senate Bill S5715A

Protects the parties to a tort settlement from any claims by an insurer

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 07 / Jun / 2013
    • REFERRED TO JUDICIARY
  • 17 / Jun / 2013
    • AMEND AND RECOMMIT TO JUDICIARY
  • 17 / Jun / 2013
    • PRINT NUMBER 5715A
  • 21 / Jun / 2013
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 21 / Jun / 2013
    • ORDERED TO THIRD READING CAL.1619
  • 21 / Jun / 2013
    • SUBSTITUTED BY A7828A

Summary

Protects the parties to a tort settlement from any claims by an insurer.

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Bill Details

See Assembly Version of this Bill:
A7828A
Versions:
S5715
S5715A
Legislative Cycle:
2013-2014
Law Section:
General Obligations Law
Laws Affected:
Amd §§5-101 & 5-335, Gen Ob L

Sponsor Memo

BILL NUMBER:S5715A

TITLE OF BILL: 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

PURPOSE: Chapter 494 of the laws of 2009, inter alia added a new
subdivision 4 to section 5-101 of the general obligations law and
amended section 5-335 of the general obligations law. That legislation
was intended to protect parties to the settlement of a tort claim from
certain unwarranted lien, reimbursement and subrogation claims by
insurers.

The purpose of this bill is to correct any misunderstanding as to the
applicability and scope of that law by refining its definition and
applicability to precluding liens, reimbursements and subrogation
claims with respect to any 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 an insurer.

SUMMARY OF PROVISIONS: This bill would provide for the following:

1) It will now be conclusively presumed that, except with respect to
Medicare, Medicaid or Workers' Compensation payments for which there
is a statutory right of reimbursement, the money paid in settlement of
any personal injury or wrongful death action did not include
compensation for the losses or expenses that were or will be paid by
an insurer; and

2) Except for those payments made by Medicare, Medicaid or an insurer
providing Workers' Compensation benefits for which there is a
statutory right of reimbursement, no defendant that enters into a
settlement with the personal injury or wrongful death plaintiff shall
be thereafter subject to any insurers' claim for subrogation or
reimbursement.

JUSTIFICATION: In 2009, the legislature enacted the current General
Obligations Law §§ 5-101 and 5-335 to protect plaintiffs and
defendants from unwarranted liens, reimbursement and subrogation
claims by insurers. Since the 2009 enactment of the current law, it
has been relied upon by all parties to settlements involving tort
claims.

In a recent federal court decision (Wurtz v. Rawlings Co., LLC, 2013
WL 1248631 (E.D.N.Y.)), federal ERISA law was found to preempt New
York's General Obligation Law with regard to an insurer's (of an ERISA
plan) right of subrogation, undermining the intent of this
legislature.

This bill is a corrective measure that will bring the General
Obligation Law firmly under ERISA's savings clause, which allows
States to regulate an insurers subrogation rights. As this was the
legislature original intent, the bill will apply to all settlements
entered into on or after November 12, 2009 -- the effective date of
that year's amendments to the relevant provisions of the General
Obligations Law.


LEGISLATIVE HISTORY: New bill

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act will take effect immediately and apply to any
settlement entered into on or after November 12, 2009.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5715--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 7, 2013
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Judiciary  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

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
able to claim or access any monies paid in settlement of  a  tort  claim

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11329-04-3

S. 5715--A                          2

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-
ICALLY AUTHORIZED PURSUANT TO ARTICLE FIFTY-ONE OF THE INSURANCE LAW, OR

S. 5715--A                          3

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.

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