A State Fund That Helps Children Hurt at Birth Is Quietly Suspended

For more than a decade, a little-known New York State fund has paid the medical expenses of children who have suffered neurological injuries as a result of medical malpractice during childbirth.

In that time, the fund has distributed hundreds of millions of dollars to 963 families, helping to pay for hospital stays, nursing care, speech therapy and in-home medical equipment, among other costs.

But with little warning, the state shuttered the fund earlier this month. A financial report released around the time of the closing projected that the fund would eventually face a shortfall of at least $3.2 billion — a figure that would rise if the fund continued to enroll new children.

The fund’s financial problems had been known for years. Rising enrollment, combined with a costly change in 2017 that increased the quality of care offered by the fund, were cited four years ago as reasons that money would run out by the end of 2023.

Still, the closure of the Medical Indemnity Fund, which was disclosed on the state Health Department’s website, surprised families, lawyers and lawmakers alike.

Kenneth E. Raske, the president of Greater New York Hospital Association, said that hospitals, particularly those serving poorer patients, could buckle under the astronomical costs of birth injury claims — potentially worsening a trend that has led roughly 30 maternity wards in New York to close since 2008.