NJ Supreme Court Decision Leaves Patient High and Dry

In yesterday’s article we talked about the relationship between malpractice insurers and their doctors. One unfortunate case in New Jersey shows what can happen when things go really wrong. Here are the details.

In 2010, a patient had surgery on his foot. The surgery was botched badly, with the patient’s foot turned inward. The podiatrist said that he had no assets and the matter went to the doctor’s malpractice insurer. However, the underwriters on the policy said that they would not pay? Why? Because the doctor had lied on his original application to obtain the policy.

The case went all the way to the New Jersey Supreme Court. In a 5-2 decision, they allowed the insurer to back-date their cancellation of the policy. This means that the patient now has no ability to recoup damages from the doctor.

From the viewpoint of the insurer, to fulfill the claim would be tantamount to supporting other doctors to commit fraud on their insurance applications. However, the dissenting opinion said that the insurance company failed to do their due diligence and collected premiums for three years before getting the policy canceled and leaving the patient and their family with no recourse.

The lie on the policy was a misrepresentation of how often the doctor practiced in the state of Rhode Island. The insurer requires doctors to have at least 51% of their practice in Rhode Island to be eligible.

Does this open the door for malpractice insurers to find loopholes to cancel policies when a claim is actually filed? It very well might. We expect doctors to carry malpractice insurance in case something goes wrong, just like we expect people to carry auto insurance if they drive a vehicle. Malpractice insurers should not be able to cancel policies on a whim, but for now in New Jersey it appears they can.

If you wish to file a malpractice suit in the state of New York, contact Bottar Law today for a consultation.