Court Opinion

ID: 3005358
Source: CourtListenerOpinion
Date Created: 2015-09-29 14:08:30.008383+00
Date Added: 2024-06-11T11:46:00.990290
License: Public Domain

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

                    James R. Jarrell, et al. v. Richard A. Kaul, M.D., et al. (A-42-13) (072363)

Argued October 20, 2014 -- Decided September 29, 2015

CUFF, P.J.A.D. (temporarily assigned), writing for a majority of the Court.

           In these appeals, the Court examines three issues related to the statutory requirement that physicians
licensed to practice medicine in New Jersey must obtain and maintain medical malpractice liability insurance
pursuant to N.J.S.A. 45:9-19.17. Specifically, the court considers whether: (1) an injured patient may bring a direct
action against a negligent, uninsured physician; (2) failure to comply with the statutory liability insurance mandate
gives rise to an informed consent claim; and (3) a health care facility that grants privileges to a physician to use its
facilities to treat patients has a continuing duty to ascertain a physician’s compliance with the insurance requirement.

          In September 2005, plaintiff James Jarrell, who suffered from chronic back pain, was referred to defendant
Dr. Richard A. Kaul, a board certified anesthesiologist who practiced at defendant Market Street Surgical Center
(MSSC). In October 2005, Dr. Kaul performed a spinal fusion procedure on Jarrell. Following the surgery, Jarrell
experienced new pain in his left side that worsened over time and led to a “drop foot.” In January 2006, Jarrell was
examined by a board certified neurosurgeon, who concluded that the pain and drop foot were caused by Dr. Kaul’s
improper placement of some screws that pinched a nerve. At the time of the October 2005 procedure, Dr. Kaul had
a malpractice insurance policy that specifically excluded spinal surgery. Although he claimed to have $500,000 in
liquid assets, he did not have a letter of credit in that amount. The Board of Medical Examiners (BME) revoked Dr.
Kaul’s license to practice medicine in 2012.

          Jarrell and his wife (collectively, plaintiffs) filed a complaint against Dr. Kaul and MSSC. On summary
judgment, the court found that there was no cause of action against Dr. Kaul for deceit, misrepresentation, lack of
informed consent, or battery based on his failure to maintain insurance. The trial court also dismissed plaintiffs’
claims against MSSC because they lacked an expert who would testify that MSSC deviated from accepted standards
of medical care by failing to properly ascertain Dr. Kaul’s credentials and by permitting an uninsured physician to
perform spinal procedures in its facility. Trial proceeded against Dr. Kaul limited to the issue of medical
negligence, and the jury found that Dr. Kaul negligently performed the spinal fusion, which proximately caused
Jarrell’s injury.

           Dr. Kaul appealed and plaintiffs cross-appealed. The Appellate Division affirmed the summary judgment
orders, the jury verdict, and the damages award. The panel held that the trial court properly dismissed all claims
against Dr. Kaul based on his lack of insurance because N.J.S.A. 45:9-19.17 does not provide a private cause of
action for injured parties. For the same reasons, the panel concluded that N.J.S.A. 45:19-17(b), does not permit a
direct action by a patient against a surgical center that permits an uninsured or underinsured physician to use its
facilities. This Court denied Dr. Kaul’s petition for certification, but granted plaintiffs’ cross-petition. 216 N.J. 366
(2013).

HELD: Under N.J.S.A. 45:9-19.17, an injured patient does not have a direct cause of action against a physician
who does not possess medical malpractice liability insurance or a suitable letter of credit. Moreover, failure to
comply with the statutory liability insurance mandate does not give rise to an informed consent claim. Finally, a
cause of action for negligent hiring may be asserted against a health care facility that grants privileges to a physician
who has not complied with the statutorily required insurance provisions.

1. Beginning in 1998, the Legislature required physicians to maintain medical malpractice liability insurance. If a
physician could not obtain insurance, he or she could post a letter of credit. The statute, N.J.S.A. 45:9-19.17, was
later amended to require physicians to maintain insurance in the amount of at least $1 million per occurrence and $3
million per policy year, or to post a letter of credit for $500,000. The intent of these provisions is to ensure that
citizens will have some recourse for adequate compensation in the event of medical malpractice. (pp. 12-16)

2. While both the statute and its implementing regulations expressly provide that a physician who does not obtain
medical malpractice insurance or a suitable letter of credit is subject to disciplinary action by the BME and civil
penalties, neither expressly provides that an injured patient has a direct cause of action against a treating physician
who does not comply with the statutory requirements. However, although courts should hesitate to recognize any
unmentioned remedy, both the United States Supreme Court and this Court have held that a statute may implicitly
create a private cause of action. (pp. 16-18)

3. In order to determine whether an implicit private cause of action exists here, the Court considers the legislative
history and statutory language. The Court finds that the BME was expressly deemed the intended vehicle to ensure
compliance with the statutory requirements, a choice which reflects a legislative decision to encourage and force
compliance, rather than wait for a complaint by an injured patient. A post-injury direct claim is reactive and does
little to further the goal of creating a source of compensation for patients injured by negligent medical care. Thus,
the Court concludes that N.J.S.A. 45:9-19.17 neither expressly nor implicitly recognizes a direct cause of action by
an injured patient against a physician who fails to obtain the statutorily required medical malpractice liability
insurance or letter of credit. (pp. 18-21)

4. The Court next turns to the question of informed consent, which is a negligence concept predicated on a
physician’s duty to disclose material information that will allow a patient to intelligently assess the nature and risks
of a proposed treatment or procedure. A risk is material if a reasonable patient would likely attach significance to it
in deciding whether to forego the treatment. The validity of the consent obtained from a patient normally is
confined to disclosure of the associated risks, but consent may, in certain circumstances, be vitiated by a physician’s
significant misrepresentations of credentials or experience. In such circumstances, a plaintiff must show that the
physician’s more limited experience or credentials could have substantially increased the risk and that the increased
risk would cause a reasonably prudent patient not to consent. A physician’s failure to comply with N.J.S.A. 45:9-
19.17 is not a perfect fit with this jurisprudence since it does not necessarily mean that the physician is unskilled and
since lack of insurance bears no relation to the risks attendant to a proposed treatment or procedure. The Court
discerns no principled reason to depart from its prior jurisprudence and extend the relief that the informed consent
doctrine may provide to an injured patient in order to address the financial insecurity of a physician. (pp. 21-31)

5. Turning to plaintiffs’ claim that MSSC had a duty to limit the use of its facility only to those physicians who
satisfy the statutory insurance requirements, the Court notes that, generally, a person who engages an independent
contractor is not liable for the negligence of that contractor. An exception is made if the contractor is incompetent,
although liability is limited to the physical harm that is caused. In cases invoking this exception, lack of financial
responsibility, including the absence of insurance, was not considered as indicative of incompetence. However,
when a task requires specific permits or licenses, retention of a contractor without those necessary credentials
subjects the business to liability for hiring an incompetent contractor. Likewise, granting privileges to a physician
lacking the appropriate credentials also exposes a health care facility to liability. (pp. 31-41)

6. Here, the basic element of competency for any physician seeking surgical privileges at MSSC’s facility is
possession of a license to practice medicine in New Jersey, and an essential condition for such a license is
possession of a medical malpractice liability insurance policy or an acceptable letter of credit. MSSC had an initial
duty to ascertain that Dr. Kaul possessed the requisite license and a continuing duty to assure that his license was
maintained. The record reveals that MSSC knew that Dr. Kaul possessed an insurance policy that expressly
excluded the procedure performed on Jarrell. Although Dr. Kaul asserted that he had advised the BME and MSSC
that he possessed sufficient assets to satisfy the alternative letter of credit requirement, such a representation does
not satisfy the regulatory definition of a letter of credit. Moreover, the record is barren of any evidence that the
BME accepted this representation. Consequently, since discovery is required to clarify several issues integral to
plaintiffs’ negligent hiring claim, the trial court erred in granting summary judgment in favor of MSSC. (pp. 41-44)

          The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART, and the
matter is REMANDED for further proceedings consistent with the Court’s opinion.

          JUSTICE ALBIN, DISSENTING IN PART and CONCURRING IN PART, joined by CHIEF
JUSTICE RABNER, expresses the view that the facts here present the quintessential case of lack of informed
consent, and that a logical extension of New Jersey’s informed consent jurisprudence would permit a cause of action
if a plaintiff established four elements: (1) the physician was uninsured to perform the medical procedure; (2) the
physician failed to inform the patient that he was uninsured; (3) the patient would not have undergone the procedure
if properly informed; and (4) the plaintiff can prove damages.

       JUSTICES LaVECCHIA, PATTERSON, FERNANDEZ-VINA, and SOLOMON join in JUDGE
CUFF’s opinion. JUSTICE ALBIN filed a separate opinion dissenting in part and concurring in part, in
which CHIEF JUSTICE RABNER joins.

                                                           2
                                     SUPREME COURT OF NEW JERSEY
                                       A-42 September Term 2013
                                                072363

JAMES R. JARRELL and SHEILA
G. JARRELL, his wife,

    Plaintiffs-Appellants,

         v.

RICHARD A. KAUL, M.D. and
MARKET STREET SURGICAL
CENTER,

    Defendants-Respondents,

         and

JOHN T. FORD, SUSSEX COUNTY
TOTAL HEALTH CENTER, INC.,

    Defendants.

         Argued October 20, 2014 – Decided September 29, 2015

         On certification to the Superior Court,
         Appellate Division.

         Lewis Stein argued the cause for appellants
         (Nusbaum, Stein, Goldstein, Bronstein &
         Kron).

         Jeffrey B. Randolph argued the cause for
         respondent Richard A. Kaul, M.D.

         Peter E. Rhatican argued the cause for
         respondent Market Street Surgical Center.

         Abbott S. Brown argued the cause for amicus
         curiae New Jersey Association for Justice
         (Lomurro, Davison, Eastman and Munoz,
         attorneys; Mr. Brown and Christina Vassiliou
         Harvey, on the brief).

                               1
    JUDGE CUFF (temporarily assigned) delivered the opinion of

the Court.

    In this appeal, we examine three issues related to the

statutory requirement that physicians licensed to practice

medicine in New Jersey and providing medical care in this State

must obtain and maintain medical malpractice liability

insurance.   The first issue presented in this appeal is whether

an injured patient may bring a direct action against a

negligent, uninsured physician.   The second issue is whether a

physician has a duty to advise a prospective patient that he is

in compliance with the statutory medical malpractice liability

insurance requirement and whether the failure to obtain such

insurance gives rise to a lack of informed consent claim.     The

third issue is whether a health care facility that grants

privileges to a physician to use its facilities to treat

patients has a continuing duty to ascertain a physician’s

compliance with the insurance requirement.

    Plaintiff James R. Jarrell sought treatment for persistent

pain in his back from defendant Dr. Richard A. Kaul, a board

certified anesthesiologist.   The doctor performed a spinal

fusion procedure at a surgical center.   At the time of the

operation, Dr. Kaul was required to have medical malpractice

liability insurance or to have posted a letter of credit.     The

medical malpractice liability insurance issued to him expressly

                                  2
excluded spinal surgical procedures.    Dr. Kaul instead maintains

that he produced a suitable letter of credit.

    The surgery performed by Dr. Kaul actually increased

Jarrell’s discomfort, so he sought treatment from another

physician.    Another surgeon performed a surgical revision of the

procedure performed by Dr. Kaul.

    Jarrell and his wife, Sheila, filed a complaint alleging

that Dr. Kaul negligently performed the initial spinal

procedure, and they sought compensatory damages for pain and

suffering and economic losses caused by the physician’s

negligence.   They also asserted a direct claim against Dr. Kaul

based on his status as an uninsured physician at the time he

treated Jarrell.    Based on Dr. Kaul’s lack of liability

insurance, plaintiffs also asserted claims seeking damages for

misrepresentation, fraud, deceit, and lack of informed consent.

They also asserted a negligent hiring claim against the facility

where Dr. Kaul performed the surgery.    Jarrell’s wife asserted a

loss of consortium claim.    Only the negligence claim proceeded

to trial.    A jury awarded $500,000 to Jarrell and $250,000 to

his wife.    All of the other claims were dismissed prior to

trial.

    Although it is undisputed that Dr. Kaul was uninsured for

the procedure he performed on Jarrell, we affirm the dismissal

of Jarrell’s direct claim against the physician for his failure

                                   3
to maintain insurance.   The statute imposing the medical

malpractice liability insurance requirement does not expressly

authorize a direct action against a noncompliant physician and

neither the language nor the purpose of the statute supports

such a claim.

    Although a reasonably prudent patient may consider a

physician’s compliance with the statutorily imposed liability

insurance requirement material information, lack of compliance

or failure to disclose compliance does not necessarily provide

the predicate for an informed consent claim.   Indeed, using the

informed consent doctrine to address the financial insecurity of

a physician and the inability of a patient to satisfy a judgment

or to fund a settlement would represent a marked departure from

our prior informed consent jurisprudence.   We decline to follow

that course.

    Finally, we hold that a health care facility that grants

privileges to physicians has a continuing duty to ensure that

those physicians have and maintain the required medical

malpractice liability insurance or have posted a suitable letter

of credit that conforms with the statutory requirement.

                                I.

    Jarrell suffered from chronic back pain for many years.

His chiropractor referred him to Dr. Kaul, a board certified

anesthesiologist, in September 2005.   Dr. Kaul’s practice

                                4
focused on pain management and minimally invasive spinal

procedures.   In 2005, Dr. Kaul saw patients and performed

procedures at Market Street Surgical Center (MSSC) in Saddle

Brook several times a week.    Dr. Kaul also served as the Medical

Director of MSSC until 2007.

     Dr. Kaul diagnosed Jarrell with a herniated lumbar disc,

lumbar radiculopathy, and discogenic back pain.       On October 11,

2005, Dr. Kaul performed a spinal fusion procedure in which he

fused the L4, L5, and S1 vertebrae using two mesh cages attached

by rods and pedicle screws.    Immediately following the surgery,

Jarrell experienced new pain in his left side that worsened over

time and eventually led to a “drop foot,”1 causing him to fall.

     A friend referred Jarrell to Dr. Alfred Steinberger, a

board certified neurosurgeon, in January 2006.       Following an

examination and diagnostic tests, Dr. Steinberger concluded that

Dr. Kaul improperly placed some screws that pinched a nerve

causing the pain and drop foot.       On January 31, 2006, Dr.

Steinberger removed and replaced the fixation devices implanted

by Dr. Kaul in October 2005.   Jarrell’s pain decreased

immediately following the second procedure; however, at the time

1 “Drop foot” is “a general term for difficulty lifting the front
part of the foot. If you have foot drop, you may drag the front
of your foot on the ground when you walk.” Mayo Clinic Staff,
Diseases and Conditions: Foot drop, MayoClinic.org (last
visited June 19, 2015), www.mayoclinic.org/disease-
conditions/foot-drop/basics/definition/con-20032918.
                                  5
of his January 2012 trial, he still required pain medication,

including fentanyl patches, and his physical activity was

limited.

    Dr. Kaul was educated in England, where he practiced as a

dental anesthesiologist.    He relocated to New Jersey and

obtained a license to practice medicine in 1995.     Thereafter, he

commenced a pain management practice and performed various

spinal procedures, including the spinal fusion procedure he

conducted on Jarrell.

    At the time of the October 2005 spinal procedure, Dr. Kaul

had a malpractice insurance policy that specifically excluded

spinal surgery.   He claimed to have $500,000 in liquid assets

but did not have a letter of credit from a bank or other

financial institution.     Dr. Kaul did not discuss his insurance

coverage, or lack thereof, with Jarrell or his wife.     Neither

Jarrell nor his wife inquired about Dr. Kaul’s insurance

coverage.

    The Board of Medical Examiners (BME)2 revoked Dr. Kaul’s

license to practice medicine in 2012.

                                 II.

    Jarrell and his wife filed a nine-count complaint in the

Superior Court against Dr. Kaul and MSSC.     Jarrell asserted a

2 The BME is the administrative body that regulates the practice
of medicine in this State.
                                  6
claim against Dr. Kaul for medical negligence alleging that he

departed from accepted standards of medical care in his choice

of procedure and his selection of medical devices for use in the

surgery.   (Count One).   Jarrell further alleged that Dr. Kaul

misrepresented his qualifications and training, thereby

wrongfully obtaining his informed consent for the surgery.

(Count Two).   Jarrell also claimed that MSSC negligently and

unreasonably facilitated performance of an unauthorized surgical

procedure by an unqualified physician.     (Count Five).   His wife

asserted a loss of consortium claim.     (Count Seven).

    Jarrell also alleged that Dr. Kaul performed the October

2005 surgical procedure without the statutorily required

malpractice insurance or letter of credit and withheld this

information from him.     He alleged that Dr. Kaul’s noncompliance

formed the basis for a claim sounding in deceit, fraudulent

misrepresentation, and lack of informed consent (Count Eight),

as well as a battery claim (Count Nine).     Plaintiffs also

asserted claims against John T. Ford and Sussex County Total

Health Center, Inc. (Counts Three and Four), which were

dismissed.

    Plaintiffs’ motion for summary judgment based on Dr. Kaul’s

failure to carry medical malpractice insurance that covered the

spinal procedure performed on Jarrell was denied.     The motion

judge reasoned that Dr. Kaul had informed the BME that he had

                                  7
substantially complied with the statutory requirement, and the

BME had not placed any limits on his license to practice

medicine.    Plaintiffs renewed this motion immediately prior to

trial and Dr. Kaul filed a cross-motion for summary judgment.

The trial court granted Dr. Kaul’s cross-motion.    The court

reasoned that Basil v. Wolf, 193 N.J. 38 (2007), precluded any

form of direct action against Dr. Kaul for failing to maintain

insurance.   The court held that there was no cause of action

against Dr. Kaul for deceit, misrepresentation, lack of informed

consent, and battery based on the failure to maintain insurance.

The trial court also dismissed plaintiffs’ claims against MSSC

because plaintiffs lacked an expert who would testify that MSSC

deviated from accepted standards of medical care by failing to

properly ascertain Dr. Kaul’s credentials and permitting an

uninsured and unqualified physician to perform spinal procedures

in its facility.

    Trial proceeded solely against Dr. Kaul limited to the

issue of medical negligence.    The jury found that Dr. Kaul

negligently performed the October 2005 spinal fusion and his

negligence proximately caused injury to Jarrell.    The jury

awarded $500,000 in damages to Jarrell for his pain, suffering,

and disability, and $250,000 to his wife for loss of consortium.

All post-trial motions for a new trial or remittitur were

denied.

                                  8
    Dr. Kaul appealed, arguing that significant trial errors

required a reversal of the judgment and a new trial.    Plaintiffs

filed a cross-appeal contending that the trial court erroneously

denied their motion for summary judgment and erroneously granted

partial summary judgment in favor of Dr. Kaul based on Dr.

Kaul’s lack of insurance.   They also contended that the trial

court erred in granting summary judgment in favor of MSSC based

on Dr. Kaul’s credentials and lack of insurance.

    In an unreported opinion, the Appellate Division affirmed

the summary judgment orders, the jury verdict, and the damages

award.   The appellate panel held that the trial court properly

dismissed all claims against Dr. Kaul based on his lack of

insurance because N.J.S.A. 45:9-19.17 does not provide a private

cause of action for injured patients.    The panel based this

decision largely on this Court’s opinion in Basil, supra, 193

N.J. at 72, in which the Court stated that the statutory medical

malpractice insurance requirement placed noncompliant physicians

on notice only that they may be subject to disciplinary action

by the BME.   For the same reasons, the panel concluded that

N.J.S.A. 45:9-19.17(b) does not permit a direct action by a

patient against a surgical center that permits an uninsured or

underinsured physician to use its facilities.

    This Court denied Dr. Kaul’s petition for certification but

granted plaintiffs’ cross-petition.     Jarrell v. Kaul, 216 N.J.
9
366 (2013).   The Court also admitted the New Jersey Association

for Justice (NJAJ) to appear as amicus curiae.

                               III.

    Plaintiffs urge that the Appellate Division’s reliance on

Basil was misplaced.   They contend that the discussion on which

it relied to foreclose a direct cause of action against Dr. Kaul

due to his lack of medical malpractice insurance is mere dicta.

They also urge this Court to draw a distinction between “mere

negligent failure to maintain malpractice insurance versus gross

negligence or intentional concealment, deceit, and lack of

informed consent (battery).”   They request that the Court

reconsider its position in Basil because the Court did not

consider whether the statute requiring medical malpractice

insurance implicitly authorized a direct action by a patient

against an uninsured physician.    Plaintiffs urge that

application of the three-prong analysis set forth in In re

Resolution of State Commission of Investigation, 108 N.J. 35

(1987), leads to the conclusion that the Legislature implicitly

created a private right of action.     Therefore, plaintiffs argue

that all claims premised on Dr. Kaul’s lack of insurance must be

reinstated.

    Finally, plaintiffs maintain that Howard v. University of

Medicine & Dentistry of New Jersey, 172 N.J. 537 (2002),

suggests that an informed consent claim against Dr. Kaul should

                                  10
be permitted.   They contend that the ability of a physician to

compensate a patient in the event of negligence is information

that would be material to the reasonably prudent patient

selecting a surgeon.

    As to MSSC, plaintiffs urge that the Appellate Division

misunderstood their claim against the facility.   Plaintiffs

contend that they did not assert a respondeat superior or any

theory of vicarious liability against MSSC.   Rather, they

maintain that their claim against MSSC is premised on a duty of

the surgical center to ensure that surgeons who perform

procedures in its facility are qualified to perform those

procedures and those qualifications include proper insurance or

other suitable financial security.

    Dr. Kaul responds that his lack of insurance does not

permit a private right of action by injured patients.     He

further contends that there is no legal basis to support

plaintiffs’ theory that lack of insurance vitiates any consent

to perform a procedure.   Furthermore, he claims that although

the policy of insurance excluded spinal surgery, he maintained

insurance at the time of the surgery performed on Jarrell and he

held sufficient financial assets at the time to comply with the

statute.

    MSSC contends that plaintiffs are attempting to establish a

new duty for health care facilities that will expose them to

                                11
“financial ruin.”    It argues that N.J.S.A. 45:9-19.17 does not

impose on health care facilities the duty to enforce the

insurance requirement, and the BME has not adopted regulations

requiring such action.    It urges that the Appellate Division

judgment barring a direct negligence claim against it based on

the credentialing process should be affirmed.

       Amicus NJAJ asserts that this appeal presents an

opportunity for this Court to hold as a matter of law and sound

public policy that patients’ right to informed consent includes

the right to know if their physician possesses insurance that

covers the procedure for which consent is sought.    Furthermore,

every medical facility should be obliged to confirm on a regular

basis that the physicians who have been granted privileges to

perform procedures have the minimum amount of insurance coverage

required by statute and that the insurance covers all procedures

performed at the facility by the physician.

                                IV.

       The Legislature first required physicians to maintain

medical malpractice liability insurance in 1998.    L. 1997, c.

365.    The obligation extended to those physicians who were

licensed in this State and who treated patients in this State.

Id. at § 1.   The 1998 legislation also permitted a physician to

post a letter of credit if medical malpractice liability

insurance was not available.    Ibid.   In addition, the

                                 12
Legislature delegated to the BME3 the authority to establish the

minimum amounts per occurrence and per policy year of the

required coverage.   Ibid.   The BME adopted a regulation that

required physicians to maintain “insurance in the sum of $1

million per occurrence and $3 million dollars per policy year.”

N.J.A.C. 13:35-6.18(a).

     In 2004, the Legislature amended the statute.      The

legislation established the minimum amount of medical

malpractice liability insurance that a physician must obtain and

maintain at $1,000,000 per occurrence and $3,000,000 per policy

year.   L. 2004, c. 17, § 25.   The Legislature also set the

minimum amount of the letter of credit at $500,000 and

authorized the BME to require higher amounts for both insurance

and the letter of credit.    Ibid.    It has not done so.     See

N.J.A.C. 13:35-6.18 (establishing minimum amounts per occurrence

and per policy year at $1,000,000 and $3,000,000 respectively

and $500,000 for letter of credit).

     Codified as N.J.S.A. 45:9-19.17, the statute provides as

follows:

                a.   A   physician   who   maintains   a
           professional medical practice in this State
           and has responsibility for patient care is
           required to be covered by medical malpractice
           liability insurance issued by a carrier
           authorized to write medical malpractice

3The BME is the agency responsible for the licensure and discipline
of licensed physicians in this State. N.J.S.A. 45:9-1, -2.
                                 13
         liability insurance policies in this State, in
         the sum of $1,000,000 per occurrence and
         $3,000,000 per policy year and unless renewal
         coverage includes the premium retroactive
         date, the policy shall provide for extended
         reporting endorsement coverage for claims made
         policies, also known as “tail coverage,” or,
         if such liability coverage is not available,
         by a letter of credit for at least $500,000.

              The physician shall notify the State
         Board of Medical Examiners of the name and
         address of the insurance carrier or the
         institution issuing the letter of credit,
         pursuant to section 7 of P.L. 1989, c. 300
         ([N.J.S.A.] 45:9-19.7).

              b. A physician who is in violation of
         this section is subject to disciplinary action
         and civil penalties pursuant to sections 8, 9
         and 12 of P.L. 1978, c. 73 ([N.J.S.A.] 45:1-
         21 to 22 and 45:1-25).

              c. The State Board of Medical Examiners
         may, pursuant to the “Administrative Procedure
         Act,” P.L. 1968, c. 410 ([N.J.S.A.] 52:14B-1
         et seq.), establish by regulation, minimum
         amounts for medical malpractice liability
         insurance coverage and lines of credit in
         excess of those amounts required pursuant to
         subsection a. of this section.

              d. The State Board of Medical Examiners
         shall notify all physicians licensed by the
         board of the requirements of this section
         within 30 days of the date of enactment of
         P.L. 2004, c. 17.

The statement of the Assembly Health Committee accompanying the

1998 bill provided that the intent of the bill was “to ensure

the citizens of the State that they will have some recourse for

adequate compensation in the event that a physician or

                               14
podiatrist is found responsible for acts of malpractice.”

Assembly Health Comm., Statement to S. 267 (Sept. 19, 1996).

    The BME adopted implementing regulations on April 5, 1999,

which defined key phrases including “[m]aintaining a

professional practice with responsibility for patient care,”

“[l]etter of credit,” and “[n]ot available.”   N.J.A.C. 13:35-

6.18(a).   A “[l]etter of credit” is defined as “a non-

assignable, non-transferrable, unexpired, continuous irrevocable

obligation, liability bond or other instrument issued by a bank

or savings association authorized to do business in this State.”

Ibid.   Coverage is “[n]ot available” when the physician is

unable to purchase insurance coverage from a carrier authorized

to write it; however, insurance coverage that is unaffordable is

still considered available.   Ibid.

    A physician who does not have medical malpractice insurance

must present to the BME a letter of credit in the amount of

$500,000, N.J.A.C. 13:35-6.18(b), and must promptly notify the

BME if a demand for payment on the letter has been made or the

continuing viability of the letter has been compromised,

N.J.A.C. 13:35-6.18(d)(1)-(2).   The failure of a physician

obliged to obtain medical malpractice liability insurance or a

letter of credit as required by the regulation is considered

professional misconduct, N.J.A.C. 13:35-6.18(e), and he or she

is subject to discipline in accordance with N.J.S.A. 45:1-21(e).

                                 15
Such discipline may include revocation or suspension of the

physician’s license to practice medicine in this State.     See

N.J.S.A. 45:1-21.

     It is against this statutory and regulatory backdrop that

we examine the three issues presented in this appeal.

                                 V.

     We commence our discussion of whether N.J.S.A. 45:9-19.17

bestows on an injured patient a private right of action against

a physician who does not obtain or maintain statutorily required

medical malpractice insurance4 with an examination of the express

language of the statute and the regulations adopted by the BME

implementing this requirement.   As set forth above, the express

terms of N.J.S.A. 45:9-19.17 provide that a physician who

obtains neither a policy of medical malpractice insurance nor a

letter of credit is subject to disciplinary action by the BME

and civil penalties.    The implementing regulations reflect this

legislative decision.   See N.J.A.C. 13:35-6.18(e).   Neither the

statute nor the implementing regulations expressly provide that

an injured patient has a direct cause of action against a

treating physician who does not comply with the statutory

financial responsibility provisions.

4 When we refer to the requirement to maintain medical
malpractice liability insurance, we include by implication the
letter of credit alternative. See N.J.S.A. 45:9-19.17(a).
                                 16
    Both the United States Supreme Court and this Court have

held that a statute that does not expressly create a private

cause of action may, nonetheless, implicitly create one.      See

Cort v. Ash, 422 U.S. 66, 78, 95 S. Ct. 2080, 2088, 45 L. Ed. 2d
26, 36 (1975) (addressing whether statute imposing criminal

liability on corporation making political contributions created

private right of action); State Comm’n of Investigation, supra,

108 N.J. at 40-41 (addressing whether subjects of investigation

may seek enforcement of confidentiality obligations of

investigatory agency).   This Court employs a three-prong test

that inquires

         [1] whether the plaintiff is “one of the class
         for whose especial benefit the statute was
         enacted”; [2] whether there is any evidence
         that the Legislature intended to create a
         private cause of action under the statute; and
         [3] whether implication of a private cause of
         action in this case would be “consistent with
         the underlying purposes of the legislative
         scheme.”

         [State Comm’n of Investigation, supra, 108
         N.J. at 41 (citations omitted) (quoting Cort,
         supra, 422 U.S. at 78, 95 S. Ct. at 2088, 45
         L. Ed. 2d at 36).]

    Through this inquiry the Court seeks to ascertain the

underlying legislative intent.    Jalowiecki v. Leuc, 182 N.J.

Super. 22, 30 (App. Div. 1981).    When the Legislature has

expressly created specific remedies, a court should always

hesitate to recognize another unmentioned remedy.    See

                                  17
Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 19,

100 S. Ct. 242, 247, 62 L. Ed. 2d 146, 154-55 (1979).      Stated

differently, “[i]n the absence of strong indicia of a contrary

[legislative] intent, we are compelled to conclude that [the

Legislature] provided precisely the remedies it considered

appropriate.”   Middlesex Cnty. Sewerage Auth. v. Nat’l Sea

Clammers Ass’n, 453 U.S. 1, 15, 101 S. Ct. 2615, 2623, 69 L. Ed.
2d 435, 447 (1981).

    There is scant legislative history associated with N.J.S.A.

45:9-19.17.   The committee statement accompanying this

legislation simply states that the insurance requirement is

designed to ensure a source of some compensation in the event of

medical negligence.   Assembly Health Comm., Statement to S. 267,

supra.   Notably, N.J.S.A. 45:9 generally regulates the practice

of medicine and further requires physicians to undertake certain

health-related tasks.   For example, N.J.S.A. 45:9-19.11

immunizes members of the BME from liability for actions taken in

the course of their administrative obligations, and N.J.S.A.

45:9-22.3(b) immunizes a physician from liability for failing to

distribute a breast cancer information booklet to a patient.

These instances suggest that the Legislature was content to

entrust oversight of these responsibilities to the BME.

    In Basil, supra, this Court noted that N.J.S.A. 45:9-19.17,

when originally adopted in 1998, did not authorize a direct

                                18
action against an uninsured physician. 193 N.J. at 71, 72.     We

reached that conclusion in the context of the statutory and

regulatory scheme in place at the time the defendant physician

examined the plaintiff.    Id. at 71-72, 73.    Notably, until the

BME adopted regulations in 1999 to implement the 1998 statute,

including a definition of “maintaining a professional practice

with responsibility for patient care,”5 it was not abundantly

clear that physicians who simply performed independent medical

examinations, such as the defendant physican, were required to

maintain medical malpractice liability insurance.      Id. at 71-72.

Following the adoption of the regulations, however, “all

practitioners . . . were on notice that . . . any physician who

does not satisfy the insurance requirement would be incompetent

to practice his profession.”   Id. at 72.      Here, at the time Dr.

Kaul treated plaintiff, there was no question that he was

required to maintain liability insurance.

       Applying the three-part test adopted by this Court in State

Commission of Investigation, we determine that N.J.S.A. 45:9-

19.17 does not create, expressly or implicitly, a direct cause

of action by a patient against a noncompliant treating

physician.    To be sure, a patient, such as Jarrell, may receive

a direct benefit by virtue of the availability of insurance to

5   N.J.A.C. 13:35-6.18.
                                 19
provide a source of funds to recompense for negligent care.     On

the other hand, there is no evidence that the Legislature

contemplated that enforcement of its determination -- that

physicians providing medical care in this State must be insured

-- would be advanced by bestowing a direct cause of action on an

injured patient.   To the contrary, the Legislature expressly

concluded that the administrative agency charged with regulating

the licensure and discipline of physicians -- the BME -- would

be the most likely vehicle to ensure compliance with the

liability insurance requirement.

    It is difficult to quarrel with this approach.    A physician

is prohibited from providing medical care in New Jersey without

a license, and the BME will not issue a license unless a

physician establishes financial responsibility.   Noncompliance

is considered professional misconduct and the BME has the

authority to suspend or revoke a license to practice medicine of

a noncompliant physician.   Administrative oversight and

enforcement is the declared enforcement mechanism and that

choice reflects a legislative decision to encourage and force

compliance rather than wait for a complaint by an injured

patient that may never be filed.

    The underlying purpose of the legislation is predominately

proactive.   The legislative intent is to create a source of

compensation for a patient injured by negligent medical care.        A

                                20
post-injury direct claim against a noncompliant and negligent

physician is reactive and does little to further the articulated

goal.

     We therefore conclude that N.J.S.A. 45:9-19.17 does not

expressly, and cannot be read to implicitly, recognize a direct

cause of action by an injured patient against a physician who

fails to obtain the statutorily required medical malpractice

liability insurance or letter of credit.   The Appellate Division

judgment that rejected such a cause of action is affirmed.

                                 VI.

     In Count Eight of the amended complaint, plaintiffs allege

that Dr. Kaul knew that he was uninsured at the time that he

obtained Jarrell’s consent to perform surgery.    Jarrell alleged

that Dr. Kaul’s uninsured status “would have been significant in

[his] decision-making.”    Plaintiffs asserted that the failure to

disclose this information constitutes “deceit, misrepresentation

and outrageous conduct.”

     Before the trial court and on appeal, plaintiffs argued

that the claims asserted in the amended complaint, as they

pertained to Dr. Kaul’s lack of insurance, implicated the

doctrine of informed consent.6   All of the claims asserted by

plaintiffs against Dr. Kaul, other than the medical malpractice

6 In Count Two, plaintiffs alleged that Dr. Kaul misrepresented
his professional training and experience.
                                 21
claim asserted in Count One, were construed as direct claims

under the statute cast in various guises against Dr. Kaul based

on his lack of financial responsibility.   As a result, neither

the trial court nor the appellate panel considered whether the

absence of statutorily required medical malpractice liability

insurance may be information that a reasonably prudent patient

would consider material to his or her decision to proceed with a

course of medical treatment or surgical procedure.

    Plaintiffs argue that the existence, or absence, of medical

malpractice insurance is as important a piece of information as

are the risks attendant to the medical treatment recommended by

a physician.   They insist that a discussion of the nature and

risks of the treatment and the risks associated with failing to

pursue a particular course of treatment is incomplete and any

decision to pursue or reject a certain course of treatment

cannot be considered informed if the physician fails to advise

the patient that he does not possess the statutorily required

medical malpractice insurance.   Dr. Kaul responds that a

physician’s duty to obtain informed consent from a patient prior

to undertaking medical treatment is limited to the risks

associated with the treatment, not whether a patient may have a

source to pay a monetary judgment in the event the physician

negligently discharges his professional duties.

                                 22
    In Largey v. Rothman, 110 N.J. 204 (1988), the Court

observed that the origins of the duty of a physician to obtain a

patient’s consent to a medical procedure can be traced to the

eighteenth century.   Id. at 207 (citing Slater v. Baker &

Stapleton (1767), 95 Eng. Rep. 860 (K.B.)).      In In re Conroy, 98
N.J. 321 (1985), this Court stated that “‘[e]very human being of

adult years and sound mind has a right to determine what shall

be done with his own body; and a surgeon who performs an

operation without his patient’s consent commits an assault for

which he is liable in damages.’”      Id. at 346 (quoting

Schloendorff v. Soc’y of N.Y. Hosp., 105 N.E. 92, 93 (N.Y.

1914)).

    Informed consent is

          essentially a negligence concept, predicated
          on the duty of a physician to disclose to a
          patient such information as will enable the
          patient to make an evaluation of the nature of
          the treatment and of any attendant substantial
          risks, as well as of available options in the
          form of alternative therapies.

          [Largey, supra, 110 N.J. at 208.]

If a physician withholds facts that are necessary to form the

basis of an intelligent consent to proposed treatment, the

physician has not discharged his duty to the patient.       Ibid.;

see Salgo v. Leland Stanford, Jr. Univ. Bd. of Trs., 317 P.2d
170, 181 (Cal. Ct. App. 1957).     The duty extends to the need to

provide information to a patient not only about risks attendant

                                 23
to the proposed treatment but also to alternative treatments or

therapies and the risks of pursuing no treatment at all.

Matthies v. Mastromonaco, 160 N.J. 26, 38 (1999).

    Largey, supra, adopted the “prudent patient” or

“materiality of risk” standard. 110 N.J. at 213.   The Court

recognized that “[t]he foundation for the physician’s duty to

disclose in the first place is found in the idea that ‘it is the

prerogative of the patient, not the physician, to determine for

himself the direction in which his interests seem to lie.’”       Id.

at 214 (quoting Canterbury v. Spence, 464 F.2d 772, 781 (D.C.

Cir.), cert. denied, 409 U.S. 1064, 93 S. Ct. 560, 34 L. Ed. 2d
518 (1972)).   Thus, this Court acknowledged a physician’s duty

to “‘warn of the dangers lurking in the proposed treatment’ and

to ‘impart information [that] the patient has every right to

expect,’ as well as a duty of ‘reasonable disclosure of the

choices with respect to proposed therapy and the dangers

inherently and potentially involved.’”    Id. at 211 (alteration

in original) (quoting Canterbury, supra, 464 F.2d at 782).        The

Court stated that

         the scope of the duty to disclose “must be
         measured by the patient’s need, and that need
         is the information material to the decision.
         Thus the test for determining whether a
         particular peril must be divulged is its
         materiality to the patient’s decision: all
         risks potentially affecting the decision must
         be unmasked. And to safeguard the patient’s
         interest in achieving his own determination on

                                  24
           treatment, the law must itself          set   the
           standard for adequate disclosure.”

           [Ibid. (quoting Canterbury, supra, 464 F.2d at
           786-87).]

    The breadth of the duty to disclose risks is measured by a

standard that is not personal to the physician or to the

patient.   Rather, it is an objective standard “‘with due regard

for the patient’s informational needs and with suitable leeway

for the physician’s situation.’”       Ibid. (quoting Canterbury,

supra, 464 F.2d at 787).   A risk is “material” if the reasonable

patient “would be ‘likely to attach significance to the risk or

cluster of risks’ in deciding whether to forego the proposed

therapy or to submit to it.”   Id. at 211-12 (quoting Canterbury,

supra, 464 F.2d at 787).

    Thus, the Largey Court reversed the verdict in favor of a

physician, where the trial court instructed the jury to evaluate

the plaintiff’s informed consent claim in accordance with the

prevailing “reasonable physician” standard.      Id. at 205, 216.

In the course of deciding that the plaintiff’s informed consent

claim should be evaluated in accordance with the prudent patient

standard, the Court stated that

           “[t]he   topics    importantly   demanding   a
           communication of information are the inherent
           and   potential   hazards   of  the   proposed
           treatment, the alternatives to that treatment,
           if any, and the results likely if the patient
           remains untreated. The factors contributing
           significance to the dangerousness of a medical

                                  25
         technique are, of course, the incidence of
         injury and the degree of harm threatened.”

         [Id. at 213 (alteration in original) (quoting
         Canterbury, supra, 464 F.2d at 787-88).]

    In Matthies, supra, the Court emphasized that a physician

is required to explain the risks associated with all medically

reasonable alternatives, including invasive and noninvasive

treatments. 160 N.J. at 34.   In that case, an eighty-one-year-

old, partially paralyzed woman living independently fell and

fractured her hip.    Id. at 29-30.     Without consulting the

patient or her family, her physician unilaterally decided not to

surgically repair her fractured hip and placed her on bed rest.

Id. at 31.    The Court emphasized that “the decisive factor [in

any informed consent analysis] is not whether a treatment

alternative is invasive or noninvasive, but whether the

physician adequately presents the material facts so that the

patient can make an informed decision.”       Id. at 36.   Dismissing

the contention that the plaintiff’s position would require a

physician to provide a detailed explanation of every treatment

option, the Court emphasized that “[t]he standard obligates the

physician to disclose only that information material to a

reasonable patient’s informed decision.”       Ibid. (citing Largey,

supra, 110 N.J. at 211-12).      Because the physician impermissibly

arrogated to himself the decision concerning which treatment

                                   26
alternative would be pursued, the Court remanded the matter for

a new trial.   Id. at 34, 41.

       The validity of the consent obtained from a patient

normally is confined to a disclosure of the risks associated

with the recommended procedure and alternative procedures or

therapies.   The Court has recognized, however, that in certain

circumstances consent may be vitiated if the physician made

significant misrepresentations of his credentials or experience.

In Howard, supra, a neurologist disclosed to the plaintiff the

significant risks, including paralysis, of the surgery proposed

to address a large cervical disc herniation. 172 N.J. at 543.

The plaintiff claimed that the defendant physician informed him

that he was a board certified physician and in each of the prior

eleven years had performed sixty procedures similar to the

procedure he proposed to perform on the plaintiff.    Ibid.

Following the surgery, which left the plaintiff a quadriplegic,

the plaintiff learned that the defendant neurologist was not

board certified and had performed the procedure no more than

twenty-five times.    Id. at 544.

       The Court acknowledged in Howard that a misrepresentation

about a physician’s credentials or experience is “not a perfect

fit” with the prevailing doctrine of informed consent.       Id. at

557.    Nevertheless, the Court determined that “the possibility

of materiality is present” when the physician makes significant

                                    27
misrepresentations about his credentials and experience when

discussing the risks associated with the proposed surgical

procedure, and those misrepresentations may undermine the

validity of the consent obtained from the patient.    Id. at 558.

The Court stated that

           [i]n   certain   circumstances,    a   serious
           misrepresentation concerning the quality or
           extent   of    a   physician’s    professional
           experience, viewed from the perspective of the
           reasonably prudent patient assessing the risks
           attendant to a medical procedure, can be
           material to the grant of intelligent and
           informed consent to the procedure.

           [Id. at 555 (citing 1 Dan B. Dobbs, The Law of
           Torts, § 251 at 660-61 (2001)).]

       Thus, to succeed on an informed consent claim based on

misrepresented credentials and experience, the plaintiff in

Howard also was required to show that the additional risk posed

by the physician’s actual credentials and experience increased

the plaintiff’s risk of paralysis from the procedure.       Id. at

558.    That demonstration is guided by two inquiries:   first,

“whether the more limited experience or credentials possessed by

defendant [physician] could have substantially increased

plaintiff’s risk of paralysis,” ibid., and second, “whether that

substantially increased risk would cause a reasonably prudent

person not to consent to undergo the procedure,” ibid.

       Requiring a physician to disclose whether he maintains

medical malpractice liability insurance, the amount of the

                                 28
coverage, and any restrictions, reservations, or limitations of

the insurance coverage, or whether a physician has posted a

letter of credit with the BME is also “not a perfect fit” with

our informed consent jurisprudence.

    We recognize that the existence or not of medical

malpractice liability insurance or the permissible letter of

credit may be material information for some patients.     To

encourage compliance and to enforce the legislative mandate, the

BME has adopted regulations that declare that the failure to

obtain and maintain medical malpractice liability insurance

constitutes professional misconduct.   N.J.A.C. 13:35-6.18(e).

In addition, a physician’s failure to have the required coverage

subjects him or her to discipline in accordance with N.J.S.A.

45:9-19.17(b), which may include revocation or suspension of the

physician’s license to practice medicine in this State.    See

N.J.S.A. 45:1-21.

    Declaring that failure to comply with the statutory

requirement to maintain liability insurance is an act of

professional misconduct, which subjects a physician to

substantial discipline by the BME, and recognizing that some

patients would consider the existence or not of such insurance

material information do not lead inexorably to the conclusion

that noncompliance with the statutory mandate should give rise

to an informed consent claim.   As explained in Largey, supra,

                                29
informed consent is predicated on the duty of the physician to

disclose to the patient the information that will enable the

patient to make a reasoned evaluation of the nature of the

proposed treatment, any risks associated with it, and those

risks associated with any alternative treatments. 110 N.J. at

208.    Yet, there may be many reasons that explain a physician’s

lack of liability insurance and some of those reasons do not

necessarily mean that the physician is unskilled to perform the

proposed procedure or to administer the proposed treatment.7   In

such circumstances, the absence of insurance bears no relation

to the nature of the proposed medical course or to the risks

attendant to a proposed procedure or treatment.

       To be sure, a patient who has been injured due to negligent

care by an uninsured physician has sustained a financial loss,

but such a loss is not the injury that the informed consent

doctrine ever contemplated.    Applying the informed consent

jurisprudence to the financial consequences of negligent care by

an uninsured physician untethers the remedy from its theoretical

underpinnings and is a stark departure from our prior

7 We readily acknowledge in Howard, supra, that even exaggerating
one’s credentials was “not a perfect fit” with our informed consent
jurisprudence. 172 N.J. at 557.    Nevertheless, we permitted a
plaintiff to proceed with such a claim if he could establish that
the actual experience of the physician “could have substantially
increased plaintiff’s risk of paralysis” and that a patient facing
that increased risk would not consent to the procedure. Id. at
558.
                                 30
jurisprudence.   We discern no principled reason to extend the

additional and questionable relief that the informed consent

doctrine may provide to an injured patient to address the

financial insecurity of a physician.

                                 VII.

    Plaintiffs also asserted a negligence claim against MSSC

based on its action permitting Dr. Kaul to perform a medical

procedure for which he was uninsured at its facility.

Plaintiffs do not seek to hold MSSC vicariously liable for Dr.

Kaul’s negligent treatment.   Rather, they contend that MSSC owed

a duty to them and others to limit use of its facility only to

those who satisfy the statutory mandate to obtain and maintain

the minimum level of medical malpractice liability insurance.

In essence, plaintiffs asserted a claim of negligent hiring

against MSSC.

    Generally, a person who engages an independent contractor

is not liable for the negligence of that contractor.     Majestic

Realty Assocs. v. Toti Contracting Co., 30 N.J. 425, 430-31

(1959).   An individual will be held liable if he or she: (1)

retains control of the manner and means by which the work will

be performed; (2) retains an incompetent contractor; or (3)

retains an independent contractor to perform work that

constitutes a nuisance per se.    Ibid.   Plaintiffs urge that a

surgical center that grants privileges to a physician to perform

                                 31
a procedure for which he is uninsured invokes the second

exception because it permitted an incompetent physician to use

its facility.

    The incompetent contractor exception is founded on the

premise that

           [a]n employer is subject to liability for
           physical harm to third persons caused by his
           failure to exercise reasonable care to employ
           a competent and careful contractor

                (a) to do work which will involve the
           risk of physical harm unless it is skillfully
           and carefully done, or

                (b) to perform any duty       which   the
           employer owes to third persons.

           [Restatement (Second) of Torts § 411 (1965).]

A competent and careful contractor is “a contractor who

possesses the knowledge, skill, experience, and available

equipment which a reasonable [person] would realize that a

contractor must have in order to do the work which he is

employed to do without creating unreasonable risk of injury to

others.”   Id. at cmt. (a).   Any liability for failing to engage

a competent contractor is limited “to the physical harm as is so

caused.”   Id. at cmt. (b).   In order for the employer to be

liable, “that harm shall result from some quality in the

contractor which made it negligent for the employer to entrust

the work to him.”   Ibid.

                                 32
    Efforts to invoke the second Majestic exception to the

ordinary rule that a principal is not liable for the negligent

acts of an independent contractor have often arisen in the

context of a tradesman, such as a paver, a tree surgeon, or a

carpenter, who was employed to perform a certain task and is

later determined to be insolvent.    See Mavrikidis v. Petullo,

153 N.J. 117, 137-38 (1998) (rejecting contention that efforts

to minimize cost and use of uninspected truck constitutes

incompetence); Cassano v. Aschoff, 226 N.J. Super. 110, 112, 116

(App. Div.) (rejecting contention that insolvency of tree

surgeon constitutes indicia of incompetence), certif. denied,

113 N.J. 371 (1988); Miltz v. Borroughs-Shelving, 203 N.J.

Super. 451, 466 (App. Div. 1985) (confirming that financial

responsibility is not reliable indicia of incompetence of

carpenter).   In those cases, lack of financial responsibility,

including the absence of insurance, was not considered as

indicia of a lack of skill or incompetence.   Such dispositions

are consistent with comment (g) to § 411 of the Restatement,

which provides that § 411 “has no application where the

contractor, although competent and careful, is financially

irresponsible.”

    Mavrikidis illustrates this rule and comment.    In

Mavrikidis, a trucking firm retained by a gasoline station

operator to pave the surface of the station used a grossly

                                33
overloaded truck with faulty brakes to haul hot asphalt to the

gas station. 153 N.J. at 124-25, 128.   Unable to stop due to

the faulty brakes, the truck drove through a red light, struck

the plaintiff’s car, hit a telephone pole and overturned,

spilling hot asphalt onto the plaintiff’s car.     Id. at 125.   The

Court refused to recognize a cause of action for negligent

hiring of the asphalt hauler because the evidence presented at

trial demonstrated that the retained contractor was a skilled

and experienced paving contractor and there was no evidence that

the gas station operator knew or had reason to know that the

vehicle used to carry the asphalt was unsafe.     Id. at 141-42.

In a dissenting opinion, Justice Stein asserted that the

majority viewed the Majestic incompetent contractor exception

too narrowly.   Id. at 152 (Stein, J., dissenting).    The dissent

also found substantial evidence to support the jury’s finding

that the gas station operator negligently hired a contractor to

pave and transport hot asphalt because it could set off the

paving cost against a debt owed to it by the contractor, and it

knew that the contractor operated uninspected trucks in a state

of disrepair.   Id. at 154-58.

    In Puckrein v. ATI Transport, Inc., 186 N.J. 563, 579-80

(2006), the Court addressed the Majestic negligent hiring

exception in the context of retaining independent contractors to

perform tasks in a highly regulated industry.    We recognized a

                                 34
cause of action against a principal engaged in the collection

and disposal of solid waste and recyclable materials, who

retained a trucking company to haul the waste to various out-of-

state waste disposal facilities.      The principal demonstrated

little or no regard for the qualifications of the drivers or the

conditions of the vehicles used to transport the materials.        The

contract between the business and the trucking firm retained by

it required the trucking firm to comply with all applicable

city, state, and federal requirements, and the trucking firm

agreed to maintain required insurance and to indemnify the

business that retained its services.      Id. at 569-70.

    Discovery revealed that equipment bearing markings other

than the retained trucking firm occasionally appeared at the

facility to collect solid waste and recyclable materials.      Id.

at 571.   The transportation manager for the principal believed

“they were the same company.”    Ibid.    Moreover, the

transportation manager conceded that he never checked to

determine if the trucks that appeared at his facility had passed

inspection or held the requisite registration, insurance,

licenses, or permits.   Ibid.

    The incident that formed the basis for the plaintiff’s

complaint in Puckrein occurred when the driver of a tractor-

trailer drove through a red light and struck an automobile with

three occupants.   Id. at 568.   Two of the occupants died; a

                                 35
third occupant was seriously injured.      Ibid.   At the time of the

accident, the tractor-trailer contained tons of glass residue.

Ibid.   The vehicle also had faulty brakes and the liability

insurance had lapsed.   Id. at 568, 570.

    Relying on basic negligence principles and § 411 of the

Restatement, the Court recognized a duty of an employer “to

exercise reasonable care to employ a competent and careful

contractor” to perform work that involves a risk of physical

harm unless it is done with skill.   Id. at 575.      The Court

concluded that

          to prevail against the principal for hiring an
          incompetent contractor, a plaintiff must show
          that the contractor was, in fact, incompetent
          or unskilled to perform the job for which
          he/she was hired, that the harm that resulted
          arose out of that incompetence, and that the
          principal knew or should have known of the
          incompetence.

          [Id. at 576 (citing Mavrikidis, supra, 153
          N.J. at 136-37).]

In so holding, the Court addressed the contrary result reached

in Mavrikidis.

    The Puckrein Court did not view its earlier opinion in

Mavrikidis as the final word on the Majestic incompetent

contractor exception; instead, the Court viewed the disposition

in Mavrikidis as

          a difference of opinion over whether to
          consider that contract narrowly as a paving
          contract, or more broadly as including pre-

                                36
         and post-paving activities. Although that
         issue may be debatable, what is not debatable
         is that the tipping point between the majority
         and the dissent in Mavrikidis was not a
         disagreement over the basic legal principles
         to which we have adverted.       That is the
         backdrop for our inquiry.

         [Id. at 577.]

    Ultimately, the Puckrein Court determined that summary

judgment had been improperly granted in favor of the business

that had retained the wastehauler.    Id. at 580.   The Court noted

that the tractor-trailer operator hauling the glass had been

retained to perform the very task that was the subject of the

contract between the business and the wastehauler.       Id. at 578.

Any driver performing those tasks had to have a valid driver’s

license, the vehicle had to be registered and inspected, and the

owner/operator of the vehicle had to maintain liability

insurance.   Ibid.   As such, the Court concluded that

         the core question here is not whether [the
         retained trucker] was competent to transport
         [the business’s] loads upon the public
         highways -- it was not.      The question is
         whether [the business] violated its duty to
         use reasonable care in selecting a trucker and
         whether it knew or should have known of [the
         retained trucker’s] incompetence.

         [Id. at 579.]

A later case rephrased the essential question as whether the

principal that engaged an independent contractor inquired “into

                                 37
an independent contractor’s essential competency.”     Fox v.

Millman, 210 N.J. 401, 427 (2012).

      A year following this Court’s decision in Puckrein, the

Court restated the circumstances that would permit a person to

prevail on a claim against a principal who retained an

incompetent or unskilled contractor.     Basil, supra, 193 N.J. at

68.   In Basil, this Court addressed a negligent hiring claim

brought against a workers’ compensation carrier that retained an

uninsured physician to examine and treat persons who sustained

workplace injuries.   Id. at 43-45.    The physician was not

obliged to have medical malpractice liability insurance as a

condition of his license to practice medicine in this State at

the time the insurance carrier retained the defendant physician

or at the time he performed the medical examinations of the

plaintiff.   Id. at 72.   Accordingly, the Court concluded that

the physician could not be considered an incompetent contractor.

Id. at 72-73.

      The Court proceeded, however, to emphasize that the current

state of the law requiring medical malpractice liability

insurance as a condition of licensure imposed a continuing

responsibility on an insurer that retains physicians to treat or

examine injured workers to ensure that the retained physician is

qualified to practice.    Id. at 73.   The Court stated:

                                 38
          State   regulations    now  clearly    require
          practicing     physicians    maintaining     a
          professional office . . . to obtain a minimum
          amount of medical malpractice insurance as a
          condition for licensure.     An IME contract
          physician who lacked malpractice insurance
          after . . . (the effective date of [N.J.A.C.
          13:35-6.18(a)]), is unqualified to practice
          medicine. Consistent with our 2006 holding in
          Puckrein, supra, an insurance company that
          engages an IME physician for evaluative
          purposes now must be aware that it is under a
          continuing duty of inquiry in respect of
          malpractice insurance requirements in order to
          ensure that the physicians it engages are
          qualified to practice.

          [Ibid. (internal citation omitted).]

    In sum, Puckrein establishes that, when a business retains

a contractor to perform a task that requires special skill and

specific permits or licenses, its retention of a contractor

without those necessary credentials subjects the business to

liability for hiring an incompetent contractor.   Similarly,

Basil counsels that granting privileges to a physician without

the appropriate credentials also exposes the health care

facility to liability for hiring an incompetent contractor.

    The provision of medical care is highly regulated in this

State.   Hospitals and the wide variety of alternative providers

of health care services, including ambulatory care centers and

surgical centers, are highly regulated.   See, e.g., N.J.A.C.

8:43G-1.1 to -7A.10 (establishing hospital licensing standards);

N.J.A.C. 8:43A-1.1 to -33.4 (promulgating manual of standards

                                39
for licensing ambulatory care centers).   No health care facility

may provide medical care unless it obtains a license, N.J.S.A.

26:21-1 to -12(a), and that license is subject to renewal on an

annual basis, N.J.A.C. 8:43E-5.3(c).   Each set of regulations

governing each type of health care facility recognizes that the

health care administered in a facility is provided by employees,

such as nurses and technicians, and independent contractors,

such as physicians.   Health care facilities are given broad

responsibility to select the professionals who will provide

medical care; however, regulations address the manner in which

the medical staff shall be organized, the staff policies and

procedures that should be addressed, and medical staff

qualifications.   N.J.A.C. 8:43G-16.1 to -17.1.   The governing

authority of each facility is required to establish criteria for

delineating the privileges that will be granted, granting

privileges to provide medical care in its facility in accordance

with the adopted standards and procedures, and reviewing the

granted privileges on a periodic basis.    N.J.A.C. 8:43A-4.1, -7.2

to -7.4.   Physicians must submit an application to obtain

privileges and must demonstrate that they are currently licensed

to practice medicine in this State.    See N.J.A.C.

8:43A-1.21, -3.5, and -12.3(a) (requiring provision of surgical

privileges at ambulatory health centers to currently licensed

physicians); N.J.A.C. 8:43G-16.3(a) (requiring all physicians

                                40
with clinical privileges at hospitals to be licensed to practice

medicine by BME).   Obtaining and maintaining medical malpractice

liability insurance in the amounts prescribed by law is a

requirement to obtain and maintain a license to practice

medicine in New Jersey.   N.J.S.A. 45:9-19.17; N.J.A.C. 13:35-

6.18(b).

    In the context of plaintiffs’ negligent hiring claim

against MSSC, the basic element of competency for any physician

seeking surgical privileges at MSSC’s facility is possession of

a license to practice medicine in the State of New Jersey.     An

essential condition for such a license is possession of a policy

of medical malpractice liability insurance or an acceptable

letter of credit as required by statute and the regulations

adopted by the BME.   Moreover, the statutory financial

responsibility requirements impose a continuing obligation on

the physician to maintain the appropriate type and amount of

insurance.

    As recognized in Puckrein and Basil, when the task that a

principal retains an independent contractor to perform requires

specific qualifications, such as possession of certain permits

and licenses, the principal has an initial duty to ascertain

that the contractor possesses the requisite license and a

continuing duty to assure that the requisite license is

maintained.   Here, MSSC had a duty to withhold privileges to any

                                41
physician who did not meet the financial responsibility

requirements for a license to practice medicine in this State.

To be sure, the Legislature delegated the authority to enforce

the liability insurance requirement to the BME.    The record

before the trial court, however, demonstrates that MSSC knew

that Dr. Kaul possessed an insurance policy that expressly

excluded the procedure performed on plaintiff.    The record also

reveals that Dr. Kaul asserted that he advised the BME and MSSC

that he possessed sufficient assets to satisfy the alternative

letter of credit requirement.    Yet, a simple representation that

a physician possesses sufficient assets does not satisfy the

regulatory definition of a letter of credit.     See N.J.A.C.

13:35-6.18(a).   More importantly, the record is barren of any

evidence that the BME accepted this bare representation of

financial responsibility or that MSSC conducted any inquiry to

confirm that the BME deemed such a representation as compliance

with the statutory insurance requirement.   In short, based on

this record, the trial court erred in granting summary judgment

in favor of MSSC.

    A negligent hiring cause of action is not a strict

liability claim.    To the contrary, it is founded on basic

negligence principles.   Thus, a plaintiff who asserts such a

claim against a health care facility must do more than prove

that the facility granted privileges to a physician without the

                                 42
statutorily required medical malpractice liability insurance or

letter of credit.

    Here, having misconstrued the nature of plaintiffs’ claim

against MSSC, the trial court dismissed the negligent hiring

claim.   As noted in this opinion, there are several open

questions about whether Dr. Kaul complied with the alternative

letter of credit requirement.     As described by Dr. Kaul, his

bare assertion of adequate financial assets to respond to a

negligence claim does not comply with the BME definition of a

letter of credit.   N.J.A.C. 13:35-6.18(a).    Moreover, Dr. Kaul

asserts either he or MSSC personnel discussed the sufficiency of

his purported letter of credit with BME personnel.     Discovery is

required to clarify this and other issues integral to this

claim.   We therefore reverse the summary judgment entered in

favor of MSSC in the negligent hiring claim asserted by

plaintiffs.

                                 VIII.

    In summary, we conclude that N.J.S.A. 45:9-19.17 does not

create a direct action by an injured patient against a physician

who does not possess medical malpractice liability insurance or

a suitable letter of credit.     Moreover, failure to comply with

the statutory liability insurance mandate does not give rise to

an informed consent claim.     The inability to recover a judgment

is not the injury contemplated by the informed consent doctrine.

                                  43
    Finally, we hold that a cause of action for negligent

hiring may be asserted against a health care facility that

grants privileges to a physician who has not complied with the

statutorily required insurance.    A health care facility that

grants privileges to physicians to use its facility has a

continuing duty to ensure that any physician granted privileges

maintains the required insurance, which is a condition of

obtaining and maintaining a license to practice medicine in this

State.

                                IX.

    The judgment of the Appellate Division is affirmed in part

and reversed in part and remanded for further proceedings

consistent with this opinion.

     JUSTICES LaVECCHIA, PATTERSON, FERNANDEZ-VINA, and SOLOMON
join in JUDGE CUFF’s opinion. JUSTICE ALBIN filed a separate
opinion dissenting in part and concurring in part, in which
CHIEF JUSTICE RABNER joins.

                                  44
                                        SUPREME COURT OF NEW JERSEY
                                          A-42 September Term 2013
                                                   072363

JAMES R. JARRELL and SHEILA
G. JARRELL, his wife,

    Plaintiffs-Appellants,

         v.

RICHARD A. KAUL, M.D. and
MARKET STREET SURGICAL
CENTER,

    Defendants-Respondents,

         and

JOHN T. FORD, SUSSEX COUNTY
TOTAL HEALTH CENTER, INC.,

    Defendants.

    JUSTICE ALBIN, dissenting and concurring.

    The facts here present the quintessential case of lack of

informed consent.   Dr. Kaul did not have the medical malpractice

insurance required by law to perform the invasive surgical

procedure on his patient, plaintiff James Jarrell.    Performing

the procedure without the requisite insurance constituted

professional misconduct.    Yet, Dr. Kaul never explained any of

this to his patient, presumably because plaintiff never would

have agreed to the procedure had he been fully informed.

    Dr. Kaul failed to disclose material facts to his patient.

He denied plaintiff the right to decide whether a financially

                                  1
incompetent -- or worse yet, a professionally incompetent --

physician should perform invasive surgery on him.       Dr. Kaul was

credentialed only as an anesthesiologist; he was not insured to

perform spinal surgery.

    A logical extension of our informed-consent jurisprudence

would permit a cause of action if a plaintiff can establish four

elements:     (1) the physician was uninsured to perform the

medical procedure, (2) the physician failed to inform the

patient that he was uninsured, (3) the patient would not have

undergone the procedure if properly informed, and (4) the

plaintiff can prove damages.     The majority, however, is not

willing to take this natural step in the development of our

common law.

    A cause of action for lack of informed consent would

recognize that a physician cannot hide material facts and that

the patient has a right to make critical choices concerning his

health.     No reasonable patient would consent to spinal surgery

knowing that his physician lacks malpractice insurance to

perform that procedure.     Because the majority is unwilling to

find that Dr. Kaul breached a common-law duty by failing to

disclose to the patient his lack of insurance to perform spinal

surgery, I respectfully dissent.       I concur in the remainder of

the Court’s opinion.

                                  I.

                                   2
    A physician is statutorily required to maintain medical

malpractice liability insurance.       N.J.S.A. 45:9-19.17.   The

purpose of the law is “to ensure the citizens of the State that

they will have some recourse for adequate compensation in the

event that a physician or podiatrist is found responsible for

acts of malpractice.”    Assembly Health Comm., Statement to S.

267 (Sept. 19, 1996).    A physician who does not maintain medical

malpractice liability insurance for a procedure he performs is

subject to discipline for professional misconduct -- discipline

that includes possible revocation or suspension of his license

to practice medicine.    See N.J.S.A. 45:1-21; N.J.A.C. 13:35-

6.18(e).   The public therefore presumes that a physician is

insured to perform a surgical procedure.

    Physicians are obligated to provide information that is

material to a reasonable patient’s ability to make an informed

decision about whether to proceed with a course of treatment or

procedure.    Matthies v. Mastromonaco, 160 N.J. 26, 36 (1999).

The doctrine of informed consent finds its source in the concept

of negligence.   Largey v. Rothman, 110 N.J. 204, 208 (1988).        In

an informed-consent analysis, the dominant issue is “whether the

physician adequately presents the material facts so that the

patient can make an informed decision.”       Matthies, supra, 160

N.J. at 36.   A “‘physician violates his duty to his patient and

subjects himself to liability if he withholds any facts which

                                   3
are necessary to form the basis of an intelligent consent by the

patient to the proposed treatment.’”   Largey, supra, 110 N.J. at

208 (quoting Salgo v. Leland Stanford, Jr. Univ. Bd. of

Trustees, 317 P.2d 170, 181 (Cal. Dist. Ct. App. 1957)); see

also In re Conroy, 98 N.J. 321, 346 (1985) (explaining that

under informed-consent doctrine, “no medical procedure may be

performed without a patient’s consent, obtained after

explanation of the nature of the treatment, substantial risks,

and alternative therapies” (internal quotation marks omitted)).

The informed-consent doctrine is about patient autonomy -- the

right of the patient to make decisions that intimately and

materially concern his health and life.   Rothman, supra, 110

N.J. at 209; see also Howard v. Univ. of Med. & Dentistry of

N.J., 172 N.J. 537, 557 (2002) (recognizing informed-consent

claim when objectively reasonable patient would not consent to

procedure if physician’s inexperience had been known to

patient).   The physician cannot arrogate to himself decisions

that vitally concern the patient’s health.

    A patient has a right to know whether a physician

performing a procedure is in a financially responsible position

in the event that the patient suffers injuries due to medical

malpractice.   A reasonable patient would consider a physician’s

lack of insurance a material factor in making a decision whether

to have spinal surgery.   That is so because an uninsured

                                 4
physician provides no financial safety net for a patient who is

harmed by the physician.   Lack of insurance also may suggest

that the carrier considered the physician incompetent to perform

the procedure.

    If the physician does not tell the patient that he is not

lawfully permitted to perform the uninsured medical procedure,

then the patient should be able to file a cause of action for

lack of informed consent, provided he would not have undergone

the procedure had he been properly informed and he can prove

damages.

                                II.

    The goals of tort law are to deter persons from engaging in

unreasonable conduct and to compensate victims for the damage

done to them by tortfeasors.   The application of the common law

to this claim of lack of informed consent would have been an

unremarkable extension of our jurisprudence.   It is remarkable

that a patient has no cause of action against a physician who

performs a surgical procedure under the false pretense that he

is insured.

    For those reasons, I respectfully dissent in part and

concur in part.

                                 5
                  SUPREME COURT OF NEW JERSEY

NO.       A-42                               SEPTEMBER TERM 2013

ON CERTIFICATION TO             Appellate Division, Superior Court

JAMES R. JARRELL and SHEILA
G. JARRELL, his wife,

      Plaintiffs-Appellants,

                 v.

RICHARD A. KAUL, M.D. and
MARKET STREET SURGICAL
CENTER,

      Defendants-Respondents,

                 and

JOHN T. FORD, SUSSEX COUNTY
TOTAL HEALTH CENTER, INC.,

      Defendants.

DECIDED                September 29, 2015
                  Chief Justice Rabner                      PRESIDING
OPINION BY              Judge Cuff (temporarily assigned)
CONCURRING/DISSENTING OPINIONS BY                   Justice Albin
DISSENTING OPINION BY
                                    AFFIRM IN
                                                        CONCUR IN
                                      PART/
                                                           PART/
CHECKLIST                          REVERSE IN
                                                        DISSENT IN
                                      PART/
                                                           PART
                                     REMAND
CHIEF JUSTICE RABNER                                         X
JUSTICE LaVECCHIA                        X
JUSTICE ALBIN                                                X
JUSTICE PATTERSON                        X
JUSTICE FERNANDEZ-VINA                   X
JUSTICE SOLOMON                          X
JUDGE CUFF (t/a)                         X
TOTALS                                   5                    2