The “Double Secret” New York Medical Indemnity Fund: Where is the Information about Fund Operations and Where Are the Hearings and the Fund Regulations?

By Michael W. Kessler

The New York Medical Indemnity Fund was created by Governor Cuomo to eliminate the obligation of proven wrongdoers who cause serious injuries to children at birth from the responsibility to pay for the medical care that these children require because of the harm done to them. Yes, you read that correctly! Though it is difficult to believe, it is the fact that hospitals and doctors whose negligent care resulted in a lifetime of enormous care expense and suffering–and even more perversely their megawealthy insurance companies who received premiums to assume the risk and pay these claims-will be bailed out by the State of New York.

Effective April 1, 2011, Governor Cuomo, and his friends in the hospital community and the highly profitable malpractice insurance industry, actually created a system where the person who caused catastrophic injuries to these innocent infants is immune from paying for the harm that they have caused. Instead care for these children will be paid for by the already beleaguered taxpayers of New York State through the New York Medical Indemnity Fund. Such life sustaining care, if it is approved by the Fund at all, will be rationed by paying providers at below market rates. And even worse, families are deprived of the right to make health care choices that are in the best interest of their injured children. (See Kessler & Fahrenkopf, “The New York State Medical Indemnity Fund: Rewarding Tortfeasors Who Cause Birth Injuries by Rationing Care to Their Victims,” 22 Albany Law Journal of Science and Technology 173 (2012).

In addition to bailing out wrongdoers and their insurance companies, apparently the State also does not want the public or the taxpayers to know how the Fund is operating, how much it is costing, and how well – if at all – it is meeting the care needs of the children it is charged with protecting.

FOIA request and lack of response

More than five months ago, I made a Freedom of Information Act request to the Fund Administrator seeking information about Fund operations. Although by law a response was required within 20 days, the only response I received was that I would get a response by October 30, 2012. That time has now also long since come and passed without any response whatsoever-not even a request for more time to respond. I am appealing their failure to respond.

What is the Fund hiding? Indeed, the Fund has been through two contracted claims administrators in its 18-month existence without any disclosure as to the contracting process. The question of how much money, which is supposed to be spent on the care of these injured children within the State, is instead being diverted to these contractors remains unanswered. And if you are looking for the actuarial reports that the Fund is required to publish quarterly concerning the Fund’s financial exposure and operations, forget about it. Those have not been disclosed either.

The Fund was also supposed to promulgate regulations to govern its operations and the claims process. Of course establishing regulations would require public hearings, which could expose the shortcomings of the Fund to public scrutiny. So, instead, now for 18 months the Fund has been operating under ninety day “emergency” regulations-renewed every three months. This has the effect of thwarting any real public input into how the Fund will operate. As of this date, no hearings have been scheduled. Even if hearings are scheduled promptly, the “emergency” regulations will have been in effect for at least two years after the Fund’s creation.

The only reason that there has been no public outcry about this outrageous state of affairs is that almost no one knows about it. Only a small group of the State’s most vulnerable children and their families are impacted, but when they are, the consequences can be devastating. Thirty million dollars of the taxpayer’s money was appropriated in the first year of the Fund-an amount that can only increase exponentially over the years. For that amount of money, as well as for the Fund’s potential to ruin so many innocent lives, at a very minimum there should be both a full accounting and evaluation as to how well – or not – this stealth State agency is functioning and public hearings on the regulations that will govern they way care is provided.

It is bad enough that this Fund exists. At a minimum, the Fund Administrator needs to comply with the law that created it, so that the public and perhaps even the politicians who enacted it can see its costs and the potential harms to innocent, injured children.