S.5128 (DeFrancisco/A.8364 (Weinstein)




S.5128 (DeFrancisco/A.8364 (Weinstein)


Prohibition on Insurers' Right of Subrogation for Collateral Source Payments



The Business Council strongly opposes this legislation, which would amend the Civil Practice Law and Rules (CPLR) in relation to subrogation rights for collateral source payments made in the context of a settlement. Provisions in this legislation would unfairly prohibit insurers from recovering medical expenses lawfully paid by an insurer from a settlement of a legal action where an insured's injuries were caused by a third party. By prohibiting a health insurer from recouping these expenses, this legislation would force health insurers to actuarially raise premiums in order to compensate for the expenses that they are currently able to recover. Subsequently, this bill would contribute to the rising cost of health coverage and the increasing number of New York's employers who cannot afford health coverage.

Under CPLR 4545, a health insurer may join in a legal action to seek payment from a defendant for medical expenses the insurer paid on behalf of its insured (the plaintiff) for injuries that resulted from the defendant' s negligence.

This legislation amends CPLR 4545, and revokes the insurer's right to seek recovery for the costs of the individual's medical expenses from the party responsible for the injuries in a settlement. In addition, under a separate provision of this proposed legislation, the insurer would not be able to recover its expenses from either the defendant or the plaintiff. Therefore, insurers would have little choice other than transferring the costs of this care to New York's employers that provide health coverage to their workers.

Enacting legislation that would allow a defendant to avoid financial responsibility for medical expenses that the insurer incurred as a result of the injuries caused by the defendant's negligence represents an egregious proposal for both the health care industry and legal precedent. These costs are inappropriately shifted to the health insurer, and are ultimately borne by those that purchase health coverage. In fact, the New York Health Plan Association has estimated the cost of this provision to employers and consumers that purchase commercial health coverage would amount to more than $50 million a year.

This legislation creates an additional burden on many of New York's employers - particularly small businesses - that are already struggling to keep up with the rising cost of health insurance and maintain coverage for their workers. On behalf of the members of The Business Council, we urge you to reject this legislation.