S T A T E   O F   N E W   Y O R K
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                                 7828--A

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              June 5, 2013
                               ___________

Introduced  by  M.  of  A.  WEINSTEIN  --  read once and referred to the
  Committee on Judiciary -- reported and referred to  the  Committee  on
  Codes  --  reported  and  referred  to the Committee on Rules -- Rules
  Committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to the Committee on Rules

AN  ACT  to 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

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Legislative intent. The legislature finds that  the  resol-
ution  and  settlement of certain types of claims have been impeded as a
result of health insurers' attempts  to  intervene  into  pending  liti-
gation,  as  well  as  similar  attempts  to  institute  subrogation and
reimbursement actions against litigants.  As  a  result,  settlement  of
claims  made by accident victims and others are imperiled and prevented,
thus causing undue burdens and pressures upon the court system. In addi-
tion, defendants in such actions are being subjected to claims  made  by
health insurers, exposing them to additional liability.
  Chapter 494 of the laws of 2009 was enacted to add a new subdivision 4
to section 5-101 of the general obligations law and to add a new section
5-335  of the general obligations law "in relation to protecting parties
to the settlement  of  a  tort  claim  from  certain  unwarranted  lien,
reimbursement  and subrogation claims".  However, one federal court, the
United States District Court for the Eastern District of  New  York,  in
Wurtz v. Rawlings Co., LLC, 2013 WL1248631 (E.D.N.Y), has held that this
legislation  was  preempted  to  the  extent  it  applies to any insured
employee benefit plan covered by the Employee Retirement Income Security
Act of 1974, as amended (ERISA).  The instant legislation is intended to
make clear the original purpose of  sections  5-101  and  5-335  of  the
general  obligations  law  which  is to ensure that insurers will not be

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11329-05-3
              

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able to claim or access any monies paid in settlement of  a  tort  claim
whether  by way of a lien, a reimbursement claim, subrogation, or other-
wise so that the burden of payment for health care services,  disability
payments,  lost  wage  payments or any other benefits for the victims of
torts will be borne by the insurer and not any party to a settlement  of
such  a  victim's tort claim.   This law is specifically directed toward
entities engaged in providing health insurance, thus falling  under  the
"savings"  clause  contained  in ERISA, which reserves to the states the
right and the ability to regulate insurance.
  S 2. Subdivision 4 of section 5-101 of the general obligations law, as
added by section 7 of part F of chapter 494 of  the  laws  of  2009,  is
amended to read as follows:
  4.  As  used  in  section  5-335  of  this article, the term ["benefit
provider"] "INSURER" means any [insurer,  health  maintenance  organiza-
tion,  health  benefit  plan,  preferred provider organization, employee
benefit plan] 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.
  S 3. Section 5-335 of the general obligations law, as added by section
8 of part F of chapter 494 of the laws of 2009, is amended  to  read  as
follows:
  S  5-335.  Limitation of [non-statutory] reimbursement and subrogation
claims in personal injury and wrongful death actions. (a) When a [plain-
tiff] PERSON settles [with] A CLAIM, WHETHER IN LITIGATION OR OTHERWISE,
AGAINST one or more [defendants in an action] OTHER PERSONS for personal
injuries, medical, dental, or podiatric malpractice, or wrongful  death,
it  shall  be conclusively presumed that the settlement does not include
any compensation for the cost of health care services, loss of  earnings
or  other economic loss to the extent those losses or expenses have been
or are obligated to be paid or reimbursed by [a benefit provider, except
for those payments as to which there is a statutory right of  reimburse-
ment]  AN INSURER.   By entering into any such settlement, a [plaintiff]
PERSON shall not be deemed to have taken an action in derogation of  any
[nonstatutory]  right  of any [benefit provider] INSURER that paid or is
obligated to pay those losses or expenses;  nor  shall  a  [plaintiff's]
PERSON'S  entry  into  such  settlement  constitute  a  violation of any
contract between the [plaintiff]  PERSON  and  such  [benefit  provider]
INSURER.
  [Except  where  there is a statutory right of reimbursement, no party]
NO PERSON entering into such a settlement shall be subject to a subroga-
tion claim or claim for reimbursement by [a benefit provider] AN INSURER
and [a benefit provider] AN INSURER shall  have  no  lien  or  right  of
subrogation or reimbursement against any such settling [party] PERSON OR
ANY  OTHER  PARTY  TO SUCH A SETTLEMENT, with respect to those losses or
expenses that have been or are obligated to be  paid  or  reimbursed  by
said [benefit provider] INSURER.
  (b)  This  section shall not apply to a subrogation claim for recovery
of additional first-party benefits provided pursuant to  article  fifty-
one of the insurance law. The term "additional first-party benefits", as
used  in  this  subdivision,  shall  have  the  same meaning given it in
section 65-1.3 of title 11 of the codes, rules and  regulations  of  the
state of New York as of the effective date of this statute.
  (C)  THIS  SECTION  SHALL  NOT APPLY TO A SUBROGATION OR REIMBURSEMENT
CLAIM FOR RECOVERY OF BENEFITS PROVIDED BY MEDICARE OR MEDICAID, SPECIF-

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ICALLY AUTHORIZED PURSUANT TO ARTICLE FIFTY-ONE OF THE INSURANCE LAW, OR
PURSUANT TO A POLICY OF INSURANCE OR  AN  INSURANCE  CONTRACT  PROVIDING
WORKERS' COMPENSATION BENEFITS.
  S  4.  This  act  shall take effect immediately and shall apply to all
settlements entered into on or after November 12, 2009.