New York’s Medicaid Redesign Plan -- The Neurologically Impaired Infant’s Fund: True Relief or Looming Disaster?

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The true cornerstone of Gov. Andrew Cuomo’s Medicaid Redesign Team is the creation of a new fund designed to pay particular (and limited) medical expenses for neurologically damaged infants. The proposal was introduced by the Greater New York Hospital Association, a long time proponent of strategies designed to reduce the crushing cost of medical malpractice insurance.

The Fund covers all cases pending (if brought on or after April 1, 2011) and will come under the penumbra of the newly formed combination of the state insurance and banking departments. Its primary responsibility will be to assure administration of the fund on a case-by-case basis. To many, the medical indemnity fund was seen as the 21st century’s best hope for reducing New York’s skyrocketing medical-malpractice costs. According to Mr. Cuomo's chief Medicaid reform adviser, between 150 and 200 babies are expected to qualify annually for the fund and the situation is, no doubt, dire. In 2009, the state's hospitals spent $1.6 billion to cover medical malpractice expenses and half of those funds compensated neurologically impaired infants.

The bill expressly covers "an injury to the brain or spinal cord of a live infant caused by the deprivation of oxygen or mechanical injury occurring in the course of labor, delivery or resuscitation or by other medical services provided or not provided during delivery admission that rendered the infant with a permanent and substantial motor impairment or with a developmental disability." However, ethical issues abound for lawyers on both sides. For example, it is unclear whether the fund may be misused to cover brachial plexus injuries or Erb’s palsies, both of which are common obstetrical malpractice claims (but are not necessarily caused by hypoxia or mechanical injury secondary to labor or delivery).

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