New Jersey-2022-S3343-Introduced

An Act concerning contingency fees and damages in medical malpractice cases and supplementing Title 2A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the "New Jersey Medical Malpractice Fees and Civil Damage Act."

2. The Legislature finds and declares that establishing an environment in the health care delivery setting that encourages transparency and open communication will protect New Jersey patients and improve health care provider well-being. Imposing reasonable limits on attorney contingency fees in medical malpractice cases while simultaneously establishing predictable raises in maximum limitations on recovery of compensatory damages will add stability in the health care setting.

3. For the purposes of this act:

"Adverse patient safety event or unexpected health care outcome" means any act or omission to act by a health care provider in the rendering of professional services resulting in, alleged to have resulted in, or with the potential to result in injury or death to one or more persons and that is not the result of knowingly or purposefully harmful action, or, shall have the same meaning as in subsection a. section 8 of P.L. 2007, c.196 (C.26:2H-12.25).

"Benevolent gestures" means any action that conveys a sense of compassion or commiseration emanating from humane impulses.

"Family" means the spouse, domestic partner, parent, grandparent, stepparent, child, guardian, stepchild, grandchild, sibling, half-sibling, adopted children of a parent, a spouse's parent, and in-laws of an injured party.

"Future damages" means damages for future medical treatment, care or custody, loss of future earnings, loss of bodily function, or future pain and suffering of the judgment creditor.

"Health care facility" means a facility licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).

"Health care provider" means a professional licensed or certified to practice a health care profession pursuant to Title 45 of the Revised Statutes.

"Periodic payments" means the payment of money or delivery of other property to the judgment creditor at regular intervals.

"Professional negligence" means a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that the services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital.

"Recovered" means the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim. Costs of medical care incurred by the plaintiff and the attorney's office overhead costs or charges are not deductible disbursements or costs for this purpose.

"Unaffiliated" means a specified health care provider, health care facility, or other entity not affiliated with, or that is not employed by, performing under a contract with, an owner of, or in a joint venture with another specified entity, health care facility, health care provider, organized medical group, professional corporation, or partnership, or that is otherwise not in the same health system with that health care provider, health care facility, or other entity. Whether a health care provider, health care facility, or other entity is unaffiliated is determined at the time of the professional negligence.

4. a. An attorney shall not contract for or collect a contingency fee for representing any person seeking damages in connection with an action for injury or damage against a health care provider or health care facility based upon the person's or facility's alleged professional negligence in excess of the following limits:

(1) 25 percent of the dollar amount recovered if the recovery is pursuant to a settlement agreement and release of all claims executed by all parties thereto prior to a civil complaint or demand for arbitration being filed.

(2) 33 percent of the dollar amount recovered if the recovery is pursuant to a settlement, arbitration, or judgment after a civil complaint or demand for arbitration is filed.

(3) If an action is tried in the Superior Court or arbitrated, the attorney representing the plaintiff or claimant may file a motion with the court or arbitrator for a contingency fee in excess of the percentage stated in paragraph (2), which motion shall be filed and served on all parties to the action and decided in the court's discretion based on evidence establishing good cause for the higher contingency fee.

These limitations shall apply regardless of whether the recovery is by settlement, arbitration, or judgment, or whether the person for whom the recovery is made is a responsible adult, an infant, or an incompetent person.

b. If periodic payments are awarded to the plaintiff, the court shall place a total value on these payments based upon the projected life expectancy of the plaintiff and include this amount in computing the total award from which attorney's fees are calculated pursuant to this section.

5. a. In any action for injury against a health care provider or health care facility based on professional negligence, the injured plaintiff shall be entitled to recover noneconomic losses to compensate for pain, suffering, inconvenience, physical impairment, disfigurement and other nonpecuniary damage, subject to the limitations in this section.

b. In any action for injury that does not involve wrongful death against one or more health care providers or health care facilities based on professional negligence, the following limitations shall apply:

(1) Civil liability for damages for noneconomic losses against one or more health care providers, collectively, shall not exceed $250,000, regardless of the number of health care providers, which does not include any unaffiliated health care providers that are responsible for noneconomic losses pursuant to paragraph (3) of this subsection.

(2) Civil liability for damages for noneconomic losses against one or more health care facilities, collectively, shall not exceed $250,000, regardless of the number of health care facilities, which does not include any unaffiliated health care facilities that are responsible for noneconomic losses pursuant to paragraph (3) of this subsection.

(3) Civil liability for damages for noneconomic losses against one or more health care providers or health care facilities that are unaffiliated with a defendant described in paragraph (1) or (2) based on acts of professional negligence separate and independent from the acts of professional negligence of a defendant described in paragraph (1) or (2) and that occurred at, or in relation to medical transport to, a health care facility unaffiliated with a health care facility described in paragraph (2), collectively, shall not exceed $250,000, regardless of the number of defendants described in this paragraph, which does not include any unaffiliated health care providers or unaffiliated health care facilities that are responsible for noneconomic losses pursuant to paragraph (1) or (2) of this subsection.

c. In any action for wrongful death against one or more health care providers or health care facilities based on professional negligence, the following limitations shall apply:

(1) Civil liability for damages for noneconomic losses against one or more health care providers, collectively, shall not exceed $500,000, regardless of the number of health care providers, which does not include any unaffiliated health care providers that are responsible for noneconomic losses pursuant to paragraph (3) of this subsection.

(2) Civil liability for damages for noneconomic losses against one or more health care facilities, collectively, shall not exceed $500,000, regardless of the number of health care facilities, which does not include any unaffiliated health care facilities that are responsible for noneconomic losses pursuant to paragraph (3) of this subsection.

(3) Civil liability for damages for noneconomic losses against one or more health care providers or health care facilities that are unaffiliated with a defendant described in paragraph (1) or (2) of this subsection based on acts of professional negligence separate and independent from the acts of professional negligence of a defendant described in paragraph (1) or (2) of this subsection that occurred at, or in relation to medical transport to, a health care facility unaffiliated with a health care facilities described in paragraph (2) of this subsection, collectively, shall not exceed $500,000, regardless of the number of defendants described in this paragraph, which does not include any unaffiliated health care providers or unaffiliated health care facilities that are responsible for noneconomic losses pursuant to paragraph (1) or (2) of this subsection.

d. A health care provider defendant shall not be liable for damages for noneconomic losses in more than one of the categories set forth in this section, regardless of the application or combined application thereof.

e. A health care facility defendant shall not be liable for damages for noneconomic losses in more than one of the categories set forth in this section, regardless of the application or combined application thereof.

f. The applicable dollar amounts set forth in this section apply regardless of the number of defendant health care providers or health care facilities against whom the claim is asserted or the number of separate causes of action on which the claim is based. For a claim subject to subsection b. of this section the applicable dollar amounts set forth in subsections b., g., and h. provide three separate limits of liability that may apply. For a claim subject to subsection c., the applicable dollar amounts set forth in subsections c., g., and h. provide three separate limits of liability that may apply.

g. This section shall be deemed effective as of, and shall apply to all cases filed or arbitrations demanded on or after, January 1, 2023. After the effective date of this section, the dollar amounts set forth in subsection b. shall increase by $40,000 each January 1^st for 10 years up to $650,000, and the dollar amounts set forth in subsection c. shall increase each January 1st by $50,000 for 10 years up to $1,000,000. The dollar amount in effect at the time of judgment, arbitration award, or settlement shall apply to an action, subject to subsection h.

h. The applicable amounts for noneconomic damages for personal injury of $650,000, and for wrongful death of $1,000,000, as set forth in subsection g. of this section, shall be adjusted for inflation on January 1^st of each year by two percent beginning on January 1, 2034.

i. In no action shall the amount of damages for noneconomic losses exceed the applicable dollar amounts set forth in subsections b., c., g., or h. of this section.

6. a. It is the intent of the Legislature in enacting this section to authorize the entry of judgments in malpractice actions against health care providers which provide for the payment of future damages through periodic payments rather than lump-sum payments. By authorizing periodic payment judgments, it is the further intent of the Legislature that the courts will utilize such judgments to provide compensation sufficient to meet the needs of an injured plaintiff and those persons who are dependent on the plaintiff for whatever period is necessary while eliminating the potential windfall from a lump-sum recovery which was intended to provide for the care of an injured plaintiff over an extended period who then dies shortly after the judgment is paid, leaving the balance of the judgment award to persons and purposes for which it was not intended. It is also the intent of the Legislature that all elements of the periodic payment program be specified with certainty in the judgment ordering such payments and that the judgment not be subject to modification at some future time which might alter the specifications of the original judgment.

b. In any action for injury or damages against a provider of health care services, the court shall, at the request of either party, enter a judgment ordering that money damages or its equivalent for future damages of the judgment creditor be paid in whole or in part by periodic payments rather than by a lump-sum payment if the award equals or exceeds $250,000 in future damages. In entering a judgment ordering the payment of future damages by periodic payments, the court shall make a specific finding as to the dollar amount of periodic payments which will compensate the judgment creditor for these future damages. As a condition to authorizing periodic payments of future damages, the court shall require a judgment debtor who is not adequately insured to post security adequate to assure full payment of the damages awarded by the judgment. Upon termination of periodic payments of future damages, the court shall order the return of this security, or so much as remains, to the judgment debtor.

c. (1) The judgment ordering the payment of future damages by periodic payments shall specify the recipient or recipients of the payments, the dollar amount of the payments, the interval between payments, and the number of payments or the period of time over which payments shall be made. The payments shall only be subject to modification in the event of the death of the judgment creditor.

(2) In the event that the court finds that the judgment debtor has exhibited a continuing pattern of failing to make the payments, as specified in paragraph (1) of this subsection, the court shall find the judgment debtor in contempt of court and, in addition to the required periodic payments, shall order the judgment debtor to pay the judgment creditor all damages caused by the failure to make the periodic payments, including court costs and attorney's fees.

d. Money damages awarded for loss of future earnings shall not be reduced or payments terminated by reason of the death of the judgment creditor, but shall be paid to persons to whom the judgment creditor owed a duty of support, as provided by law, immediately prior to the judgment creditor's death. The court which rendered the original judgment may, upon petition of any party in interest, modify the judgment to award and apportion the unpaid future damages in accordance with this subsection.

e. Following the occurrence or expiration of all obligations specified in the periodic payment judgment, any obligation of the judgment debtor to make further payments shall cease and any security given, pursuant to subsection a., shall revert to the judgment debtor.

7. Statements, writings, or benevolent gestures expressing sympathy, regret, a general sense of benevolence, or suggesting, reflecting, or accepting fault relating to the pain, suffering, or death of a person, or to an adverse patient safety event or unexpected health care outcome, in relation to an act or omission in providing or failing to provide health care, and made to that person or the family or representative of that person prior to the filing of a lawsuit or demand for arbitration, shall be confidential, privileged, protected, not subject to subpoena, discovery, or disclosure, and shall not be used or admitted into evidence in any civil, administrative, regulatory, licensing, or disciplinary board, agency, or body action or proceeding, and shall not be used or admitted in relation to any sanction, penalty, or other liability, as evidence of an admission of liability or for any other purpose, and all such communications, whether verbal, electronic, in writing, or in any other form, also shall be entitled to the privileges and protections set forth in the Evidence Code.

8. If any provision or part of P.L. , c. (pending before the Legislature as this bill) or the application of any provision or part to any person or circumstances, is for any reason held to be invalid, the remaining provisions and parts, and application of the remaining provisions and parts, shall not be affected, but shall remain in full force and effect, and the provisions and parts of this act are severable.

9. This act shall take effect immediately except that section 3 shall take effect as of, and shall apply to all cases filed or arbitrations demanded on or after January 1, 2023.

STATEMENT

This bill would carve out an exception concerning attorney contingent fee arrangements in certain medical malpractice cases, and impose a limit on noneconomic losses in medical malpractice cases not involving a patient death and cases involving wrongful death.

This bill would base the amount of an attorney contingency fee that may be contracted for upon whether recovery is pursuant to settlement agreement and release of all claims executed before a civil complaint or demand for arbitration is filed, or pursuant to settlement, arbitration, or judgment after a civil complaint or demand for arbitration is filed, as specified. The percentages are as follows: 25 percent of the dollar amount recovered if the recovery is pursuant to a settlement agreement and release of all claims executed prior to a civil complaint or demand for arbitration is filed; 33percent of the dollar amount recovered if the recovery is pursuant to settlement, arbitration, or judgment after a civil complaint or demand for arbitration is filed and if an action is tried in a civil court or arbitrated, the attorney representing the plaintiff or claimant may file a motion with the court or arbitrator for a contingency fee in excess of these percentages. In the court's discretion a greater amount may be awarded based on evidence establishing good cause for the higher contingency fee.

Existing case law provides that in any action against a health care provider based upon professional negligence, the injured plaintiff is entitled to recover noneconomic losses to compensate for pain, suffering, inconvenience, physical impairment, disfigurement, and other nonpecuniary damage. Currently, New Jersey does not have a limit or maximum amount permitted on recovery for noneconomic loss, referred to as compensatory damages. The bill would establish a cap of $250,000 for actions that do not involve wrongful death. The limitation would be capped at $500,000 for an action involving a wrongful death. The bill would specify that these limitations would increase by $40,000 if no wrongful death is involved, and by $50,000 if wrongful death is involved, each January 1st for 10 years and beginning on January 1, 2034, the applicable limitations on noneconomic damages for personal injury and for wrongful death would be adjusted for inflation on January 1st of each year by 2 percent.

The bill would permit a judgment ordering that money damages or its equivalent for future damages of the judgment creditor be paid in whole or in part by periodic payments rather than by a lump-sum payment if the award equals or exceeds $250,000.

This bill would specify that statements, writings, or benevolent gestures expressing sympathy, regret, a general sense of benevolence, or suggesting, reflecting, or accepting fault relating to the pain, suffering, or death of a person, or to an adverse patient safety event or unexpected health care outcome, as specified, are confidential, privileged, protected, not subject to subpoena, discovery, or disclosure, and are not to be used or admitted into evidence in any civil, administrative, regulatory, licensing, or disciplinary board, agency, or body action or proceeding. They also are not to be used or admitted in relation to any sanction, penalty, or other liability, as evidence of an admission of liability or for any other purpose.