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Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518.465.7517 x207
www.bcnys.org

BILL:

A.7828 (Weinstein) / S.5715 (Bonacic)

Support

SUBJECT:

Amend the general obligations law, in relation to protecting parties to the settlement of a tort claim from certain unwarranted lien, reimbursement and subrogation claims

 

DATE:

June 14, 2013

 

The Business Council of New York State opposes A.7828 (Weinstein)/S.5715 (Bonacic), which would deny health plans the ability to engage in subrogation for third-party source payments made in the context of a settlement. Removing the ability of health plans to remedy improper settlements harms the interests of New York's employers as the primary payers of health insurance premiums.  

In an effort to recoup costs paid by a health insurer when, in fact, another insurer should have paid as primary coverer, health plans sometimes intervene in lawsuits through the doctrine of subrogation. This ensures that health insurance consumers are not improperly subsidizing settlements related to claims covered by other types of insurance.

Additionally, health plans providing coverage to Medicaid managed care, Child Health Plus, and Family Health Plus individuals are required by State law to recoup the costs of medical expenses from third parties who caused a patient's injury. Without a health plan's ability to recoup these payments, millions of dollars of expenses under these programs will fall to State and local taxpayers.

This legislation was introduced in response to the March 2013 United States District Court decision in Wurtz v. Rawlings. That Court found that parts of a 2009 New York law, which attempted to deny health plans the opportunity to recoup payments made on behalf of plaintiffs who received healthcare services, was preempted by the Employee Retirement Income Security Act of 1974 ("ERISA").

The Wurtz decision is currently in the appeals process. The appellate courts must have the opportunity to determine whether the decision should be upheld. Now is not the right time for the Legislature to act. This bill is premature and the Legislature should wait until final disposition of the Rawlings case through the appellate process before attempting to make any statutory revisions based on a district court's holding that may ultimately be overturned at the appellate level.

For these reasons, The Business Council opposes A.7828/S.5715 and urges the Legislature to take no additional action on this issue at this time, particularly because this legislation would result in driving up health insurance costs for all New Yorkers.