However, a careful review of the facts reveals that there is no legitimate reason why medical malpractice insurance is not both available and affordable in New Jersey. The number of malpractice suits in New Jersey has declined from 2200 in 1994 to 1613 in 2001, a decrease of over 25%. This is due to the enactment of a law in l995 requiring that a medical expert state under oath at the beginning of every case that the claim has merit.
The decline in cases is confirmed by New Jersey's largest malpractice insurance company, the Princeton Insurance Company, which admits in its annual report that it tried only 366 medical malpractice cases to a conclusion in 1998, only 347 such cases in 1999, and only 274 in 2000.
Furthermore, despite recent claims by malpractice insurance companies of "jackpot jury awards," a study of over 8,000 cases by the Medical Inter-Insurance Exchange (MIIX), New Jersey's second largest malpractice insurance company, has concluded that in New Jersey "physicians usually win cases in which the physician's care was deemed to meet community standards." MIIX also determined that "the amount of payment correlated closely with the severity of the injury," and furthermore that “unjustified payments" are uncommon. Similarly, the federal government has reported that during a period of over 10 years ending December 2000, there were only 5,556 medical malpractice payments by physicians in New Jersey. The median payment was $115,000.00, ranking New Jersey 13 of the 50 states.
These statistics explain why the aforementioned Princeton Insurance Company stated in its annual report that it has enjoyed three "stellar" years in a row. In fact, for the last year available, 2000, Princeton reported net profits of nearly $30,000,000.00, an increase of 22% over the prior year. MIIX has recently reported that it has lost money in other states, and therefore it intends to "focus Company operations on New Jersey . . . where there is a history of profitability." Furthermore, MIIX has stated that it anticipates "increasing after-tax returns to the Company in future years." Due to the absence of competition, Princeton and
MIIX dominate the market in New Jersey and have, in essence, formed a malpractice insurance cartel. Despite their increasing profits, these two malpractice insurance companies are raising rates to make up for bad business decisions in other states, recoup investment losses and further increase profits.
This has created a false sense of a crisis. The insurance companies now are using this manufactured crisis to ask the New Jersey Legislature to deprive the victims of malpractice of their day in court. However, eliminating accountability for medical mistakes would only reduce the incentive to be careful. Many medical procedures and hospital practices have been made safer as a result of lawsuits. Additionally, New Jersey recovers over $5,000,000.00 per year in reimbursement for medical bills paid to victims of personal injury claims. If we eliminate malpractice claims, these sums would not be paid by the person who caused the injury, but rather by the taxpayer. What we need in New Jersey is regulation of the medical malpractice industry. Princeton and MIIX should be required to obtain approval from the Department of Insurance to increase premiums, just like other insurance companies. We should also reinstate the Medical Malpractice Liability Insurance Act, 17:30D-1, which already provides for a Medical Malpractice Reinsurance Recovery Fund.
However, the best way to reduce the cost of malpractice insurance is to reduce the amount of malpractice, not to deprive the victims of malpractice of fair compensation for their injuries. Rather than inflicting more punishment on victims, we must identify and eliminate the bad doctors. Multiple studies in other states have shown that a relatively small number of doctors are responsible for a disproportionate number of lawsuits.
Finally, if we really want to lower the cost of malpractice insurance over the long term, it is essential that we finally require full disclosure of all medical mistakes. In New Jersey, knowledge of most malpractice is buried with the patient. Every hospital in New Jersey claims a so-called “privilege of self-critical analysis," which allows it to knowingly refuse to disclose to a patient's family that their loved one was the victim of malpractice.
However, when the Veterans Administration Hospitals decided to promptly and fully disclose medical errors, and then offer fair compensation, litigation costs were dramatically decreased.
To err is human, and to forgive divine. But burying medical malpractice mistakes should be a crime.
Abbott Brown, a partner of Bendit Weinstock in West Orange, N.J., is a certified civil trial attorney, an Adjunct Faculty member teaching medical malpractice law at the Seton Hall University School of Law, and is the author of “New Jersey Medical Malpractice Law” (2001) and “New Jersey Medical Malpractice Cases: (2000). He is an officer of The Association of Trial Lawyers of America-New Jersey (NJAJ) and Chair of its Medical Negligence Committee.