Mckeon: New York's Innovative Approach To Medical Malpractice
Mckeon: New York's Innovative Approach To Medical Malpractice
Mckeon: New York's Innovative Approach To Medical Malpractice
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* Justice, Supreme Court, Bronx County, NY; J.D., New York University School of Law,
B.A., City University of New York, Hunter College.
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INTRODUCTION
See New York State Medical Liability Reform and Patient Safety Model: The NYS Model, N.Y.
UNIFIED CT. SYS. & N.Y. DEPARTMENT OF HEALTH (Oct. 17, 2011), www.health.ny.gov/
health_care/medicaid/redesign/docs/2011-10-17_nys_model_medical_liability.ppt. The NYS
Model is the project developed as a result of an Agency for Healthcare Research and Quality
(AHRQ) grant from the Obama Administration in June 2010. The New York State Unified
Court System, the New York State Department of Health, and five academic medical centers
in New York City are collaborating to achieve the following goals: (1) Develop a culture of
patient safety; (2) Enable *and+ promote complete adverse events reporting; (3) Create a
disclosure and early settlement program; (4) Expand a Judge-Directed Negotiation
Program; (5) Demonstrate the effectiveness of the model; (6) Disseminate reports and
lessons learned; and (7) Expand the NYS Model. Id.
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Background
5 Gil Siegal et al., Adjudicating Severe Birth Injury Claims in Florida and Virginia: The
Experience of a Landmark Experiment in Personal Injury Compensation, 34 AM. J.L. & MED. 493, 494
(2008).
6 Id. at 494-95.
7 See Michael Monaco, Note, New Yorks Medical Malpractice Insurance CrisisA New
Direction for Reform, 14 FORDHAM URB. L.J. 773, 774-75 (1985); Greg David, New York State of
Malpractice, CRAINS N.Y. BUS., June 21, 2010, at 11.
8
See Monaco, supra note 7, at 773-75; see also David, supra note 7.
MRT Adopts Four Work Groups Recommendations, GREATER N.Y. HOSP. ASSN,
http://www.gnyha.org/7785/Default.aspx?&print=yes (last visited Mar. 30, 2012) [hereinafter
GNYHA].
9
10
Id.
Mendez v. N.Y. & Presbyterian Hosp., 934 N.Y.S.2d 662, 665-66 (N.Y. Sup. Ct. 2011). This
figure comes from remarks made on December 1, 2009 by Lisa Kramer, President and CEO of
Hospitals Insurance Company, Inc. (HIC) before the New York State Senate Standing
Committee on Insurance, Health and Codes. Id.
11
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$171,430.12
To make matters worse, the State faced a record budget gap. 13
Medicaid costs had to be reduced, and a Medicaid Redesign Team (MRT)
was appointed by the Governor to make recommendations.14 In response to
escalating medical malpractice premiums and Medicaid costs in certain
regions of the State due to obstetrical malpractice litigation, one of the
recommendations was the creation of the MIF.15
Unlike Virginias and Floridas voluntary obstetrical funds, which
substitute an administrative-compensation program for a claimants right
to sue in court,16 New Yorks Fund is mandatory and only available to
those qualifying health providers who have resolved a lawsuit, either by
settlement or judgment, on or after April 1, 2011.17 In fact, New Yorks
Fund does not restrict a litigants right to sueit requires it.18
The Fund substitutes services for cash as the measure of damages for
the future medical expenses component of any court-obtained award, i.e.,
settlement or judgment. In other words, as will be explained in detail
below, the MIF eliminates the need for an insurer or healthcare provider to
pay cash up front for future medical expenses. Instead, services are paid by
the Fund on an accrual basis.19 The savings to insurers and healthcare
providers will presumably reduce malpractice costs and lower malpractice
premiums. Based on the template in Mendez v. New York and Presbyterian
Hospital,20 the first published opinion interpreting the Fund, and actual
savings achieved in post-April 1, 2011 Fund settlements, major hospitals in
12 EXCELLUS, THE FACTS ABOUT NEW YORK STATE MEDICAL MALPRACTICE COVERAGE
PREMIUMS 1 (2011), available at https://www.excellusbcbs.com/wps/wcm/connect/
5c0c0d80472181c9afa0ff7bd97e1c48/Medical+Malpractice+FS+2011-EX+FINAL.pdf?
MOD=AJPERES.
13 See Within Our Means, N.Y. TIMES, Jan. 31, 2011, at A16.
14 Redesigning New Yorks Medicaid Program, N.Y. STATE DEPARTMENT OF HEALTH,
http://www.health.ny.gov/health_care/medicaid/redesign/ (last visited Mar. 19, 2012).
15 See Benson, supra note 4.
16 See Siegal et al., supra note 5, at 499, 519 & n.130.
17 N.Y. STATE DEPT OF HEALTH, NYS MEDICAL INDEMNITY FUND 11 (2012), available at
http://www.health.ny.gov/regulations/emergency/docs/2012-03-13_medical_indemnity_fund.
pdf.
18 Daniel S. Ratner, New York States New Medical Indemnity Fund, MARTINDALE.COM (Aug.
11, 2011), http://www.martindale.com/medical-malpractice-law/article_heidell-pittonimurphy
-bach-llp_1328126.htm (stating plaintiffs must bring suit and prevail or settle to be eligible for
payment from the MIF).
19
GREATER N.Y. HOSP. ASSN, OVERVIEW OF THE NEW YORK STATE MEDICAL INDEMNITY
FUND FOR NEUROLOGICALLY IMPAIRED NEWBORNS 1 (2011), available at http://www.gnyha.org
/10711/File.aspx.
20
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New York are projecting significant reductions (in the millions of dollars
range) in medical malpractice premium costs.21
JDN is a judicially created settlement tool and method of medicalmalpractice case management, originally implemented in the Supreme
Court, Bronx County, in collaboration with the New York City Health and
Hospitals Corporation (HHC).22 Since 2006, when HHC established its
own Law and Claims Departments, 23 there have been 695 HHC medicalmalpractice dispositions in the Supreme Court, Bronx County, only four of
which required jury selection.24 Of those four, only two resulted in a jury
verdict.25
The JDN concept is quite simple. One judge, well versed in medicine, is
assigned to a malpractice action from inception to jury selection. Cases are
analyzed early on as to whether they have the potential to settle. If the facts
warrant settlement (or the discontinuance against a blameless medical
provider) even before discovery commences, discussions among the parties
are initiated. Each case is closely monitored to reduce court appearances
and lower defense costs. This is significant since researchers estimate that
fifty-four percent of the dollars paid to plaintiffs in medical-malpractice
suits goes to the administration of the system.26
II. Judge-Directed Negotiation
New Yorks Chief Judge Jonathan Lippman and the two Chief
Administrative Judges who have served during his tenure, Honorable Ann
Pfau27 and Honorable Gail Prudenti, have been visionaries in creating
21 Interview with Donald Ashkanese, Vice President, Montefiore Med. Ctr.; Interview with
Brian Noonan, Esq., Vice President, New York and Presbyterian Hosp.
22 Alicia Gallegos, Medical Liability: Cutting Costs from the Bench, AMEDNEWS.COM (Oct. 31,
2011), http://www.ama-assn.org/amednews/m/2011/10/31/psa1031.htm. New York Citys
municipal healthcare system is the largest municipal system in America. Id.
23 See Joel Stashenko, New York Program to Target Medmal Cases for Early Settlements,
N.Y.L.J.,http://www.newyorklawjournal.com/PubArticleNY.jsp?id=120253653369&slreturn=1
(Dec. 27, 2011). Prior to 2006, lawsuits against the City of New York and related agencies,
including HHC, were defended by the New York City Corporation Counsel (Corporation
Counsel). Any settlement required the approval of the New York City Comptroller
(Comptroller). Today, HHC defends its own cases, but still requires the approval of the
Comptroller to settle them.
24
Id.
Id.
26 GNYHA, supra note 9.
27 Judge Pfau is currently the Statewide Coordinating Judge for Medical Malpractice
Matters. In announcing Judge Pfaus appointment, Chief Judge Lippman stated: The eyes of
the country are focused on our efforts to improve the administration of justice in medical
malpractice litigation . . . . State Courts in N.Y. Changing Leadership, INSURANCENEWSNET.COM,
25
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Barbara Benson & Gale Scott, Median Plan Cuts HHCs Med Mal Costs, CRAINS N.Y. (June
23, 2009), http://www.crainsnewyork.com/article/20090623/PULSE/906229963.
29 Interview with Jeff Korek, Esq., former President of N.Y. State Trial Lawyers Assn.
30 See Emily P. Walker, Medical Malpractice Reform by President Obama and the White House,
KEVINMD.COM, http://www.kevinmd.com/blog/2009/09/medical-malpractice-reformpresident-obama-white-house.html (last visited Mar. 30, 2012).
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demogrants.htm.
32 Stashenko, supra note 23.
33 See, e.g., Michelle Andrews, N.Y. Court Program Aims to Ease Malpractice Bottlenecks,
WASH. POST, Nov. 22, 2011, at E4.
34
Pregnancy Complications: Shoulder Dystocia, MARCH OF DIMES (Dec. 2007),
http://www.marchofdimes.com/pregnancy/complications_shoulderdystocia.html [hereinafter
Pregnancy Complications].
35 Henry Lerner, Is All Brachial Plexus Injury Caused by Shoulder Dystocia?, SHOULDER
DYSTOCIA (2006), http://shoulderdystociainfo.com/allbrachialcaused.htm (citing Dominico
Pecorari, A Guest Editorial: Erb Palsy Without Apparent Shoulder Dystocia, 57 OBSTETRICAL &
GYNECOLOGICAL SURV. 547 (2002)).
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created by two means: (1) the doctors failure to appreciate the large size of
the baby or risk factors, for example, the mother is obese or diabetic,
making shoulder dystocia more likely to occur;36 or (2) the doctors use of
excessive lateral traction to free the impacted shoulder.37 Generally, these
issues are identifiable from the hospital record or by a physical exam of the
child. When combined with a full and frank discussion of the legal and
medical pros and cons of the suitthe hallmark of the JDN approachand
an opportunity to view the childs damages, defendants are often prepared
to make a settlement offer quite early in the process.
In the typical JDN/HHC settlement conference, the court benefits from
the presence of HHC and New York City Comptrollers Office
representatives, who have actual authority to settle cases. This is key. By
having people at the table with real authority, the plaintiffs bar views the
negotiations as a genuine opportunity to settle cases.
Replicating these periodic settlement sessions with private hospitals
has been challenging. Culturally, private-medical-malpractice insurers
have not, for the most part, come to court to discuss an inventory of cases
at one sitting. Refining that process is a work in progress. Unlike HHC
where all physicians are employees of the municipal entity, private
attending physicians often have their own coverage with the right to
withhold consent to settlement. Even so, the Federal Grant Program has
achieved more settlements early in the process than was previously the
case.38
III. Medical Indemnity Fund
On January 1, 2011, New York Governor Andrew Cuomo took office
confronting a record-budget deficit. Committed to ameliorating the states
worsening economic woes, the Governor appointed a Medicaid Redesign
Team to find ways to save Medicaid money for the 2011-2012 fiscal
year.39 Subsequently, on February 24, 2011, the Redesign Team approved a
package of recommendations, including Proposal 131proposed, inter alia,
caps on noneconomic damages for medical-malpractice awards and urged
the establishment of a Neurologically Impaired Infant Medical Indemnity
Fund, designed to reduce medical-malpractice costs, principally borne by
36
38
See Interview with Donald Ashkanese, supra note 21; Interview with Brian Noonan, Esq.,
supra note 21.
39 Press Release, Andrew M. Cuomo, Governor of N.Y., Governor Cuomo Issues Executive
Order Creating Medicaid Redesign Team (Jan. 5, 2011), available at http://governor.ny.gov/
press/01052011medicaid; see also EXCELLUS, supra note 12, at 3.
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hospitals, for obstetrical claims.40 Under the proposal, the Fund pays the
cost of future medical expenses for infants who would otherwise receive
Medicaid benefits.41
On December 1, 2009, Lisa Kramer, President and CEO of Hospitals
Insurance Company Inc. (HIC), proposed the establishment of an
obstetrical fund before the New York State Senate Standing Committees on
Insurance Health and Codes.42 Her testimony explained the rationale for
the Fund and its economic benefits to certain hospitals:
In the past five years, inflation in malpractice premiums far
exceeded inflation in consumer prices and, more important, the
reimbursement hospitals receive for the critical care they provide
to the public. By way of example, malpractice premiums for one
of our hospitals increased from $53 million in 2005 to $115
million in 2009.
The single biggest driver of hospitals= malpractice costs is
obstetricsthe delivery of babies. Over 40% of our payments are
made in cases involving neurologically impaired infants. Taking
into account the malpractice premiums attributable to obstetrics
cases, one of our hospitals has calculated that it loses over $8,000
per Medicaid-delivered newborn . . . .43
In the spring of 2011, New Yorks Assembly and Senate enacted the
MIF statute; however, caps limiting pain and suffering awards to $250,000
were never considered. Crains New York Business reported that about
50% of med-mal costs in New York were due to suits involving
neurologically impaired infants. 44 Medicaid is the insurer for an estimated
50% of New York state deliveries and pays the medical costs of a
significant number of children affected by neurological impairment,
including many who received a settlement or award in a medicalmalpractice action.45 In the Bronx and Brooklyn, Medicaid pays for about
70% of baby deliveries.46
The creation of an obstetrical fund achieves Governor Cuomos
multiple goals of reducing Medicaid costs and medical malpractice
Id. at 665-66.
Benson, supra note 4.
Id.
Id.
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47 See KREINDLER ET AL., supra note 3, 21.44; Joseph A. Rosenberg, Supplemental Needs
Trusts for People with Disabilities: The Development of a Private Trust in the Public Interest, 10 B.U.
PUB. INT. L.J. 91, 123-24 (2000).
48 See KREINDLER ET AL., supra note 3, 21.44.
49 N.Y. PUB. HEALTH LAW 2999-j(10) (McKinney 2012) (Payment from the fund shall not
give the fund any right of recovery against any qualified plaintiff . . . .).
50
51
Id. 2999-j(6).
Id. 2999-j(12).
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future care less than projected at the time of the settlement, unspent or
surplus funds went to the childs estate or nonmedical uses rather than
being returned to the insurer or medical provider. The Fund eliminates this
shortcoming by paying only for those services actually utilized, 52 a method
of compensation that has the potential to significantly reduce the cost of
future medical care to qualified infants.
Several years earlier, New Yorks Civil Practice Law and Rules was
amended by the addition of Article 50-A. In Mendez v. New York and
Presbyterian Hospital, the first published opinion addressing the Fund, the
court wrote:
The notion that the payment of future damages should have
some temporal relationship with the future, not exclusively with
the present, is consistent with CPLR Article 50-A, about which
the Advisory Committee on Civil Practice wrote: The legislative
history indicates that the provisions were intended to avoid
payment of unwarranted, windfall damages and to thereby
reduce the liability costs of the defendants found liable, but
without depriving victorious plaintiffs of fair compensation.53
52 Stephen G. Schwarz, Implications of the New Medical Indemnity Fund in New York State,
LAWYERS.COM (Apr. 27, 2011), http://research.lawyers.com/blogs/archives/12849-Implicationsof-the-New-Medical-Indemnity-Fund-in-New-York-State.html.
53
Mendez ex rel. Mendez v. N.Y. & Presbyterian Hosp., 934 N.Y.S.2d 633, 634 (N.Y. Sup.
Ct. 2011) (quoting ADVISORY COMM. ON CIVIL PRACTICE, REPORT OF THE ADVISORY COMMITTEE
ON CIVIL PRACTICE 18 (2004), available at http://www.nycourts.gov/ip/judiciaryslegislative/
civilpractice_04.pdf).
54 PUB. HEALTH LAW 2999-h(3).
55 Id. 2999-j(6).
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Under the statutory scheme, cases are settled, as it was prior to the
enactment of the Fund, for lump sums. Plaintiffs attorneys fee are
calculated pursuant to Judiciary Law section 474-a (sliding scale for
medical-malpractice actions), based upon this lump sum.57 Unlike other
medical-malpractice actions, the defendants in a Fund case pay a portion of
the attorney=s fee.58 Damages, other than future medical expenses (Fund
damages), are paid with lump-sum cash. The amount of non-Fund
damages (the damages to be paid in cash) is determined by an allocation of
the lump-sum settlement.59 The allocation also determines how much of
the attorneys fee is paid by defendant.60 Under the statute, the defendant
is responsible for paying the portion of the fee allocable to Fund damages
and the plaintiff is responsible for the remainder. 61 The statute is silent as to
the criteria to apply in allocating a settlement.
In Mendez, the court allocated a $5,500,000 settlement for a profoundly
brain-damaged child on a 50/50 basis50% for Fund damages and 50% for
non-Fund damages.62 There, the court reviewed appellate authorities in
which damaged infants required custodial care (usually the most costly
element of future medical expenses) and concluded that in a braindamaged-baby case, future medical expenses ranged from 53.7% to as high
as 89% of a damage award. 63
In allocating the settlement amount, as required by the MIF statute, the
Mendez court concluded that the Fund change[d] the dynamics of the
56
Id. 2999-h(1).
Id. 2999-j(14).
58 Id.
59 Id.
60 Mendez ex rel. Mendez v. N.Y. & Presbyterian Hosp., 934 N.Y.S.2d 662, 664 (N.Y. Sup.
Ct. 2011).
57
61
Id.
Id.
63 Id. at 668 (discussing future medical expense damage awards from Lovett v. Interfaith
Med. Ctr., 860 N.Y.S.2d 172, 173 (N.Y. App. Div. 2008) and Flaherty v. Fromberg, 849 N.Y.S.2d
278, 280 (N.Y. App. Div. 2007)).
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CONCLUSION
It is hard to imagine a conversation about the rising cost of healthcare
in America without some reference, justly or unjustly, to medical-liability
litigation. Ironically, it is routinely a discussion defined less by finances
(okay, there is some of that) than by partisanship and emotion. Partisans
who rigidly adhere to positions are resistant to change or any effort to
achieve consensus. Unfortunately, this results in the debate being shaped
more by terms such as caps, defensive medicine, and patient safety
than by dollars and cents.
Against that backdrop, New York State is utilizing two programs,
more middle ground than tort reform, to address economic realities while
adhering to the fundamental right of victims of medical malpractice to be
fairly compensated, preferably sooner rather than later. New York=s
Medical Indemnity Fund and Judge Directed Negotiation are new methods
to deal with old problems, and more importantly, innovative approaches
which seem to be working.
64
Id. at 669.
See id. at 663. Sedgwick Claims Management Services, Inc., a highly regarded national
claims management company, has been retained to serve as the Funds administrator. Medical
Indemnity Fund: General Information for Providers, N.Y. DEPARTMENT OF FIN. SERVICES,
http://www.dfs.ny.gov/insurance/mif/mif_gen_prov.htm (last visited Mar. 30, 2012).
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