No Insurance, No Claim Against the Physician Individually – So Says the New Jersey Supreme Court in Jarrell v. Kaul, M.D.

Posted in Medical Malpractice

New Jersey Statute 45:9-19.17 requires physicians to maintain insurance and specifically states:

A physician who maintains a professional medical practice in this State and has responsibility for patient care is required to be covered by medical malpractice liability insurance issued by a carrier authorized to write medical malpractice liability insurance policies in this State, in the sum of $1,000,000 per occurrence and $3,000,000 per policy year and unless renewal coverage includes the premium retroactive date, the policy shall provide for extended reporting endorsement coverage for claims made policies, also known as “tail coverage,” or, if such liability coverage is not available, by a letter of credit for at least $500,000.

Plaintiff Jarrell suffered from back pain and was referred to Dr. Kaul, a Board Certified Anesthesiologist. In October 2005, Dr. Kaul performed a spinal fusion procedure on Jarrell. Following the surgery, Jarrell had new pain in the left side that worsened over time and led to a foot drop. In January 2006, Jarrell was seen by a neurosurgeon who concluded that the pain and foot drop were caused by Dr. Kaul’s improper placement of screws that damaged a nerve. Apparently at the time of the procedure, Dr. Kaul had a malpractice insurance policy, but it specifically excluded spinal surgery. Although there was a claim that Dr. Kaul did have at least $500,000 in assets that were liquid, he did not have a letter of credit that so stated.

The Supreme Court recently ruled that an injured patient does not have a direct cause of action against a physician who does not possess malpractice insurance or a letter of credit. Furthermore, the Court found that there is no informed consent claim that arises for such failure. Although a physician who does not have malpractice insurance or a letter of credit certainly is subject to disciplinary action by the Medical Board, after extensive analysis of this statute, it was concluded that the statute 45:9-19.17 does not expressly or implicitly recognize a direct cause of action by an injured patient against a physician who failed to obtain the required medical liability insurance or letter of credit.  Additionally, the Court determined that failure to comply with this statute does not necessarily dictate that the doctor is somehow unskilled; because lack of insurance does not equal risk related to a treatment or procedure.

Nevertheless, the Supreme Court did indicate that a facility which allows a physician to perform certain procedures, and a type that requires specific permits or licenses, it is incumbent upon the facility to have a doctor with appropriate credentials or the facility can be liable for hiring an incompetent physician. In addition, the Supreme Court reiterated that giving privileges to a doctor who does not have appropriate credentials can expose the healthcare facility to liability.

The record before the Supreme Court in this matter specifically established that Dr. Kaul had insurance coverage that excluded the procedure that he performed on the plaintiff and hence, summary judgment in that regard on behalf the facility was reversed and the matter has been remanded for further proceedings in that regard.

If you were injured due to a doctor’s negligence, it is strongly recommended that you seek experienced counsel immediately.