New Jersey - (201) 891-3726

New Jersey

New York - (646) 759-2962

New York
  • (By Appointment Only)
  • 1 Blue Hill Plaza
  • Lobby Level #1509
  • Pearl River, NY 10965
  • (646) 759-2962 tel

Facilities Liable for Uninsured Physicians Under NJ Supreme Court Ruling

By: Gina L. Campanella, Esq., FACHE

On September 29, 2015, the New Jersey Supreme Court released its decision in the matter of Jarrell v. Kaul, No. A-42-13 (072363). The Supreme Court was tasked with deciding three main issues on this appeal. Refusing to expand the scope of liability for the individual physician, the Court held on the first issue that an injured patient does not have a direct cause of action against a physician for failure to obtain or maintain malpractice insurance for the procedure which caused the injury. Continuing that application, the Court held on the second issue that failure to inform a patient of such a lack of appropriate malpractice insurance is not a failure to obtain informed consent. However, the third holding of the Court breaks with their analysis on the first two issues and is a critical change for all health care facilities in the state of New Jersey.

New Jersey Statute 45:9-19.17 requires all physicians licensed in the State of New Jersey to maintain professional liability insurance in the minimum coverage amounts of $1,000,000.00 per occurrence and $3,000,000.00 in the annual aggregate. In the alternative, physicians may supply the State Board of Medical Examiners with a letter of credit evidencing possession of at least $500,000 in assets available to satisfy a potential judgement. In Jarrell v. Kaul, the Defendant, Dr. Kaul, did not have professional liability coverage or a satisfactory letter of credit for the procedure he performed on the Plaintiff, Mr. Jarell, which resulted in his injury. Mr. Jarell asked the Court to hold the facility where the procedure was performed responsible for negligence based on their allowing Dr. Kaul to perform a procedure for which he was uninsured at their facility. The New Jersey Supreme Court held that when a business hires an independent contractor to provide a service which requires special skills, licensure or credentials, failure to ensure that the contractor does, in fact, have and maintain the required licensure and/or credentials is grounds for liability. The Court was careful to specify that the liability imposed is not one based in vicarious liability for the negligence of the contractor but is based upon the facility’s negligence in the engagement of an incompetent or unqualified contractor.

All facilities in the State of New Jersey can now be held liable for negligence should they permit a physician without proper credentials to perform surgery or procedures at their facility. More specifically, “[a] health care facility that grants privileges to physicians to use its facility has a continuing duty to ensure that any physician granted privileges maintains the required insurance, which is a condition of obtaining and maintaining a license to practice medicine in this State.” All facilities would be prudent to review their Medical Staff Bylaws, specifically their policies and procedures for credentialing physicians, to be sure there are safeguards in place to confirm that all physicians have the necessary professional liability insurance for the procedures they have privileges to perform and that there is a regular method by which maintenance of insurance is confirmed.

Leave a Reply

Your email address will not be published.