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New Jersey State Bar Association v. State

July 26, 2006

NEW JERSEY STATE BAR ASSOCIATION, A NOT-FOR-PROFIT CORPORATION, AND PEGGY SHEAHAN KNEE, INDIVIDUALLY, PLAINTIFFS-APPELLANTS,
v.
STATE OF NEW JERSEY, JOHN E. MCCORMAC, IN HIS OFFICIAL CAPACITY AS TREASURER OF THE STATE OF NEW JERSEY, HOLLY C. BAKKE, IN HER OFFICIAL CAPACITY AS COMMISSIONER OF THE DEPARTMENT OF BANKING AND INSURANCE; AND FRED M. JACOBS, M.D., IN HIS OFFICIAL CAPACITY AS ACTING COMMISSIONER OF HEALTH AND SENIOR SERVICES, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Chancery Division, Union County, No. UNN-C-1-05.

The opinion of the court was delivered by: Wefing, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued April 5, 2006

Before Judges Wefing, Wecker and Fuentes.

On June 7, 2004, the Legislature passed and the Governor signed into law the New Jersey Medical Care Access and Responsibility and Patients First Act, L. 2004, c. 17. On January 3, 2005, plaintiffs New Jersey State Bar Association and Peggy Sheahan Knee, an attorney licensed to practice law in New Jersey, filed suit challenging the constitutionality of this statute. They named as defendants the State of New Jersey, John E. McCormac, the then-Treasurer of the State of New Jersey, Holly C. Bakke, the then-Commissioner of the Department of Banking and Insurance, and Fred M. Jacobs, M.D., the then-Acting Commissioner of Health and Senior Services. Following a period of limited discovery, the matter was presented to the trial court on cross-motions for summary judgment. Plaintiffs appeal from the trial court's order granting summary judgment to defendants. After reviewing the record in light of the contentions on appeal, we affirm.

The preamble to the bill states:

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.

[L. 2004, c. 17, § 2.]

The bill itself is extensive and contains numerous provisions aimed at alleviating the crisis in medical professional liability insurance that the Legislature perceived. Only four aspects of the Act, which we summarize below, are implicated in this appeal, however.

Section 27 of the Act establishes the Medical Malpractice Liability Insurance Premium Assistance Fund within the Department of the Treasury and subsection (b) of § 27 creates a revenue source for the Fund. Subparagraph (6) of subsection (b) directs "an annual fee of $75 to be assessed by the State Treasurer and payable by each person licensed to practice law in this State, for deposit into the fund." L. 2004, c. 17, § 27(b)(6).

The Act exempts attorneys in the following categories from this assessment:

1) those who are barred by statute or constitution from practicing law;

2) those who do not maintain a bona fide office in New Jersey for the practice of law;

3) those who are completely retired from practicing law;

4) those who are on full-time duty with either the armed forces, VISTA or the Peace Corps and are not engaged in practicing law;

5) those who are ineligible to practice in New Jersey by reason of not having made their required payment to the New Jersey Lawyers' Fund for Client Protection; and

6) those who have not practiced law for at least one year.

L. 2004, c. 17, § 27(6).

The sums collected pursuant to this assessment upon attorneys are to be deposited into the fund and combined with the other sums assessed by the statute, which include a $3 annual surcharge per employee for all employers subject to New Jersey's unemployment compensation law and a $75 annual charge upon every physician, podiatrist, chiropractor, dentist and optometrist licensed in New Jersey. L. 2004, c. 17, § 27(b)(1)-(5).

Further, the statute provides with specificity how the monies in the Fund are to be allocated and spent. It directs that $17 million annually shall be directed toward providing relief to health care providers in paying medical malpractice liability insurance premiums; $6.9 million annually shall be used for payments to hospitals for charity care subsidies; $1 million shall be directed to reimburse obstetricians and gynecologists for expenses in paying off student loans; and $1.2 million shall be paid to the Division of Medical Assistance and Health Services for the health care of low-income pregnant women. L. 2004, c. 17, § 27(e).

Further, the Act directs judges who are presiding over medical malpractice actions to determine within thirty days of the discovery end date whether referring the matter for complementary dispute resolution would encourage an early disposition or settlement. L. 2004, c. 17, § 5. If the judge concludes that it would, the Act directs that the matter be referred to complementary dispute resolution in accordance with R. 1:40. Ibid.

Additionally, the Act provides a new mechanism by which a health care provider may seek dismissal of a malpractice action in which that individual has been named a defendant. L. 2004, c. 17, ยง 6. Section 6(a) of the Act directs that if the health care provider files an affidavit of non-involvement with the court, the action shall be dismissed as to that person. The affidavit of non-involvement must: 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, in the care and treatment of the claimant, and was not obligated, either individually or through ...


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