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New York Hospitals Forgo Coverage for Malpractice

By Rheingold Giuffra Ruffo Plotkin & Hellman LLP

Some hospitals are not making enough money to pay for their mistakes. Consequently, a handful of New York City hospitals are partially or completely uninsured for malpractice. What does this mean for patients who become victims of malpractice? It means that any future jury awards or settlements could come at the expense of patients’ care, and it also means patients could be waiting many years for hospitals to complete payment of their award.

A 2009 survey by the state Health Department revealed that 3 hospitals in Brooklyn were entirely self-insured: Interfaith Medical Center; Kingsbrook Jewish Medical Center; and Wyckoff Heights Medical Center. The survey also revealed that 12 other hospitals across New York City were partially self-insured, including St. Vincent’s Hospital in Manhattan, which went bankrupt and closed in 2010; Lenox Hill in Manhattan; Jamaica Hospital Medical Center in Queens; and New York Hospital in Queens. In interviews, some hospital executives explained that their doctors had separate insurance which is subsidized or reimbursed by the hospital. However, two of the hospitals without insurance have no money set aside.

Due to these hospitals’ dire financial circumstances and the multi-million dollars a year price tag of insurance, it makes sense economically for struggling hospitals to skip out on buying insurance in order to keep themselves afloat. However, from a social perspective this is extremely irresponsible. Hospitals are essentially taking in patients that they know they would not be able to make whole again on the harm they cause.

Unfortunately, hospitals’ inability to manage risk has turned into a trend. For instance, in 2009, Wyckoff Heights Medical Center in Brooklyn had $50,000 in its malpractice fund and in 2010 the amount put aside to cover claims had dwindled down to “0” even though the hospital listed professional liabilities of $37 million. Similarly, an executive of Interfaith Hospital admitted that Interfaith had exhausted its malpractice reserves despite its millions of dollars of liability left unfunded.

Not only will malpractice victims fail to be compensated by these hospitals, but these hospitals’ extreme financial circumstances are also depriving patients from the same access to care. In 2006, a jury awarded a judgment of $31.6 million against Interfaith Hospital, which was later reduced to $12.9 million, and is being paid out in installments through 2018. As a result, Interfaith was forced to close its obstetric practice out of fear of additional lawsuits and bankruptcy.

Patients should be aware of the kind of care that will be offered to them by these hospitals and they should know the risks of receiving uninsured treatment. There’s also the implication that doctors at uninsured hospitals may be less careful since they don’t have to follow insurance-mandated procedures, although no link has been drawn thus far.

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