New Jersey Banking, Insurance Commissioner Asks Court to Dismiss Lawsuit

New Jersey Banking and Insurance Commissioner Karen L. Suter authorized the filing of court papers today seeking to dismiss a lawsuit challenging the $50 million assessment on the state’s HMOs to pay for a portion of the HIP-NJ and APPP insolvencies.

“The New Jersey Insolvent Health Maintenance Organization Assistance Fund Act meets all constitutional standards,” Commissioner Suter said. “This lawsuit only serves to delay payment to the many doctors and hospitals who rallied to provide necessary health care to the thousands of people left stranded by these two insolvencies.”

The lawsuit was filed in June by the New Jersey Association of Health Plans. The New Jersey Insolvent Health Maintenance Organization Assistance Fund Act, signed by Gov. Christie Whitman on April 6, provides funding for payments owed to providers as a result of the insolvencies of HIP-NJ and APPP.

The law also established the New Jersey Insolvent Health Maintenance Organization Assistance Association to administer the claims payments. Under the law, the monies will come from two sources: $50 million to be deposited in the Fund from payments made by tobacco manufacturers as a result of the tobacco settlement on Nov. 23, 1998; $50 million collected through assessments over a 3-year period on HMOs operating in New Jersey based on net written premiums.

Additionally, under the law, providers forgive one-third of the amount they are owed. Last week, Commissioner Suter adopted a Plan of Operation for the Association that would allow for an interim payment later this fall of a portion of the claims stemming from the 1998 insolvencies of HIP Health Plan of New Jersey and American Preferred Provider Plan.