In a 5 to 2 ruling, the New Jersey Supreme Court determined that an underwriter doesn’t have to pay out on a malpractice insurance policy that was cancelled because the physician who was insured lied on his application. The decision has provoked controversy over what this means for New Jersey residents who are the victims of medical malpractice if their doctor’s policy doesn’t cover them.
The case that made it to the high court involved a 55-year-old Lakewood man who underwent surgery in 2010 that left him with a foot that is inverted. He says that he has undergone two surgeries to correct the effects of the botched surgery, but they have not helped. He says that he is “miserable with pain” and is forced to have injections to reduce the swelling.
The Medical Malpractice Joint Underwriting Association of Rhode Island says that they rescinded the podiatrist’s policy because he inaccurately stated what percentage of his practice was in New Jersey and what percentage was in Rhode Island. That, according to the association’s attorney, is fraud. Therefore, the association argued that they are under no obligation to pay out on a malpractice claim. The majority of the justices agreed.
The attorney for the patient and his wife, who were suing both the doctor and the underwriting association, reacted to the decision by calling it “a bad day for consumers in New Jersey.”
The doctor has since moved to California. He has said that between building a new practice, a divorce, student loans and other debts, he has no assets.
The majority of justices determined that by requiring an underwriting association to pay out on a malpractice suit where the insured physician had lied, they would be condoning fraudulent conduct.
However, the justices who dissented from that opinion argued that they were rewarding the insurer for failing to do proper due diligence before approving the policy after it had “pocketed three years of premiums.” That decision, according to the justice who wrote the dissenting opinion, “leaves an innocent patient without a source of compensation for damages suffered by the malpractice of his insolvent doctor.”
While most medical malpractice cases are not as complicated as this one, insurers, underwriters and physicians will generally fight to avoid paying out on a malpractice claim. That’s why it’s essential to have legal guidance from an experienced New Jersey medical malpractice attorney.
Source: Asbury Park Press, “High court: Malpractice insurer doesn’t have to cover botched surgery,” Kathleen Hopkins, Dec. 02, 2015