New Jersey appellate ruling adds to physicians' liability worries

Doctors need to keep an eye on their insurers' financial situation and take steps to protect their personal assets as well.

By Mike Norbut, AMNews staff. May 9, 2005.

New Jersey physicians, already saddled with rising liability insurance premiums, are reeling once again after a state appellate court ruled that plaintiffs can pursue defendants' personal assets in cases where the insurer is in liquidation.

For a state that already is struggling to retain physicians and recruit new ones, word that doctors may have to pay claims out of their own pockets if their insurance company goes bankrupt will likely damage a patient's access to care even further, doctors said.

"It's dismaying that a physician can work his or her entire career to try to make a retirement for themselves, only to lose it all," said George Remisovsky, MD, an obstetrician-gynecologist in solo practice in Union City, N.J. "This will force people out of the state."

If an insurance company goes bankrupt and damages in the case exceed the $300,000 cap allowed by the New Jersey Property-Liability Insurance Guaranty Assn., defendants would be personally responsible for the difference, according to the court ruling in Johnson v. Braddy.

The legislation that established the guaranty fund did not specifically make a defendant immune in situations where his or her insurance company became insolvent, so "it is more reasonable to infer a legislative intent to favor the injured party," the court said.

Although the case involves a personal injury dispute involving a trucking company and its contracted driver, the decision could have far-reaching consequences for doctors, said Bob Conroy, an attorney with Kern Augustine Conroy & Schoppmann P.C., which serves as the Medical Society of New Jersey's general counsel.