New Jersey State Bar Association - The voluntary Bar Association of New Jersey, serving members since 1899.

FOR IMMEDIATE RELEASE: 12/06/04
CONTACT:Barbara S. Straczynski
Communications and Marketing Manager
732-937-7524

NJSBA To Challenge Med Mal Attorney Assessment

NEW BRUNSWICK, NJ—New Jersey attorneys have begun receiving a "2004 Attorney Fee Notice" that requires payment of a $75 assessment pursuant to the provisions of the New Jersey Medical Care Access and Responsibility and Patients First Act, P.L. 2004, c.17. Revenues from this assessment will be used for a variety of health care purposes, including payment of medical malpractice liability insurance premiums for certain medical specialties, and payment of tuition expenses for medical students studying in certain practice areas.

The New Jersey State Bar Association will be filing a lawsuit challenging the constitutionality of this legislation. Until such time as there is a definitive court ruling on the issues raised by this lawsuit, the NJSBA offers its members the following guidance:

Although designated in the notice as a "fee", a court may determine that the assessment constitutes a tax, and so is subject to the State Tax Uniform Procedure Law (STUPL). STUPL applies to any tax that is payable or collectible by the Director of the Division of Taxation. Pursuant to N.J.S.A. 54:49-14, a taxpayer has four years to file a claim for a refund. Accordingly, attorneys who pay this fee may wish to preserve their rights by filing such a claim within the four-year period. The refund claim form is A-3730, and it can be downloaded from the website of the Department of Treasury, Division of Taxation, at www.state.nj.us/treasury/ . In addition, attorneys may want to submit a letter with their payment indicating that it is being paid "under protest" and that they will be filing a refund claim. This may preserve rights to a refund if the fee is determined not to be a tax.

NJSBA Action on the Medical Malpractice Insurance Crisis

In the summer of 2002, physicians staged a mass protest on the steps of the state Capitol demanding relief from escalating medical malpractice insurance premiums. A host of med-mal bills were introduced in the Legislature that focused on issues such as awards, statutes of limitations, trial proceedings, insurance coverage, reporting requirements and establishing an Assembly Task Force on Medical Malpractice Insurance with subpoena powers.

With doctors threatening to leave the state and close their practices, and with President George W. Bush joining the ranks calling for caps on jury awards, the NJSBA called for a study commission to address the myriad issues influencing the severe increases in premiums. In a letter to the editor, then NJSBA President Richard J. Badolato stated that the Administrative Office of the Courts reported an 18 percent reduction in the number of medical malpractice lawsuits filed over the past four years, countering the accusation that runaway jury awards were the root cause of the problem. His letter formally called for a study commission to “consider the many facets of this difficult problem, with real solutions that enable doctors to continue seeing patients while allowing injured parties to seek redress in the courts.” He closed the letter with the slogan, “Access to care should not compete with access to justice.”

In January 2003, Badolato established an NJSBA blue ribbon task force to study these critical issues and also questioned the role played by insurance companies. The NJSBA was not alone. The Consumer Federation of America was one of many who pointed the finger at insurance companies for scrambling the facts. J. Robert Hunter, an actuary and CFA director of insurance said, “The economic cycle of the insurance industry and the industry’s own business practices are largely to blame for the rate shock that doctors are experiencing.”

The Newark Star-Ledger printed editorial after editorial calling for an investigation of insurance companies. A December 2002 editorial stated, “The insurance companies should be providing more answers. Instead, they have created chaos that obscures the facts behind malpractice premiums high enough to drive doctors out of practice.” That same editorial charged the Legislature to “authorize the study and take a close look at what is happening in the courts before it considers a cap or sets an amount.”

NJSBA representatives testified three times before the state Legislature on medical malpractice legislation and also met separately with members of the Legislature on other occasions. Current NJSBA President Edwin J. McCreedy testified that “the role that insurance companies have played in escalating premiums and denying coverage must be closely examined,” in light of allegations that “dramatic increases in doctors’ professional liability premiums are more the result of bad business decisions by insurers than losses due to malpractice verdicts.” In Washington, a delegation of NJSBA representatives led by Badolato and then President-Elect Karol Corbin Walker lobbied New Jersey members of Congress to defeat President Bush’s proposal to cap pain and suffering awards.

The ink was not even dry after Governor James E. McGreevey signed into law the “New Jersey Medical Care Access and Responsibility and Patients First Act” on June 7, 2004, when U.S. District Court Judge William G. Bassler ordered the Division of Consumer Affairs to make public information showing that confidential settlements, jury awards and other payouts in medical malpractice actions steadily declined in sharp opposition to the escalating premiums being charged by insurance companies. The release of this information confirmed that the so-called crisis is unrelated to the actual number of claims and outcomes, other factors including faulty insurance investment decisions are at play, and medical malpractice jury awards arise from public juries, not from attorneys and their clients.

The establishment of the Medical Malpractice Liability Insurance Premium Assistance Fund, according to Section 27 of P.L. 2004, c. 17, “unfairly assesses lawyers for doing their job and protecting legitimate victims of medical malpractice,” said McCreedy in a July 1 letter to the Governor. He further stated, “Given the medical malpractice insurance companies' dubious candor and remarkable silence during legislative hearings and public debate on this important issue, the legitimacy of the fund is even more questionable than we initially asserted.”

Press releases, letters to the Governor and Legislature, letters to the editor, the Assembly and Senate voting records and the new physicians profiles online via are all available at www.njsba.com.

The New Jersey State Bar Association, incorporated in 1899, is dedicated to the continuing education of lawyers and the public, to reforming and improving the legal system and to aiding in the administration of justice.

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