Challenging the New York Medical Indemnity Fund

Prior articles on this issue have described how the recently adopted New York Medical Indemnity Fund adversely impacts the families of children injured by medical malpractice at birth. (See eg New York’s Death Panel Lottery for Children Injured by Medical Malpractice at Birth and New York State To Ration Care to Brain Injured Victims of Obstetric Malpractice)

In summary, this legislation prevents these children from receiving the care that they have proven in Court was necessary, and which the Court after a trial determined was caused by the negligence of a doctor or hospital. Instead of the wrongdoer and its insurance carrier paying for the care necessitated by the harm that they caused, the child will be required to apply to the Fund-financed by the taxpayers and an additional tax on obstetric services- to get care.

The care that the Fund will pay for will not be based on the care determined by the Court, but rather whatever is determined anew by the Fund Administrator. Even in the unlikely event that all the necessary care is approved by the Fund, the reimbursement rates for most things are so low that it is inevitable that access to services and providers will be reduced, thus impairing the health of the child, his or her quality of life, and even how long they will live.

These limitations will also severely restrict health care decisions by the family. And forget about moving to another State or another country! The Fund requires that health care providers “must accept assignment of payment [at NY Medicaid rates] from the Fund.” (Regs. §69-10.5)

A group of attorneys who represent families impacted by this Fund are determined to challenge this legislation. We are the Committee to Challenge the Fund and I am its co-chairman. After careful analysis, I believe that the Fund legislation is unconstitutional under both the New York State and United States Constitutions. We believe that there are a number of constitutional deficiencies which are summarized very briefly below:

1. Separation of Powers: The Fund violates separation of powers (Article VI) because it interferes with the inherent judicial authority to enter judgment that conforms to the facts of the case as determined by the jury and accepted by the Court. The statute, to the contrary, mandates that a court not enter judgment conforming to the facts, and directly prohibits it from doing so. Similarly the Fund interferes with the Court’s statutory and inherent judicial power to protect infant’s rights and approve settlements in an infant’s best interests. (CPLR Article 12)

2. Violation of a right to trial by jury: The New York Constitution states that “[t]rial by jury in all cases in which it has heretofore been guaranteed by constitutional provision shall remain inviolate forever…”. N.Y. Const. Art. I, § 2.

The Fund replaces the jury’s determination, which was based on the facts of the case, with nothing but a promise of possible benefits. As noted above there is absolutely no guarantee that a child-despite having proven liability and damages–, will ever receive any benefits from the Fund, much less to the extent and duration determined by the jury. Instead of the negligent defendant paying for future medical care, either the child’s family will pay with his health insurance, or the Fund might pay if its administrator finds that the treatment is approved as “medically necessary.” Or, in many instances, the care determined by the Court on the specific facts of the case will simply not be provided at all.

The jury has already made the determination which the Fund administrator is-under the Fund statute-now free to ignore. Instead of the funds to pay for his own care and make his own health care decisions the child will be sentenced to the potential of perpetual litigation with the Fund Administrator to get what the Court has already determined him to be entitled. This completely usurps the jury’s function and violates the heretofore inviolate right to a jury trial.

3. Due Process: The Fund is an uncompensated taking, and at that, is not for a public purpose, but rather to relieve a private defendant from paying a private judgment.

4. Equal Protection: The “Fund” and its regulations improperly discriminates between individuals-by definition only children-with the exact same injury, care needs and damages as between (a) malpractice victims versus non malpractice victims; (b) malpractice victims versus birth injury malpractice victims; (c) birth injury malpractice victims who are accepted (i.e. forced) into the fund before it is 80 percent exhausted versus those who are not after the fund is closed/ exhausted-and thereby receive their full damages; (d) those who receive “full” payment of their needs from the Fund versus those who are denied some or all of their benefits by the Fund Administrator; (e) birth injured malpractice victims with private health insurance or private assets versus those who don’t; and (f) those who are initially accepted into the fund but then are deprived benefits when or if the Fund lacks the funds to make payment and are then precluded from seeking the rest from the defendant already found responsible versus those who are paid their future care costs in full.

5. Freedom to travel: The Fund requires “[a]ll health care providers shall accept from qualified plaintiff’s [sic] or persons authorized to act on behalf of such plaintiff’s [sic] assignments of the right to receive payments from the fund for qualifying health care costs” [see, P.H.L. § 2999-j (11)]. It would not seem that a New York State statute can require health care providers outside of New York State to accept payment from the Fund. Although a child could physically leave the State of New York or reside in another state or country, practically speaking, he is tied to New York because out-of-state (or out of US) health care providers are not required to accept the New York reimbursement rate.

6. Retroactive Application: The statute is unconstitutionally retroactive because it applies to all cases pending on April 1, 2011-even where a verdict was rendered on March 31, and not yet converted into a judgment.

7. Article VII Section 8: This section provides that: “[t]he money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking…” Here the statute “pays off” a portion of a private judgment by a private individual against a private individual.

8. Article VII, Section 6: The Fund-and the restrictions on the child’s recovery–was passed as part of the Budget. This section of the New York State Constitution prohibits substantive legislation to be passed as part of the budget bill.

This list of constitutional issues is not exhaustive. There are others. The attorneys working on developing a constitutional challenge have been working pro bono and I will continue to do so. However, most of us are malpractice lawyers and not constitutional lawyers. So I have consulted with the nation’s premier constitutional lawyers specializing in challenges like this-Bob Peck of the Center for Constitutional Litigation in Washington, D.C. Based on my own analysis and after consulting with Bob, I believe that, if properly presented, there is a good chance that this legislation can be invalidated.

However, whether I rate the chances of a successful challenge as good or poor, I believe that the harm that this Fund will cause to these families makes it critical that I challenge it. Unfortunately, despite my pro bono efforts, a proper challenge will take a significant amount of money. Although I have raised a substantial amount, I am nowhere near to reaching my goal. Many of us have committed not only my time, but substantial dollars as well. But I can’t do it alone. We need help. If you’re willing to get involved please send a check payable to Center for Constitutional Litigation to my office.

This is a time critical issue. Birth injury cases are currently being tried and/or settled all over the State, and I want to make sure that any constitutional challenge to the Fund is properly supported. There is already a pending challenge to the Fund and I want to make sure that I can raise the funds to get Bob Peck involved in time to help it be successful. Thanks.

Michael W. Kessler