NYS Legislature Passes Legislation Limiting Health Insurer Subrogation

Before leaving Albany June 21, both houses of the New York State Legislature passed legislation that would eliminate the ability of health insurers to pursue subrogation recovery by asserting a lien or otherwise claiming proceeds of a personal injury or wrongful death settlement.  The legislation is limited to health insurers and does not affect the ability of property insurers or others to recover.

The “legislative intent” section of the bill indicates it is designed “to ensure that [health] insurers will not be able to claim or access any monies paid in settlement of a tort claim whether by way of lien, a reimbursement claim, subrogation or otherwise so that the burden of payment for health care services... will [not] be borne by.. any party to a settlement of... a victim’s tort claim.”

The provision would add a new section 5-335 to the General Obligations Law stating that when a person settles a lawsuit claiming personal injuries, medical, dental or podiatric malpractice or wrongful death, it will be presumed that the settlement does not include any compensation for the cost of health care services, except where there is a statutory right of reimbursement.  The law is specifically directed toward entities engaged in providing health insurance, which, per the bill’s drafters, is consistent with the federal ERISA law that gives the states the right to regulate insurance.  The legislation would affect “any insurance company or other entity which provides for payment or reimbursement of health care expenses, health care services, disability payments, lost wage payments, or any other benefits under a policy of insurance or an insurance contract with an individual or group.”

The legislation specifically states that it does not apply to “APIP” (additional personal injury protection insurance in an automobile accident) and exempts Medicare and Medicaid, for which statutory rights of reimbursement exist in New York’s Insurance Law.

The bill passed the New York State Assembly on June 20, then passed the New York State Senate on June 21 (the last day of session).  The status of the bill is currently listed as “referred to Assembly.”  It is unclear whether Governor Cuomo would sign the legislation.   We will keep an eye on it.