N.Y. Healthcare Alliance Warns of Cuts as Med Mal Premiums Rise

June 4, 2003

The New York Healthcare Alliance (NYHA), a coalition of healthcare providers and workers from approximately 75 hospitals throughout the state, has issued a warning that, as a result of a recent court ruling, “New Yorkers will lose critical medical services — such as obstetrics, neurosurgery and trauma care — and that thousands of healthcare jobs could be put at risk starting next month.”

The NYHA bulletin said, “the looming crisis was touched off on April 8th when the New York State Court of Appeals upheld a lower court’s strict, ambiguous interpretation of New York’s structured judgment law (CPLR 50A). In the case, known as Desiderio v. Ochs, the trial court increased the jury award for future medical expenses from $40 million to $140 million by ‘averaging’ and counting inflation twice. In rendering its unprecedented decision, the Court of Appeals implored the legislature to clarify the law, passed in 1986, which was designed to moderate the increases in medical malpractice premiums.”

As a result of the ruling, hospitals have been notified that insurance premiums will increase substantially, or coverage might not be available at all. The coalition is calling on the New York State Legislature to avert the crisis by passing legislation to clarify the malpractice law before they adjourn for the summer.

“We are on the verge of a social and medical catastrophe that will force some of the finest hospitals in the world to stop providing service,” stated Spencer Foreman, MD President & CEO, Montefiore Medical Center. “A technicality in the law will compel hospitals to stop delivering babies, shut down emergency response units, and lay off workers. If this happens, New Yorkers will have to go to great lengths to find the medical services they need.”

The NYHA has called upon both houses of the legislature to restore the original intent of the law and bring financial awards back in line with accepted norms and in proportion with the related injury. Such a change would remove the “averaging” and “double inflation” features of the law.

“This law was originally written to ease the malpractice insurance burden on hospitals while ensuring that the jury awards to plaintiffs were fulfilled,” indicated David P. Rosen, President & CEO of Jamaica Hospital Medical Center, Brookdale University Hospital Medical Center, Flushing Hospital Medical Center and MediSys Health Network. “But, ambiguities in how the law was drafted has had unintended consequences and malpractice costs are about to threaten every hospital in New York.”

Kenneth E. Raske, President of the Greater New York Hospital Association added: “We just fought a monumental battle in Albany against Medicaid cuts that would have devastated New York’s health care system. The State Legislature came through and saved New Yorkers from those cuts. Now we need the Legislature to act again, because inaction on this issue would erase the positive impact of the Medicaid restorations and lead to dire consequences.”

A significant number of other healthcare industry leaders, hospital administrators, doctors and health plan organizers added their voices to the call for a legislative clarification of the law in the hopes of avoiding the consequences of the Appeals’ Court decision. “Simply repealing the law will not solve the problem. That would bring back the malpractice insurance crisis of the 1980’s that the law was intended to resolve,” stated Lisa Kramer, President & CEO of FOJP Service Corporation, an insurance program for hospitals in New York.

“The structured judgment law attempts to control malpractice costs by making jury awards more equitable and by encouraging out-of-court settlements so that plaintiffs can decide for themselves how best to use the money. But the arithmetic prescribed by the statute needs to be fixed,” she concluded.

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