senate Bill S4576

2011-2012 Legislative Session

Relates to the limitation of non-statutory reimbursement and subrogration

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to judiciary
Apr 12, 2011 referred to judiciary

S4576 - Bill Details

Current Committee:
Law Section:
General Obligations Law
Laws Affected:
Amd §5-335, Gen Ob L

S4576 - Bill Texts

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Relates to the limitation of non-statutory reimbursement and subrogration.

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BILL NUMBER:S4576

TITLE OF BILL:

An act
to amend the general obligation law, in relation to the limitation of
non-statutory reimbursement and subrogation

This is one in a series of measures being introduced at the request of
the Chief Administrative Judge upon the recommendation of her
Advisory Committee on Civil Practice.

This measure would amend General Obligations Law §5-335, which was
enacted in 2009 (L. 2009, c. 494, pt. F, §8, eff. Nov. 12, 2009) to
further facilitate resolution of personal injury lawsuits.

Section 5-335 was enacted in response to the Court of Appeals'
decision in Fasso v Doerr, 12 NY3d 80 (2009). The Fasso court held
that the parties to a personal injury lawsuit could not enter into a
settlement without the consent of a health insurer that had
intervened in the action, thereby upholding the right of the health
benefit provider to pursue a subrogation claim. Consistent with CPLR
§4545, which bars plaintiffs in personal injury actions from
recovering expenses that have been paid for by collateral sources,
the recently enacted GOL §5-335 creates a conclusive presumption that
a personal injury settlement does not include compensation for health
care costs and other expenses paid by a benefit provider. It further
states that unless there is a statutory right of reimbursement, no
party entering into a settlement shall be subject to a subrogation or
reimbursement claim by a benefit provider with respect to the losses
or expenses paid by the provider.

However, the recent decision in Rink v State of New York, 27 Misc.3d
1159 (Ct.
Claims 2009), demonstrates that further clarification is necessary so
that the goals underlying GOL §5-335 can be accomplished. The Rink
court granted a health insurer's motion to intervene in a pending
medical malpractice action, holding that GOL §5-335
addresses only situations in which the insured and tortfeasor have
settled an action and not those in which litigation is still pending.
The Committee believes that such intervention is impliedly precluded
by current law except where intervention is sought to enforce a
statutory right of reimbursement or subrogation. The measure would
make that explicit. It would also provide that unless there is a
statutory light of reimbursement, a benefit provider may not
intervene in a personal injury or wrongful death action, in order to
assert a subrogation claim or claim for reimbursement with respect to
those losses or expenses.

The proposed amendment adopts the predominant view in the Appellate
Divisions, under which intervention by health insurers is precluded
(see Fasso, 12 NY3d at 89).
Moreover, the proposal is fully consistent with the purposes
underlying the collateral source provisions of CPLR §4545 as well as
other 1980s legislation enacted in response to the liability crisis
in that it would provide savings to parties to personal injury


litigation and liability insurers, simplify and reduce the cost of
litigation, and facilitate settlement.

This measure would have no fiscal impact on the State. It would take
effect immediately and apply to all actions commenced and all actions
pending on such date.

2011 LEGISLATIVE HISTORY:

None. New proposal.

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

                                  4576

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             April 12, 2011
                               ___________

Introduced  by Sen. BONACIC -- (at request of the Office of Court Admin-
  istration) -- read twice and ordered printed, and when printed  to  be
  committed to the Committee on Judiciary

AN  ACT  to amend the general obligation law, in relation to the limita-
  tion of non-statutory reimbursement and subrogation

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

  Section  1.  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  settles  with, OR OBTAINS JUDGMENT AGAINST, one or more defendants
in an action for personal injuries, medical, dental, or podiatric  malp-
ractice,  or  wrongful death, it shall be conclusively presumed that the
settlement OR JUDGEMENT 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 reimbursement. By entering into any such
settlement OR BY SEEKING OR OBTAINING SUCH JUDGEMENT, a plaintiff  shall
not  be deemed to have taken an action in derogation of any nonstatutory
right of any benefit provider that paid or is  obligated  to  pay  those
losses  or  expenses; nor shall a plaintiff's entry into such settlement
OR RECOVERY OF SUCH JUDGEMENT constitute a  violation  of  any  contract
between the plaintiff and such benefit provider.
  Except  where  there  is  a statutory right of reimbursement, no party
entering into such a settlement OR OBTAINING SUCH A JUDGEMENT  shall  be
subject  to  a subrogation claim or claim for reimbursement by a benefit
provider and a benefit provider shall have no lien or right of  subroga-
tion or reimbursement against any such [settling] party, with respect to

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09309-01-1

S. 4576                             2

those  losses  or expenses that have been or are obligated to be paid or
reimbursed by said benefit provider.  EXCEPT WHERE THERE IS A  STATUTORY
RIGHT  OF  REIMBURSEMENT,  A  BENEFIT PROVIDER SHALL NOT BE PERMITTED TO
INTERVENE  IN  AN ACTION FOR PERSONAL INJURY, MEDICAL, DENTAL, OR PODIA-
TRIC MALPRACTICE, OR WRONGFUL DEATH, FOR  THE  PURPOSE  OF  ASSERTING  A
SUBROGATION CLAIM OR CLAIM FOR REIMBURSEMENT WITH RESPECT TO SUCH LOSSES
OR EXPENSES.
  (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.
  S  2.  This act shall take effect immediately and apply to all actions
commenced and all actions pending on such date.

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