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Department of Financial Services…cont

The Fund reduces, often substantially, the amount of net cash available to settle a case. While some parents of youngsters who have been the victims of an obstetrical mishap will, hopefully, realize that enrollment in the Fund is a valuable tangible asset, some, undoubtedly, will grouse about the reduced amount of cash which results from a settlement. Potentially, some parents will be disappointed with the outcome and their lawyers will have the difficult task of trying to explain why a guaranteed program of medical services for a child is an appropriate substitute for ready cash.

In smaller value settlements (usually because of liability problems), where a 50/50 allocation is appropriate because of the nature of the injuries, this court has tinkered with its 50/50 allocation. Take, for instance, a $2,000,000 settlement. Applying a 50/50 allocation, plaintiffs will have to pay a portion of the attorney’s fees, leaving a net recovery of less than $1,000,000. Under those circumstances, this court encourages a hospital or insurer to be less insistent on a 50/50 allocation or to take other innovative measures to maximize cash. For instance, in a recent case, a self-insured hospital, above and beyond the settlement, agreed to satisfy the Medicaid lien so that the allocation percentages remained in tact, but cash was maximized.

As we know from past experience, many obstetrical settlements will involve children who will not require custodial care or whose need for future medical services is limited. Thus, the amount allocated to Fund damages will likely be less than 50%. Hopefully, as more courts apply the allocation process to settlements, certain general parameters will be established to deal with differing fact patterns.

Now comes the difficult part: The Fund was created to help insurance companies, hospitals and medical providers reduce premium costs in obstetrical malpractice actions. Thus, if the Fund takes on the obligation of paying for a child’s future medical needs, the statute anticipates an accompanying savings to the class for whose behalf the Fund was created. “Where words of a statute are free from ambiguity and express plainly, clearly and distinctly the legislative intent, resort may not be had to other means of interpretation”

The Legislature’s reason for creating the Fund is unequivocally set forth in the statute: “To provide a funding source for future healthcare costs associated with birth related neurological injury, in order to reduce premium costs for medical malpractice insurance coverage” Distilled to its basics, the statute’s legislative scheme is a simple one: The Fund substitutes services for up-front cash. The Fund pays for the services and the insurer, hospital and/or medical provider saves the up-front cash. This savings reduces the insurer or self-insured medical provider’s cost of resolving obstetrical cases, doubtless resulting in reduced malpractice premiums and/or expenses.

Lastly, enactment of the Fund has stirred controversy; change often does. Undoubtedly, the Fund will have to work out its “kinks”; most new programs do. And, yes, skeptics have a right to insist that the Fund meet the needs of a damaged child without subjecting a family to bureaucratic nightmares and snafus. However, at a time when States across the nation confront the fiscal reality that the cost of governance must be reduced, particularly expenses related to healthcare and Medicaid, the bench and bar must act cooperatively and responsibly to implement a program whose purpose is clear while protecting the sick children who we have the privilege to call our wards.

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