New York Establishes Medical Indemnity Fund (also referred to preenactment as the Neurologically Impaired Infant Fund or NIIF)

On Thursday, March 31st, the New York State Legislature passed its first on-time budget in five years. Significantly, for medical malpractice practitioners, the budget included the creation of the Medical Indemnity Fund. The Fund was established to pay for future medical costs in birth-related neurological injury lawsuits. In those cases, all future medical expenses will be paid through the Fund, not by the defendant or its insurer. We are still working our way through analyzing the new legislation, but some of the important early highlights to note:

(1) The law will apply to all birth-related neurological injury lawsuits where no judgment has been entered and no settlement agreement has been entered into by the parties before April 1, 2011.

(2) The costs covered by the Fund include "future medical, hospital, surgical, nursing, dental, rehabilitation, custodial, durable medical equipment, home modifications, assistive technology, vehicle modifications, prescription and non-prescription medications, and other health care costs actually incurred for services rendered to and supplies utilized by qualified plaintiffs."

(3) The plaintiff's attorney's fee will be based upon the "entire sum awarded" by the jury or the court, or the full sum of the settlement. It "shall be paid in a lump sum by the defendants and their insurers pursuant to section four hundred seventy-four-a of the judiciary law; provided however that the portion of the attorney fee that is allocated to the non-fund elements of damages shall be deducted from the non-fund portion of the award in a proportional manner."

(4) Every settlement agreement for an alleged birth related neurological injury shall provide that in the event the administrator of the fund determines that the plaintiff or claimant is a qualified plaintiff, all payments for future medical expenses shall be paid in accordance with the fund provisions. When the settlement agreement does not have such a provision, "the court shall direct the modification of the agreement to include such term as a condition of court approval."

(5) Where the jury or court has made an award for future medical expenses, either party can make an application to the court "that the judgment reflect that, in lieu of that portion of the award that provides for payment of such expenses, and upon a determination by the fund administrator that the plaintiff is a qualified plaintiff, the future medical expenses of the plaintiff shall be paid out of the fund." The Court must grant such a request if the applicant makes a prima facie showing that the plaintiff qualifies for the Fund.

Initially, the most important aspect to note is that if you have a case involving an infant neurologically impaired at birth, which has not settled or reached a judgment as of April 1, 2011, your case appears to qualify for the Fund. That will result in significant cost savings for defendants and plaintiff's counsel will have to advise their clients of how the Fund will operate.

Beyond that, at this preliminary stage, we will hold-off on discussing any other specific implications of the new Fund. Of course, we welcome any insights or perspectives you would like to share. As we continue to analyze the statute and receive feedback, we will provide periodic updates on this blog.