S T A T E O F N E W Y O R K
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9311
I N A S S E M B L Y
February 17, 2016
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Introduced by M. of A. GOTTFRIED, LAVINE -- read once and referred to
the Committee on Insurance
AN ACT to amend the insurance law and the state finance law, in relation
to creating the health insurance guaranty fund
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subsection (e) of section 7402 of the insurance law is
amended to read as follows:
(e) Is found, after examination, to be in such condition that its
further transaction of business will be hazardous to its policyholders,
creditors, or the public. THIS SHALL INCLUDE A HEALTH INSURER, AS
DEFINED IN ARTICLE EIGHTY-ONE OF THIS CHAPTER, THAT IS CONSISTENTLY
UNABLE TO MEET THE REQUIREMENTS OF SECTION THREE THOUSAND TWO HUNDRED
TWENTY-FOUR-A OF THIS CHAPTER.
S 2. Section 7403 of the insurance law is amended by adding a new
subsection (e) to read as follows:
(E)(1) UPON A DETERMINATION BY THE SUPERINTENDENT AND THE REHABILITA-
TOR THAT FUNDS FROM THE NEW YORK HEALTH INSURANCE CONSUMER PROTECTION
SECURITY FUND ARE NECESSARY TO MEET THE REQUIREMENTS OF ARTICLE EIGHTY-
ONE OF THIS CHAPTER, THE SUPERINTENDENT SHALL MAKE AVAILABLE SUCH FUNDS
AS ARE NECESSARY, PURSUANT TO THE REQUIREMENTS OF SUCH ARTICLE.
(2) THE SUPERINTENDENT SHALL ADVANCE SUCH FUNDS AS MAY BE NECESSARY
PURSUANT TO SUBSECTION (D) OF SECTION EIGHT THOUSAND ONE HUNDRED FOUR OF
THIS CHAPTER. THE REHABILITATOR AND THE SUPERINTENDENT SHALL ESTABLISH A
PLAN, IF POSSIBLE, FOR REPAYMENT OF THE ADVANCE, AT A RATE OF INTEREST
DETERMINED BY THE SUPERINTENDENT.
(3) ADVANCES, PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION, SHALL, IN
ALL RESPECTS EXCEPT TO RATE OF INTEREST, BE SUBJECT TO THE PROVISIONS OF
SECTION ONE THOUSAND THREE HUNDRED SEVEN OF THIS CHAPTER, PROVIDED THAT
IN THE EVENT THAT AN INSURER WHICH HAS RECEIVED AN ADVANCE PURSUANT TO
THIS SUBSECTION IS SUBSEQUENTLY THE SUBJECT OF AN ORDER OF LIQUIDATION,
THE CLAIM OF THE FUND FOR THE ADVANCE AND ANY ACCRUED INTEREST SHALL
HAVE PRIORITY ABOVE CLAIMS OF ALL NONSECURED CREDITORS, PROVIDED THE
REQUIREMENTS OF ARTICLE EIGHTY-ONE OF THIS CHAPTER HAVE BEEN MET, AND
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13972-01-6
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SHALL BE PAID IMMEDIATELY TO THE FUND OR AS SOON AS ASSETS ARE AVAILABLE
THEREFOR.
S 3. Paragraph 1 of subsection (f) of section 7405 of the insurance
law, as amended by chapter 33 of the laws of 2005, is amended to read as
follows:
(1) No later than one hundred eighty days after a final order of
liquidation with an adjudication of insolvency of an insurer by a court
of competent jurisdiction of this state, the liquidator may in his sole
discretion make application to the court for approval of a proposal to
disburse assets out of marshalled assets, from time to time as such
assets become available, to any fund established by article seventy-six
of this chapter, article six-A of the workers' compensation law [and],
any foreign entity performing a similar function, AND ANY FUND ESTAB-
LISHED PURSUANT TO ARTICLE EIGHTY-ONE OF THIS CHAPTER, PROVIDED THAT THE
REQUIREMENTS OF SUBSECTION (A) OF SECTION EIGHT THOUSAND ONE HUNDRED
THREE OF THIS CHAPTER HAVE BEEN MET, having obligations because of such
insolvency. If the liquidator determines that there are insufficient
assets to disburse, the application authorized by this subsection shall
be considered satisfied by a filing by the liquidator stating the
reasons for this determination.
S 4. The insurance law is amended by adding a new article 81 to read
as follows:
ARTICLE 81
HEALTH INSURANCE GUARANTY FUND
SECTION 8101. PURPOSE.
8102. DEFINITIONS.
8103. NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY
FUND.
8104. POWERS OF THE SUPERINTENDENT.
S 8101. PURPOSE. THE PURPOSE OF THIS ARTICLE IS TO PROTECT COVERED
INDIVIDUALS AGAINST THE FAILURE OR INABILITY OF A HEALTH INSURER TO
PERFORM ITS CONTRACTUAL OBLIGATIONS DUE TO FINANCIAL IMPAIRMENT OR
INSOLVENCY. TO PROVIDE THIS PROTECTION, THE LEGISLATURE HEREBY CREATES A
NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY FUND TO SERVE AS
A GUARANTY FUND MECHANISM CAPABLE OF INSURING THAT THE FINANCIAL OBLI-
GATIONS OF HEALTH INSURERS TO THEIR ENROLLEES AND HEALTH CARE PROVIDERS
ARE SATISFIED.
S 8102. DEFINITIONS. AS USED IN THIS ARTICLE:
(A) "FUND" MEANS THE NEW YORK HEALTH INSURANCE CONSUMER PROTECTION
SECURITY FUND CREATED BY THIS ARTICLE.
(B) "HEALTH INSURER" MEANS ANY ORGANIZATION OR ENTITY PROVIDING
REIMBURSEMENT FOR A COVERED EXPENSE UNDER ANY INDIVIDUAL, GROUP OR BLAN-
KET POLICY OR CONTRACT COVERING THE KINDS OF INSURANCE DESCRIBED IN ITEM
(I) OF PARAGRAPH THREE OF SUBSECTION (A) OF SECTION ONE THOUSAND ONE
HUNDRED THIRTEEN OF THIS CHAPTER AND LICENSED UNDER ARTICLE THIRTY-TWO
OR FORTY-TWO OF THIS CHAPTER, WHICH IS NOT A MEMBER OF, OR PARTICIPANT
IN, OR A SUBSIDIARY OF A MEMBER OF OR PARTICIPANT IN, THE FUNDS CREATED
PURSUANT TO ARTICLES SEVENTY-FIVE, SEVENTY-SIX, AND SEVENTY-SEVEN OF
THIS CHAPTER; A CORPORATION ORGANIZED UNDER ARTICLE FORTY-THREE OF THIS
CHAPTER; OR AN ORGANIZATION CERTIFIED UNDER ARTICLE FORTY-FOUR OF THE
PUBLIC HEALTH LAW.
(C) "CONTRACTUAL OBLIGATION" MEANS ANY PAYMENT OR REIMBURSEMENT OWED
BY A HEALTH INSURER FOR A COVERED BENEFIT UNDER A POLICY, CONTRACT, OR
COMPREHENSIVE HEALTH BENEFITS PLAN.
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(D) "IMPAIRED HEALTH INSURER" MEANS A HEALTH INSURER FOR WHOM THE
SUPERINTENDENT HAS INITIATED A PROCEEDING UNDER THE PROVISIONS OF ARTI-
CLE SEVENTY-FOUR OF THIS CHAPTER.
(E) "COMMISSIONER" MEANS THE COMMISSIONER OF TAXATION AND FINANCE.
S 8103. NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY FUND.
(A) CONSISTENT WITH THE PROVISIONS OF SUBDIVISION ONE OF SECTION NINE-
TY-SEVEN-YYYY OF THE STATE FINANCE LAW, THERE IS HEREBY ESTABLISHED A
NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY FUND. SUCH FUND
SHALL BE USED IN THE PAYMENT OF UNPAID CONTRACTUAL OBLIGATIONS, IN WHOLE
OR IN PART, BY AN IMPAIRED HEALTH INSURER, AFTER APPLICATION OF ANY
FUNDS AVAILABLE FROM A PROCEEDING IMPLEMENTED PURSUANT TO ARTICLE SEVEN-
TY-FOUR OF THIS CHAPTER.
(B)(1) PAYMENT INTO THE FUND BY HEALTH INSURERS SHALL BE MADE THROUGH
AN ASSESSMENT BASED ON THE PREMIUMS RECEIVED BY A HEALTH INSURER FOR
BUSINESS IN THIS STATE FOR THE MOST RECENT CALENDAR YEAR FOR WHICH
PREMIUM INFORMATION IS AVAILABLE, EXCLUDING PREMIUMS RECEIVED FOR INDI-
VIDUALS UNDER TITLE XIX OF THE SOCIAL SECURITY ACT. THE SUPERINTENDENT
SHALL ESTABLISH ASSESSMENT LEVELS SUFFICIENT TO FULLY PAY ALL UNPAID
CLAIMS OF AN IMPAIRED HEALTH INSURER, PURSUANT TO SUBSECTIONS (B), (C)
AND (D) OF SECTION EIGHT THOUSAND ONE HUNDRED FOUR OF THIS ARTICLE, AND
TO REPAY ANY TRANSFERS MADE PURSUANT TO SUBDIVISION FIVE OF SECTION
SEVENTY-TWO OF THE STATE FINANCE LAW.
(2) THE SUPERINTENDENT MAY EXEMPT, ABATE OR DEFER, IN WHOLE OR IN
PART, THE ASSESSMENT OF A HEALTH INSURER IF THE SUPERINTENDENT DETER-
MINES THAT PAYMENT OF THE ASSESSMENT WOULD ENDANGER THE ABILITY OF THE
HEALTH INSURER TO FULFILL ITS CONTRACTUAL OBLIGATIONS OR PLACE THE
HEALTH INSURER IN AN UNSAFE OR UNSOUND FINANCIAL CONDITION.
(3) IN THE EVENT AN ASSESSMENT AGAINST A HEALTH INSURER IS EXEMPTED,
ABATED OR DEFERRED, IN WHOLE OR IN PART, THE AMOUNT BY WHICH THAT
ASSESSMENT IS EXEMPTED, ABATED OR DEFERRED SHALL BE ASSESSED AGAINST
OTHER HEALTH INSURERS IN A MANNER CONSISTENT WITH THIS SECTION.
(C) REPAYMENT OF HEALTH INSURERS WHEN FUNDS BECOME AVAILABLE FROM A
PROCEEDING PURSUANT TO ARTICLE SEVENTY-FOUR OF THIS CHAPTER SHALL BE
PROPORTIONATE TO THE CONTRIBUTION FROM EACH HEALTH INSURER.
S 8104. POWERS OF THE SUPERINTENDENT. (A) FOR ANY IMPAIRED HEALTH
INSURER, THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO MAKE
PAYMENTS FROM THE NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY
FUND TO ENSURE THAT PAYMENTS TO HEALTH CARE PROVIDERS, OR INDEMNITY
PAYMENTS TO COVERED INDIVIDUALS, ARE MADE IN FULL FOR SERVICES PROVIDED
THAT WOULD NOT OTHERWISE BE FULLY REIMBURSED DESPITE THE PROCEEDINGS
IMPLEMENTED PURSUANT TO ARTICLE SEVENTY-FOUR OF THIS CHAPTER. SERVICES
PROVIDED EITHER PRIOR TO THE IMPLEMENTATION OF A PROCEEDING UNDER ARTI-
CLE SEVENTY-FOUR OF THIS CHAPTER OR AFTER IMPLEMENTATION OF SUCH
PROCEEDING SHALL BE ELIGIBLE FOR REIMBURSEMENT, IN PART OR IN WHOLE,
FROM THE FUND. PAYMENT IN FULL SHALL BE DETERMINED BY THE TERMS OF THE
HEALTH INSURANCE CONTRACT, ANY CONTRACT BETWEEN A HEALTH CARE PROVIDER
AND THE IMPAIRED HEALTH INSURER AND ANY APPLICABLE STATE OR FEDERAL LAWS
OR REGULATIONS INCLUDING BUT NOT LIMITED TO PART H OF CHAPTER SIXTY OF
THE LAWS OF TWO THOUSAND FOURTEEN AND SECTION TWO THOUSAND NINETEEN-A OF
THE PUBLIC HEALTH SERVICES ACT, AS AMENDED BY THE PATIENT PROTECTION AND
AFFORDABLE CARE ACT.
(B) THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO MAKE PAYMENTS
TO ENSURE THAT PAYMENT IN FULL IS MADE TO HEALTH CARE PROVIDERS, OR
INDEMNITY PAYMENTS TO COVERED INDIVIDUALS, FOR SERVICES PROVIDED BEFORE
THE IMPLEMENTATION OF PROCEEDINGS PURSUANT TO ARTICLE SEVENTY-FOUR OF
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THIS CHAPTER WITHIN THIRTY DAYS OF THE IMPLEMENTATION OF SUCH PROCEED-
ING.
(C) THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO ENSURE THAT
PAYMENT IN FULL IS MADE TO HEALTH CARE PROVIDERS, OR INDEMNITY PAYMENTS
TO COVERED INDIVIDUALS, FOR SERVICES PROVIDED AFTER THE IMPLEMENTATION
OF PROCEEDINGS PURSUANT TO ARTICLE SEVENTY-FOUR OF THIS CHAPTER WITHIN
THIRTY DAYS OF RECEIPT OF A CLAIM.
(D) IF NECESSARY, THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO
ADVANCE MONIES FROM THE FUND TO COMPLY WITH THE PROVISIONS OF
SUBSECTIONS (B) AND (C) OF THIS SECTION.
(E) THE SUPERINTENDENT SHALL NOTIFY THE DIRECTOR OF THE BUDGET OF THE
NEED FOR MONIES TO BE TRANSFERRED PURSUANT TO SUBDIVISION FIVE OF
SECTION SEVENTY-TWO OF THE STATE FINANCE LAW TO MEET THE REQUIREMENTS OF
SUBSECTIONS (B), (C) AND (D) OF THIS SECTION.
(F) THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO USE THE MONIES
OF THE FUND TO REPAY ANY TRANSFERS MADE PURSUANT TO SUBDIVISION FIVE OF
SECTION SEVENTY-TWO OF THE STATE FINANCE LAW, WHEN SUCH FUNDS ARE PAID
PURSUANT TO SUBSECTION (B) OF SECTION EIGHT THOUSAND ONE HUNDRED THREE
OF THIS ARTICLE.
(G) THE SUPERINTENDENT SHALL ENSURE THAT THE COST OF ASSESSMENTS
ESTABLISHED PURSUANT TO SUBDIVISION (B) OF SECTION EIGHT THOUSAND ONE
HUNDRED THREE OF THIS ARTICLE ARE NOT INCLUDED IN PREMIUMS BY ANY HEALTH
INSURER.
S 5. Section 72 of the state finance law is amended by adding a new
subdivision 5 to read as follows:
5. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, UPON NOTIFI-
CATION FROM THE SUPERINTENDENT OF FINANCIAL SERVICES OF THE NEED FOR
MONIES TO MEET THE REQUIREMENTS OF SUBSECTIONS (B), (C) AND (D) OF
SECTION EIGHT THOUSAND ONE HUNDRED FOUR OF THE INSURANCE LAW, THE DIREC-
TOR OF THE BUDGET SHALL TRANSFER SUCH FUNDS AS ARE NECESSARY.
S 6. The state finance law is amended by adding a new section 97-yyyy
to read as follows:
S 97-YYYY. NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY
FUND. 1. THERE IS HEREBY ESTABLISHED IN THE CUSTODY OF THE COMMISSIONER
OF THE DEPARTMENT OF TAXATION AND FINANCE AN ACCOUNT OF THE MISCELLA-
NEOUS SPECIAL REVENUE FUND TO BE KNOWN AS THE NEW YORK HEALTH INSURANCE
CONSUMER PROTECTION SECURITY FUND ACCOUNT.
2. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE CONTRARY,
THE COMMISSIONER OF TAXATION AND FINANCE IS HEREBY AUTHORIZED AND
DIRECTED TO RECEIVE FOR DEPOSIT TO THE CREDIT OF THE NEW YORK HEALTH
INSURANCE CONSUMER PROTECTION SECURITY FUND ACCOUNT, ASSESSMENTS IMPOSED
PURSUANT TO ARTICLE EIGHTY-ONE OF THE INSURANCE LAW AND TRANSFERS FROM
THE GENERAL FUND PURSUANT TO SUBDIVISION FIVE OF SECTION SEVENTY-TWO OF
THIS ARTICLE.
3. THE COMMISSIONER OF TAXATION AND FINANCE SHALL MAKE PAYMENTS FROM
THE MONIES ON DEPOSIT IN THE NEW YORK HEALTH INSURANCE CONSUMER
PROTECTION SECURITY FUND ACCOUNT IN THE AMOUNTS AND AT THE TIMES DETER-
MINED BY THE SUPERINTENDENT OF INSURANCE.
S 7. This act shall take effect immediately and shall be applicable to
any health insurer determined by the superintendent of financial
services, on or after such effective date, to be insolvent within the
meaning of section 1309 of the insurance law.