant or claimant shall have the right to challenge an affidavit of noninvolvement by filing a motion and submitting an affidavit that contradicts the assertions of noninvolvement made by the health care provider in the affidavit of noninvolvement.

c. If the court determines that a health care provider named as a defendant falsely files or makes false or inaccurate statements in an affidavit of noninvolvement, the court, upon motion or upon its own initiative, shall immediately reinstate the claim against that provider. Reinstatement of a party pursuant to this subsection shall not be barred by any statute of limitations defense that was not valid at the time the original action was filed.

In any action in which the health care provider is found by the court to have knowingly filed a false or inaccurate affidavit of noninvolvement, the court shall impose upon the person who signed the affidavit or represented the party, or both, an appropriate sanction, including, but not limited to, a civil penalty not to exceed $10,000 and an order to pay to the other party or parties the amount of the reasonable expenses incurred as a result of the filing of the false or inaccurate affidavit, including a reasonable attorney fee. The court shall also refer the matter to the Attorney General and the appropriate professional licensing board for further review.

d. If the court determines that a plaintiff falsely objected to a health care provider's affidavit of noninvolvement, or knowingly provided an inaccurate statement regarding a health care provider's affidavit, the court shall impose upon the plaintiff or the plaintiff's counsel, or both, an appropriate sanction, including, but not limited to, an order to pay to the other party or parties the amount of the reasonable expenses incurred as a result of the false objection or inaccurate statement, including a reasonable attorney fee.

e. As used in this section, "health care provider" means an individual or entity, which, acting within the scope of its licensure or certification, provides health care services, and includes, but is not limited to: a physician, dentist, nurse, pharmacist or other health care professional whose professional practice is regulated pursuant to Title 45 of the Revised Statutes; and a health care facility licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).

7. (New section) In an action alleging medical malpractice, a person shall not give expert testimony or execute an affidavit pursuant to the provisions of P.L.1995, c.139 (C.2A:53A-26 et seq.) on the appropriate standard of practice or care unless the person is licensed as a physician or other health care professional in the United States and meets the following criteria:

a. If the party against whom or on whose behalf the testimony is offered is a specialist or subspecialist recognized by the American Board of Medical Specialties and the care or treatment at issue involves that specialty or subspecialty recognized by the American Board of Specialties, the person providing the testimony shall have specialized at the time of the occurrence that is the basis for the action in the same specialty or subspecialty, recognized by the American Board of Medical Specialties,as the party against whom or on whose behalf the testimony is offered, and if the person against whom or on whose behalf the testimony is being offered is board certified and the care or treatment at issue involves that board specialty or subspecialty recognized by the American Board of Medical Specialties, the expert witness shall be a specialist or subspecialist recognized by the American Board of Medical Specialties who is board certified in the same specialty or subspecialty, recognized by the American Board of Medical Specialties, and during the year immediately preceding the date of the occurrence that is the basis for the claim or action, shall have devoted a majority of his professional time to either:

(1) the active clinical practice of the same health care profession in which the defendant is licensed, and, if the defendant is a specialist or subspecialist recognized by the American Board of Medical Specialties, the active clinical practice of that specialty or subspecialty recognized by the American Board of Medical Specialties; or

(2) the instruction of students in an accredited medical school, other accredited health professional school or accredited residency or clinical research program in the same health care profession in which the defendant is licensed, and, if that party is a specialist or subspecialist recognized by the American Board of Medical Specialties, an accredited medical school, health professional school or accredited residency or clinical research program in the same specialty or subspecialty recognized by the American Board of Medical Specialties; or

(3) both.

b. If the party against whom or on whose behalf the testimony is offered is a general practitioner, the expert witness, during the year immediately preceding the date of the occurrence that is the basis for the claim or action, shall have devoted a majority of his professional time to:

(1) active clinical practice as a general practitioner; or

(2) the instruction of students in an accredited medical school, health professional school, or accredited residency or clinical research program in the same health care profession in which the party against whom or on whose behalf the testimony is licensed; or

(3) both.

c. A court may waive the same specialty or subspecialty recognized by the American Board of Medical Specialties and board certification requirements of this section if the court determines that the expert possesses sufficient training, experience and knowledge to provide the testimony as a result of active involvement in, or full-time teaching of, medicine in the applicable area of practice or a related field of medicine.

d. Nothing in this section shall limit the power of the trial court to disqualify an expert witness on grounds other than the qualifications set forth in this section.

e. In an action alleging medical malpractice, an expert witness shall not testify on a contingency fee basis.

f. A person who provides expert testimony or executes an affidavit pursuant to the provisions of P.L.1995, c.139 (C.2A:53A-26 et seq.) pursuant to this section, who deliberately misrepresents the applicable appropriate standard of practice or care, shall be liable to a civil penalty not to exceed $10,000 and other expenses incurred as a result of the testimony provided or affidavit that was executed.

g. An individual or entity who threatens to take or takes adverse action against a person in retaliation for that person providing or agreeing to provide expert testimony, or for that person executing an affidavit pursuant to the provisions of P.L.1995, c.139 (C.2A:53A-26 et seq.), which adverse action relates to that person's employment, accreditation, certification, credentialing or licensure, shall be liable to a civil penalty not to exceed $10,000 and other damages incurred by the person and the party for whom the person was testifying as an expert.

8. (New section) A judge presiding over an action alleging medical malpractice, in which the jury has rendered a verdict in favor of the complaining party, shall, upon a motion by any party for additur or remittitur on the issue of the quantum of damages, consider the evidence in the light most favorable to the non-moving party and determine whether the award is clearly inadequate or excessive in view of the nature of the medical condition or injury that is the cause of action or because of passion or prejudice by the jury.

9. (New section) a. If an individual's actual health care facility duty, including on-call duty, does not require a response to a patient emergency situation, a health care professional who, in good faith, responds to a life-threatening emergency or responds to a request for emergency assistance in a life-threatening emergency within a hospital or other health care facility, is not liable for civil damages as a result of an act or omission in the rendering of emergency care. The immunity granted pursuant to this section shall not apply to acts or omissions constituting gross negligence, recklessness or willful misconduct.

b. The provisions of subsection a. of this section shall not apply to a health care professional if a provider-patient relationship existed before the emergency, or if consideration in any form is provided to the health care professional for the service rendered.

c. The provisions of subsection a. of this section shall not apply if a general hospital has not reasonably and adequately staffed its emergency department.

d. A health care professional shall not be liable for civil damages for injury or death caused in an emergency situation occurring in the health care professional's private practice or in a health care facility on account of a failure to inform a patient of the possible consequences of a medical procedure when the failure to inform is caused by any of the following:

(1) the patient was unconscious;

(2) the medical procedure was undertaken without the consent of the patient because the health care professional reasonably believed that the medical procedure should be undertaken immediately and that there was insufficient time to fully inform the patient; or

(3) the medical procedure was performed on a person legally incapable of giving informed consent, and the health care professional reasonably believed that the medical procedure should be undertaken immediately and that there was insufficient time to obtain the informed consent of the person authorized to give such consent for the patient.

The provisions of this subsection shall apply only to actions for damages for an injury or death arising as a result of a health care professional's failure to inform, and not to actions for damages arising as a result of a health care professional's negligence in rendering or failing to render treatment.

e. As used in this section:

(1) "Health care professional" means a physician, dentist, nurse or other health care professional whose professional practice is regulated pursuant to Title 45 of the Revised Statutes and an emergency medical technician or mobile intensive care paramedic certified by the Commissioner of Health and Senior Services pursuant to Title 26 of the Revised Statutes; and

(2) "Health care facility" means a health care facility licensed by the Department of Health and Senior Services pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.) and a psychiatric hospital operated by the Department of Human Services and listed in R.S.30:1-7.

10. Section 1 of P.L.1995, c.69 (C.45:9-19.16) is amended to read as follows:

1. a. A physician licensed by the State Board of Medical Examiners, or a physician who is an applicant for a license from the State Board of Medical Examiners, shall notify the board within 10 days of :

(1) any action taken against the physician's medical license by any other state licensing board or any action affecting the physician's privileges to practice medicine by any out-of-State hospital, health care facility, health maintenance organization or other employer;

(2) any pending or final action by any criminal authority for violations of law or regulation, or any arrest or conviction for any criminal or quasi-criminal offense pursuant to the laws of the United States, this State or another state, including, but not limited to:

(a) criminal homicide pursuant to N.J.S.2C:11-2;

(b) aggravated assault pursuant to N.J.S.2C:12-1;

(d) an offense involving any controlled dangerous substance or controlled substance analog as set forth in chapter 35 of Title 2C of the New Jersey Statutes.

b. A physician who is in violation of this section is subject to disciplinary action and civil penalties pursuant to sections 8, 9 and 12 of P.L.1978, c.73 (C.45:1-21 to 22 and 45:1-25).

c. The State Board of Medical Examiners shall notify all physicians licensed by the board of the requirements of this section within 30 days of the date of enactment of this act.

(cf: P.L.1995, c.69, s.1)

11. Section 13 of P.L.1989, c.300 (C.45:9-19.13) is amended to read as follows:

13. a. In any case in which the State Board of Medical Examiners refuses to issue, suspends, revokes or otherwise conditions the license, registration, or permit of a physician, podiatrist or medical resident or intern, the board shall, within 30 days of its action, notify each licensed health care facility, psychiatric hospital operated by the Department of Human Services and listed in R.S.30:1-7, and health maintenance organization with which the person is affiliated and every board licensee in the State with which the person is directly associated in his private medical practice.

b. If, during the course of an investigation of a physician, the board requests information from a health care facility, psychiatric hospital operated by the Department of Human Services or health maintenance organization regarding that physician, and the board subsequently makes a finding of no basis for disciplinary action, the board shall, within 30 days of making that finding, notify the health care facility, State psychiatric hospital or health maintenance organization of its determination.

(cf: P.L.1989, c.300, s.13)

12. (New section) a. On or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and except as provided in subsection e. of this section, no person who is an officer, director or board member of a professional association for health care providers shall serve concurrently as an officer, director or board member of a State-domiciled medical malpractice liability insurer that is licensed in the State and offering medical malpractice liability insurance policies on that effective date.

b. On or after the effective date of P.L. , c. (C. )(pending before the Legislature as this bill) and except as provided in subsection e. of this section, no more than one person who has been an officer, director or board member of a professional association for health care providers shall serve as an officer, director or board member of a State-domiciled medical malpractice liability insurer that is licensed in the State and offering medical malpractice liability insurance policies on that effective date.

c. As used in this section, "health care provider" means an individual or entity, which, acting within the scope of its licensure or certification, provides health care services, and includes, but is not limited to, a physician, dentist, nurse or other health care professional whose professional practice is regulated pursuant to Title 45 of the Revised Statutes, and a health care facility licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).

d. A person or professional association who violates the provisions of this section shall be liable for a civil penalty of $10,000 for each violation. The penalty shall be sued for and collected by the Commissioner of Banking and Insurance in a summary proceeding in accordance with the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).

e. In the case of an officer, director or board member of a medical malpractice liability insurer who is an officer, director or board member of a professional association for health care providers on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the officer, director or board member shall have 180 days to comply with the requirements of this section.

13. (New section) Physicians may join together, by means of a joint contract under the procedures established by this section, to form a "Medical Malpractice Liability Insurance Purchasing Alliance" for the purpose of negotiating a reduced premium for its members in the purchase of medical malpractice liability insurance. The joint contract shall be executed by all members of the purchasing alliance.

a. As used in this section:

"Board" means a medical malpractice liability insurance purchasing alliance board of directors provided for in this section.

"Commissioner" means the Commissioner of Banking and Insurance.

"Medical Malpractice Liability Insurance Purchasing Alliance," "purchasing alliance" or "alliance" means a purchasing alliance established pursuant to this section.

"Member" means a physician who is a member of a medical malpractice liability insurance purchasing alliance as provided for in this section.

b. The purchasing alliance, which may be a corporation, shall be governed by a board of directors, elected by the members of the purchasing alliance. No person may serve as an officer or director of an alliance who has a prior record of administrative, civil or criminal violations within the financial services industry. The directors shall serve for terms of three years, and shall serve until their successors are elected and qualified. Each director shall serve without compensation, except for reimbursement for actual expenses incurred by that director.

c. The board shall adopt by-laws for the operation of the purchasing alliance, which shall be effective upon ratification by a two-thirds majority of the members. The by-laws shall include, but not be limited to:

(1) the establishment of procedures for the organization and administration of the alliance; and

(2) procedures for the qualifications and admission of the members of the alliance.

The bases for denial of membership shall include, but not be limited to:

(a) performance of an act or practice that constitutes fraud or intentional misrepresentation of material fact;

(b) previous denial of membership in the alliance; or

(3) procedures for the withdrawal of members from the alliance;

(4) procedures for the expulsion of members from the alliance.

The bases for expulsion shall include, but not be limited to:

(a) failure to pay membership or other fees required by the purchasing alliance;

(b) failure to pay premiums in accordance with the terms of the medical malpractice liability insurance policy or the terms of the joint contract; or

(5) procedures for the termination of the alliance.

d. In addition to the other powers authorized under this section, a purchasing alliance shall have the authority to:

(1) set reasonable fees for membership in the alliance that will finance reasonable and necessary costs incurred in administering the purchasing alliance;

(2) negotiate premium rates for medical malpractice liability insurance with insurers on behalf of the members of the alliance, provided that negotiations are conducted by a person other than a member of the alliance or an employee of a member of the alliance;

(3) provide premium collection services for insurance purchased through the alliance for members;

(4) contract with third parties for any services necessary to carry out the powers and duties authorized or required pursuant to this section; and

(5) establish procedures for keeping confidential all communications between the members of the purchasing alliance and for prohibiting the dissemination and discussion of pricing information and other business-related information between and among members of the alliance.

e. A purchasing alliance established pursuant to the provisions of this section shall not:

(1) assume risk for the cost or provision of medical malpractice liability insurance;

(2) exclude a member who agrees to pay fees for membership and the premium for medical malpractice liability insurance coverage and who abides by the by-laws of the alliance;

(3) engage in any trade practice or activity prohibited pursuant to P.L.1947, c.379 (C.17:29B-1 et seq.);

(4) represent more than 35% of the physicians in a county or other relevant geographic service area; or

(5) require a member to purchase medical malpractice liability insurance only through the alliance.

f. Within 30 days after its organization, the purchasing alliance board shall file with the commissioner a certificate that shall list: the members of the alliance; the names of the directors, chairman, treasurer and secretary of the alliance; the address at which communications for the alliance are to be received; a copy of the certificate of incorporation of the alliance, if any; and a copy of the joint contract executed by all of the members. Any change in the information required by the provisions of this section shall be filed with the commissioner within 30 days of the change.

g. The commissioner, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations necessary to effectuate the provisions of this section.

14. (New section) a. A medical malpractice liability insurance policy, which is made, issued or delivered pursuant to Subtitle 3 of Title 17 of the Revised Statutes in this State on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), may contain a provision that provides a person insured under the policy with the exclusive right to require the insurer to obtain the consent of the insured to settle any claim filed against the insured; except that, if the policy contains that provision, the insurer shall offer an endorsement, to be included in the policy at the option of the insured, providing the insurer with the right to settle a claim filed under the policy without first having obtained the insured's consent. The insurer shall establish a premium for the endorsement, which premium shall reflect any savings or reduced costs attributable to the endorsement.

b. The Commissioner of Banking and Insurance, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations necessary to effectuate the provisions of this section.

15. (New section) a. Every insurer authorized to transact medical malpractice liability insurance in this State shall offer medical malpractice liability insurance policies with a deductible, at the option of the insured, in an amount of at least $5,000 per claim and up to $1,000,000 per claim, and may require the insured to provide collateral for the deductible amount to the insurer.

b. Every insurer authorized to transact medical malpractice liability insurance in this State shall provide an appropriate premium reduction for any deductible chosen pursuant to subsection a. of this section.

c. In the case of a policy with any deductible, the insurer shall be responsible for payment of the deductible and shall be reimbursed for that amount by the insured.

16. (New section) Notwithstanding any other law or regulation to the contrary, an insurer authorized to transact medical malpractice liability insurance in this State shall not increase the premium of any medical malpractice liability insurance policy based on a claim of medical negligence or malpractice against the insured if the insured is dismissed from an action alleging medical malpractice within 300 days of the filing of that action.

17. (New section) Each annual statement made after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), pursuant to the provisions of section 16 of P.L.1982, c.114 (C.17:29AA-16), by an insurer writing medical malpractice in this State, shall include a certification by the chief executive officer or chief financial officer that the rates for every category, subcategory, or risk classification are adequate to cover expected losses and expenses of the insurer and to ensure the safety and soundness of the insurer.

18. (New section) Notwithstanding the provisions of section 1 of P.L.1968, c.131 (C.17:29C-1) to the contrary, eachnotice of renewal or nonrenewal by an insurer authorized to transact medical malpractice liability insurance in this State shall be mailed or delivered by the insurer to the insured not less than 60 days prior to the expiration of the policy and, in the case of a nonrenewal, shall contain the reason for the nonrenewal.

19. Section 10 of P.L.1982, c.114 (C.17:29AA-10) is amended to read as follows:

10. a. Rates shall not be excessive, inadequate or unfairly discriminatory.

b. In the case of rates for medical malpractice liability insurance, if the commissioner finds, after a hearing, that a rate in effect for any insurer is not in compliance with the standards of P.L.1982, c.114 (C.17:29AA-1 et seq.), and has increased in excess of 25% of the rate previously in effect, the commissioner shall issue an order specifying in what respects the rate so fails and directing that the rate change is no longer in effect, and shall order the insurer to refund with interest any premiums collected pursuant to the non-compliant rate.

c. Pursuant to procedures and standards adopted by the commissioner, insureds may petition the commissioner to investigate and, if appropriate, to conduct a hearing into whether medical malpractice liability insurance rates fail to comply with the standards of P.L.1982, c.114 (C.17:29AA-1 et seq.).

(cf: P.L.1982, c.114, s.10)

20. (New section) Subject to standards adopted by the National Association of Insurance Commissioners, the Commissioner of Banking and Insurance shall, within 180 days after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), review the current capitalization and reserve requirements applicable to insurers authorized or admitted to transact medical malpractice liability insurance in this State, as those requirements are established by statute or regulation, or both.

Based upon the findings of that review, the commissioner shall adopt regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to modify those requirements, as the commissioner determines necessary in order to ensure the solvency of those insurers and the availability and affordability of medical malpractice liability insurance in this State. If the commissioner determines that legislation is necessary to effect any such modification, the commissioner shall notify the Governor and the Legislature within the 180-day period provided in this section.

21. (New section) The provisions of P.L.1970, c.22 (C.17:27A-1 et seq.), regulating insurance company holding systems, shall apply to attorneys in fact and other persons engaged in reciprocal exchange or interinsurance contracts for the provision of medical malpractice insurance pursuant to Subtitle 3 of Title 17 of the Revised Statutes.

22. (New section) Every insurer authorized to transact medical malpractice liability insurance in this State shall offer its insureds the option to make premium payments in installments, as prescribed by the Commissioner of Banking and Insurance by regulation.

23. Section 2 of P.L.1983, c.247 (C.17:30D-17) is amended to read as follows:

2. a. Any insurer or insurance association authorized to issue medical malpractice liability insurance in the State shall notify the Medical Practitioner Review Panel established pursuant to section 8 of P.L.1989, c.300 (C.45:9-19.8) in writing of any medical malpractice claim settlement, judgment or arbitration award involving any practitioner licensed by the State Board of Medical Examiners and insured by the insurer or insurance association. Any practitioner licensed by the board who is not covered by medical malpractice liability insurance issued in this State, who has coverage through a self-insured health care facility or health maintenance organization, or has medical malpractice liability insurance which has been issued by an insurer or insurance association from outside the State, shall notify the review panel in writing of any medical malpractice claim settlement, judgment or arbitration award to which the practitioner is a party. The review panel or board, as the case may be, shall not presume that the judgment or award is conclusive evidence in any disciplinary proceeding and the fact of a settlement is not admissible in any disciplinary proceeding.

In any malpractice action against a practitioner, a settlement prohibiting a complaint against the practitioner or the providing of information to the review panel or board concerning the underlying facts or circumstances of the action is void and unenforceable.

b. An insurer or insurance association authorized to issue medical malpractice liability insurance in the State shall notify the review panel in writing of any termination or denial of coverage to a practitioner or surcharge assessed on account of the practitioner's practice method or medical malpractice claims history.

c. The form of notification shall be prescribed by the Commissioner of Banking and Insurance, shall contain such information as may be required by the board and the review panel, and shall be made within seven days of the settlement, judgment or award or the final action for a termination or denial of, or surcharge on, the medical malpractice liability insurance. Upon request of the board, the review panel or the commissioner, an insurer or insurance association shall provide all records regarding the defense of a malpractice claim, the processing of the claim and the legal proceeding; except that nothing in this subsection shall be construed to authorize disclosure of any confidential communication which is otherwise protected by statute, court rule or common law.

An insurer or insurance association, or any employee thereof, shall be immune from liability for furnishing information to the review panel and the board in fulfillment of the requirements of this section unless the insurer or insurance association, or any employee thereof, knowingly provided false information.

d. An insurer, insurance association or practitioner who fails to notify the review panel as required pursuant to this section shall be subject to such penalties as the Commissioner of Banking and Insurance may determine pursuant to section 12 of P.L.1975, c.301 (C.17:30D-12). In addition to, or in lieu of suspension or revocation, the commissioner may assess a fine which shall not exceed $1,000 for the first offense and $2,000 for the second and each subsequent offense, which may be recovered in a summary proceeding, brought in the name of the State in a court of competent jurisdiction pursuant to ["the penalty enforcement law," N.J.S.2A:58-1 et seq.] the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A: 58-10 et seq.).

e. A practitioner who fails to notify the review panel as required pursuant to this section shall be subject to disciplinary action and civil penalties pursuant to sections 8, 9 and 12 of P.L.1978, c.73 (C.45:1-21 to 45:1-22 and 45:1-25).

f. An insurer or insurance association shall make available to the review panel or the board, upon request, any records of termination or denial of coverage to a practitioner or surcharge assessed on account of the practitioner's practice method or medical malpractice claims history, which occurred up to five years prior to the effective date of P.L.1989, c.300 (C.45:9-19.4 et al.).

g. For the purposes of this section, "practitioner" means a person licensed to practice: medicine and surgery under chapter 9 of Title 45 of the Revised Statutes or a medical resident or intern; or podiatry under chapter 5 of Title 45 of the Revised Statutes.

h. Any insurer or insurance association authorized to issue medical malpractice liability insurance in the State shall notify the Commissioner of Banking and Insurance, in a form and manner specified by the commissioner, of any medical malpractice claim settlement, judgment or arbitration award involving any practitioner licensed by the State Board of Medical Examiners and insured by the insurer or insurance association. The notification shall include the specialty or area of professional practice of the practitioner and the amount of the settlement, judgment or arbitration award, but shall not include the name or other identifying information of the practitioner.

(cf: P.L.1989, c.300, s.4)

24. (New section) a. Notwithstanding any provision of law to the contrary, every insurer authorized to transact medical malpractice liability insurance in this State shall, during the period ending on the 91st day after the effective date of this act, permit a health care professional, who has a policy issued by that insurer that is in effect on the effective date of this act, to:

(1) request that the premium for that policy be recalculated to reflect any cost-saving provisions of this act; and

(2) cancel the policy with a return of the amount of the gross unearned premium to be returned on a pro rata basis.

b. The provisions of subsection a. of this section shall not be construed to permit an insurer to increase a premium on a policy, which is in effect on the effective date of this act, during the term of that policy.

25. (New section) a. As used in this section:

"Annuity" means an annuity issued by an insurer licensed or authorized to do business in this State which is a qualified assignment under section 130 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.130.

"Judgment creditor" means a claimant who is the recipient of an award for economic or noneconomic damages, or both, that is the result of an action filed against a health care provider for medical malpractice, which award is subject to the provisions of subsection b. of this section.

"Judgment debtor" means a health care provider who, as a defendant in an action brought for medical malpractice, is required to pay the claimant an award that is subject to the provisions of this section.

"Noneconomic damages" means damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium, hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature.

"Structured payment agreement" means an agreement made to settle a claim or lawsuit or respond to a judgment in an action brought for medical malpractice by an injured person whereby a series of periodic payments, rather than a lump sum payment, is made over time to a claimant, in accordance with the needs of the claimant or the claimant's family, either through the purchase of an annuity or the establishment of a trust fund, or by another means approved by the court.

b. (1) Unless otherwise agreed to by the parties, in any judgment resulting from a medical malpractice action brought by a claimant for medical malpractice in which the noneconomic damages are less than or equal to $1,000,000, the court shall enter a judgment ordering that all of the money damages, both economic and noneconomic, be paid immediately.

(2) Unless otherwise agreed to by the parties, in any judgment resulting from a medical malpractice action brought by a claimant for medical malpractice in which the noneconomic damages exceed $1,000,000, the court shall enter a judgment ordering that 50% of the noneconomic damages be paid immediately, with the costs and

attorney's fees to be paid from that amount. The remaining 50% of the judgment shall be paid over 60 months in the form of a structured payment agreement by any person, organization, group, or insurer that is contractually liable to pay the judgment.

c. The structured payment agreement shall specify: the recipient of the payments; the dollar amount of the payments; the interval between payments; the number of payments or the period of time over which payments are to be made; and the persons to whom money damages are owed, if any, in the event of the judgment creditor's death.

d. In the event of the judgment creditor's death, any amounts due and owing pursuant to subsection b. of this section shall be paid to the judgment creditor's estate.

e. The judgment debtor or the judgment debtor's insurer shall be required to: post a bond or security; or, as otherwise provided by regulation of the Department of Banking and Insurance, assure full payment of the noneconomic damages awarded. A bond shall not be deemed adequate unless it is written by a company authorized to do business in this State and is rated A+ by A.M. Best Company. If the judgment debtor is unable to adequately assure full payment of the judgment, the judgment, reduced to present value, shall be paid to the claimant in a lump sum. No bond may be canceled or be subject to cancellation unless at least 60 days' advance written notice is filed with the court and the claimant. Upon termination of periodic payments, the security, or so much as remains, shall be returned to the judgment debtor.

f. Upon the purchase of an annuity, establishment of a trust, or approval of another arrangement for periodic payments by a court, any obligation of the judgment debtor with respect to the judgment shall cease.

26. There is established the "Medical Care Availability Task Force."

a. The task force shall consist of 33 members as follows:

(1) the Commissioners of Banking and Insurance, Health and Senior Services, and Human Services, and the Director of the Administrative Office of the Courts, or their designees, who shall serve ex officio;

(2) two members of the Senate to be appointed by the President of the Senate, no more than one of whom shall be of the same political party, and two members of the General Assembly to be appointed by the Speaker of the General Assembly, no more than one of whom shall be of the same political party; and

(3) 25 public members, each of whom shall be selected by the governing body of an organization to represent that organization. The

following organizations shall each be represented by one public member: New Jersey Association of Health Plans; AAHP-HIAA; Physicians and Patients for Quality Care; Princeton Insurance Company; Medical Society of New Jersey; New Jersey Association of Osteopathic Physicians and Surgeons; New Jersey Section, American College of Obstetrics and Gynecology; American College of Emergency Physicians-New Jersey Chapter; New Jersey Neurosurgical Society; New Jersey Academy of Family Physicians; New Jersey State Nurses Association; New Jersey Hospital Association; New Jersey Council of Teaching Hospitals; Health Care Association of New Jersey; Association of Trial Attorneys-New Jersey; New Jersey State Bar Association; Garden State Bar Association; Hispanic Bar Association of New Jersey; Trial Attorneys of New Jersey; Consumers for Civil Justice; New Jersey Citizen Action; AARP; New Jersey Public Interest Research Group (PIRG); Legal Services of New Jersey; and Health Professionals and Allied Employees (HPAE) union.

b. Vacancies in the membership of the task force shall be filled in the same manner provided for the original appointments. The public members of the task force shall serve without compensation but may be reimbursed for traveling and other miscellaneous expenses necessary to perform their duties, within the limits of funds made available to the task force for its purposes.

c. (1) The task force shall organize as soon as practicable, but no later than the 30th day after the appointment of its members, and shall select a chairperson and vice-chairperson from among the members. The chairperson shall appoint a secretary who need not be a member of the task force.

(2) The task force may meet at the call of the chairperson and hold hearings at the times and in the places it may deem appropriate and necessary to fulfill its charge. The task force shall be entitled to call to its assistance, and avail itself of the services of, the employees of any State, county or municipal department, board, bureau, commission or agency as it may require and as may be available to it for its purposes.

(3) The Department of Banking and Insurance shall provide staff services to the task force.

d. The purpose of the task force shall be to study the following issues:

(1) the advantages and disadvantages of establishing limitations on noneconomic damages for medical malpractice judgments and on extending current limitations on liability that apply to nonprofit hospitals to employees, other than physicians, of those hospitals;

(2) the impact of third party reimbursement policies by insurers and health maintenance organizations on access to health care services in the context of the current affordability crisis in the State affecting health care providers in the purchase of necessary liability coverage;

(3) the advantages and disadvantages of adopting additional changes to the statute of limitations regarding medical malpractice actions;

(4) the advantages and disadvantages of establishing additional procedures for mediation of actions alleging medical malpractice and for screening for frivolous medical malpractice lawsuits; and

(5) the necessity for, and advantages and disadvantages of, reactivating the Medical Malpractice Reinsurance Association established pursuant to P.L.1975, c.301 (C.17:30D-1 et seq.).

e. The task force shall present a report of its findings and recommendations to the Governor and the Legislature no later than 12 months after the date of its initial meeting.

27. This act shall take effect on the 30th day after enactment and shall apply to causes of action for medical malpractice that accrue on or after that effective date; except that, sections 13 and 14 shall take effect on the 180th day after the date of enactment and section 18 shall take effect on the 90th day after the date of enactment, and the amendatory provisions of sections 3 and 4 shall apply to injuries sustained at birth on or after the effective date of this act.

STATEMENT

This bill, which is designated the "New Jersey Medical Care Access and Responsibility and Patients First Act," is designed to implement a number of tort liability, health care system and medical malpractice liability reforms.

Specifically, the bill provides for the following:

Tort Liability Reforms:

The bill amends N.J.S.2A:14-2 and N.J.S.2A:14-21 to provide that actions by or on behalf of a minor that have accrued for medical malpractice for injuries sustained at birth must be commenced prior to the minor's 11th birthday, and do not affect the discovery doctrine in any way.

The bill provides for court referral of a medical malpractice action to a complementary dispute resolution mechanism if the judge presiding over the action determines, within 30 days after the discovery end date, that the referral may encourage early disposition or settlement of the action. If the judge makes that determination, the matter is to be referred to complementary dispute resolution pursuant to Rule 1:40 of the New Jersey Court Rules.

The bill also provides that a health care provider named as a defendant in a medical malpractice action may file an affidavit of noninvolvement with the court. The affidavit of noninvolvement is to set forth the facts that demonstrate that the provider was misidentified or otherwise not involved, individually or through its servants or employees, in the care and treatment of the claimant, and was not obligated, either individually or through its servants or employees, to provide for the care and treatment of the claimant. The bill also provides penalties for false statements made in the affidavit or in challenging the affidavit.

The bill establishes qualifications for expert witnesses in medical malpractice actions and for the purpose of executing an affidavit of merit, and provides that an expert must have the same type of practice and possess the same credentials, as applicable, as the defendant health care provider, unless waived by the court. The bill prohibits expert witnesses from testifying on a contingency fee basis and provides for penalties for expert witnesses who intentionally misrepresent the applicable standard of practice or care. The bill also provides for penalties for an individual or entity who threatens to take or takes adverse action against a person in retaliation for that person providing or agreeing to provide expert testimony, or for that person executing an affidavit of merit, which adverse action relates to that person's employment, accreditation, certification, credentialing or licensure.

With respect to the payment of medical malpractice judgments, the bill provides that in any medical malpractice judgment in which the noneconomic damages (those for pain and suffering) are $1 million or less, unless otherwise agreed to by the parties, the court is to enter a judgment ordering that money damages be paid immediately. In any judgment in which the noneconomic damages exceed $1 million, unless otherwise agreed to by the parties, 50% of the money damages are to be paid immediately, with the costs and attorney's fees paid from that amount. The remaining 50% of the judgment is to be paid over 60 months in the form of a structured payment agreement.

Further, in order to provide the court with discretion to modify jury awards, the bill modifies the standard of review to be used by the court in reviewing the amount of a jury award to require the court to consider the evidence in the light most favorable to the non-moving party and to allow the court to determine whether the award is clearly inadequate or excessive in view of the nature of the medical condition or injury that is the cause of action or because of passion or prejudice by the jury.

Health Care System Reforms:

The bill expands the State's "Good Samaritan" law to provide immunity from civil damages to licensed health care professionals, emergency medical technicians and mobile intensive care paramedics whose duty does not require a response to a patient emergency situation, who, in good faith, respond to a life-threatening emergency or respond to a request for emergency assistance in a life-threatening emergency within a hospital or other licensed health care facility or a State psychiatric hospital operated by the Department of Human Services. The immunity shall not apply: to acts or omissions constituting gross negligence, recklessness or willful misconduct; if a provider-patient relationship existed before the emergency; if consideration in any form is provided to the health care professional for the service rendered; or if a general hospital has not reasonably and adequately staffed its emergency department.

Further, the bill provides that a health care professional is not liable for civil damages for injury or death caused in an emergency situation occurring in the health care professional's private practice or in a health care facility or State psychiatric hospital on account of a failure to inform a patient of the possible consequences of a medical procedure when the failure to inform is caused by any of the following:

- the patient was unconscious;

- the medical procedure was undertaken without the consent of the patient because the health care professional reasonably believed that the medical procedure should be undertaken immediately and that there was insufficient time to fully inform the patient; or

- a medical procedure was performed on a person legally incapable of giving informed consent, and the health care professional reasonably believed that a medical procedure should be undertaken immediately and that there was insufficient time to obtain the informed consent of the person authorized to give such consent for the patient.

The immunity provided is applicable only to actions for damages for an injury or death arising as a result of a health care professional's failure to inform, and not to actions for damages arising as a result of a health care professional's negligence in rendering or failing to render treatment.

The bill strengthens reporting requirements by physicians to the State Board of Medical Examiners (BME) to ensure that the BME is promptly informed of any pending or final action by any criminal authority in this State or any other state or federal jurisdiction or any arrest or conviction for a criminal or quasi-criminal act, by requiring that a physician report, within 10 days, the action or his arrest or conviction, for crimes that include, but are not limited to, criminal homicide, aggravated assault, sexual assault, criminal sexual contact or lewdness, or an offense involving any controlled dangerous substance or controlled substance analog.

The bill also ensures that health care facilities, State psychiatric hospitals and other physicians affiliated with a physician who has been disciplined by the BME, are notified of its action, within 30 days of the action. Similarly, the bill ensures that a health care facility, State psychiatric hospital or health maintenance organization is promptly notified by the BME if, during the course of an investigation of a physician, it requests information from that facility or health maintenance organization regarding that physician, and subsequently determines that no disciplinary action is warranted.

Medical Malpractice Liability Insurance Reforms:

To avoid the appearance of any conflicts of interest, the bill prohibits any person who is an officer, director or board member of a professional association for health care providers to serve concurrently as an officer, director or board member of a State-domiciled medical malpractice liability insurer that is issuing policies in the State. The bill also provides that no more than one person who has been an officer, director or board member of a professional association for health care providers is to serve as an officer, director or board member of a State-domiciled medical malpractice liability insurer that is issuing policies in the State.

For the purpose of negotiating a reduced medical malpractice liability insurance premium, the bill would permit physicians to join together, by means of a joint contract, to form a "Medical Malpractice Liability Insurance Purchasing Alliance."

The bill provides that a medical malpractice liability insurance policy may contain a provision that provides a person insured under the policy with the exclusive right to require the insurer to obtain the consent of the insured to settle any claim filed against the insured; but, if the policy contains that provision, the insurer would be required to offer an endorsement to the policy that permits the insurer to settle a claim filed under the policy without first having obtained the insured's consent. The insurer would be required to establish a premium for the endorsement which reflects any savings or reduced costs attributable to the endorsement, and the insured would have the option of accepting or refusing the endorsement.

Another provision to provide premium relief to health care providers is the requirement that every medical malpractice liability insurer offer individual or group medical malpractice liability insurance policies with a deductible, at the option of the insured, in an amount of at least $5,000 per claim and up to $1 million per claim, with the insurer being permitted to require the insured to provide collateral for the deductible amount to the insurer. The deductibles offered by an insurer are subject to the approval of the Commissioner of Banking and Insurance. For policies with any deductible, the insurer would be responsible for payment of the deductible and would be reimbursed for that amount by the insured.

To provide increased oversight of medical malpractice insurers, the bill requires that every annual statement filed by a medical malpractice insurer in this State with the Department of Banking and Insurance include a certification by the chief executive officer or chief financial officer that the rates for every category, subcategory or risk classification are adequate to cover expected losses and expenses of the insurer and to ensure the safety and soundness of the insurer.

The bill requires insurers authorized to transact medical malpractice liability insurance in this State to provide at least 60 days' notice to the insured for policy renewals and nonrenewals. Also, in the case of a nonrenewal, the insurer must provide the reason for the nonrenewal.

The bill provides for oversight by the Commissioner of Banking and Insurance with respect to certain rates in effect for any category or subcategory of insureds, of any medical malpractice liability insurer, that increase in excess of 25%, and provides that the insured may petition the commissioner to investigate and, if appropriate, to conduct a hearing into whether the rates fail to comply with the standards of N.J.S.A.17:29AA-1 et seq. The bill also directs the commissioner, subject to standards adopted by the National Association of Insurance Commissioners, to review the current capitalization and reserve requirements applicable to medical malpractice insurers, and to modify those requirements, as necessary, to ensure the solvency of those insurers and the availability and affordability of medical malpractice liability insurance in the State.

The bill provides that the insurance holding company systems act, N.J.S.A.17:27A-1 et seq., applies to reciprocal exchanges, to ensure that the provisions of that law are applicable to any future conversion by a reciprocal medical malpractice liability insurer to a stock company.

Also, the bill requires medical malpractice liability insurers to offer their insureds the option to make premium payments in installments, as prescribed by the Commissioner of Banking and Insurance, by regulation.

In addition, N.J.S.A.17:30D-17, which requires all medical malpractice insurers to notify the BME of every medical malpractice judgment, settlement and award involving a physician or podiatrist licensed in this State, is amended to also require notification to the Commissioner of Banking and Insurance of these payments. The notification to the commissioner is to enable the commissioner to compile statistical data about medical malpractice payouts, and would not include the name of or other identifying information about the practitioner.

The bill permits health care professionals, under terms and conditions established by the Commissioner of Banking and Insurance, to request their medical malpractice insurer to recalculate their premium to reflect any cost saving provisions of the bill, and to cancel their policy without penalty in the event the professional is able to obtain less expensive coverage from another insurer.

Finally, the bill establishes a 33-member "Medical Care Availability Task Force" to study the following issues:

-- the advantages and disadvantages of establishing limitations on non-economic damages for medical malpractice judgments and on extending current limitations on liability that apply to nonprofit hospitals to employees, other than physicians, of those hospitals;

-- the impact of third party reimbursement policies by insurers and health maintenance organizations on access to health care services in the context of the current affordability crisis in the State affecting health care providers in the purchase of necessary liability coverage;

-- the advantages and disadvantages of adopting additional changes to the statute of limitations regarding medical malpractice actions;

-- the advantages and disadvantages of establishing additional procedures for mediation of actions alleging medical malpractice and for screening for frivolous medical malpractice lawsuits; and

-- the necessity for, and advantages and disadvantages of, reactivating the Medical Malpractice Reinsurance Association established pursuant to N.J.S.A.17:30D-1 et seq.

The task force may also study the causes, and any related issues, relative to the affordability of medical malpractice liability insurance.