Summary of Proposed Medical Liability Senate Committee Substitute
February 20, 2003
Raymond Cantor, MSNJ Director of Governmental Affairs
The following summary is intended to provide the reader with an accurate
description of the legislation currently being considered by the Senate Commerce
Committee and the Senate Health, Human Services and Senior Service
Committee. According to Senate leaders from both parties, the bill is in near final
form and there may be very little room for change at this point in time. No
position has yet been taken on this legislation by the Medical Society of New
Jersey.
Limits on Non-economic Damages Health care providers (physicians,
podiatrists, osteopaths, and dentists) and their insurance companies are liable
only for the first $300,000 of non-economic damages. This limit is per event, not
per defendant. Any non-economic award above that limit is to be paid for by an
Excess Liability Fund. The fund will only pay up to $700,000 additional, for a
total non-economic payment per event of $1 million. However, the fund may pay
a higher amount only if after paying the initial amount, there remains excess
monies in the fund.
A health care provider would have no personal liability for non-economic
damages above what the provider's insurance policy contains. Thus, if a
physician has a $1 million policy and is liable for $500,000 in economic damages
and $1.5 million in non-economic damages ($2 million total), the physician's
policy would pay $800,000 ($500,000 economic and $300,000 non-economic)
and the fund would pay $700,000. The remaining $500,000 would not be
recovered, unless the fund had excess monies. The fund would only pay non-
economic damages for judgements and post judgement settlements, not for pre-
judgement settlements.
Persons with judgement awards of over $300,000 would be paid by the Excess
Liability Fund. The Excess Liability Fund would be capitalized with a $3
surcharge per person per year on persons required to obtain unemployment
insurance policies. A $50.00 annual fee is charged to physicians, osteopaths,
chiropractors, dentists, podiatrists, optometrists, accountants, and lawyers.
These fees should total about $25 million per year. The fund could not pay out
any more per year than it has on hand. It cannot go into debt. If, in any year,
there are judgements to be paid that exceed the total in the fund, the awards
would be reduced proportionately. Surpluses in future years can be applied to
deficits in prior years.
As with any legislative proposal, including caps, this can be changed by the
Legislature in the future. Because this language would be in the statutes, it
