Senate Bill S5976

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

                                  5976

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              June 15, 2015
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

AN ACT to amend the public health law,  in  relation  to  expanding  the
  function  of  the  New  York state medical indemnity fund such that it
  will serve as a funding source for future health care costs associated
  with neurological injuries resulting from medical services provided or
  not provided

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

  Section  1.  Section  2999-g  of  the  public  health law, as added by
section 52 of part H of chapter 59 of the laws of 2011,  is  amended  to
read as follows:
  S  2999-g.  Purpose  of  this title. Creation AND EXPANSION of the New
York state medical indemnity fund.  [There is hereby created the] 1. THE
New York state medical indemnity fund (the "fund")[. The purpose of  the
fund  is] WAS CREATED to provide a funding source for future health care
costs associated with birth related neurological injuries, in  order  to
reduce premium costs for medical malpractice insurance coverage.
  2.  TO  FURTHER  THE  STATE'S  INTEREST  IN REDUCING PREMIUM COSTS FOR
MEDICAL MALPRACTICE INSURANCE COVERAGE, THE FUND'S MISSION  IS  EXPANDED
SUCH  THAT THE FUND WILL PROVIDE A FUNDING SOURCE FOR FUTURE HEALTH CARE
COSTS ASSOCIATED WITH ALL NEUROLOGICAL INJURIES RESULTING  FROM  MEDICAL
SERVICES  PROVIDED  OR  NOT  PROVIDED  AND NOT JUST THOSE THAT ARE BIRTH
RELATED.
  S 2. Section 2999-h of the public health law, as added by  section  52
of  part  H  of  chapter  59  of the laws of 2011, is amended to read as
follows:
  S 2999-h. Definitions. As used in this title, unless  the  context  or
subject matter requires otherwise:
  1.  ["Birth-related  neurological injury" means an injury to the brain
or spinal cord of a live infant caused by the deprivation of  oxygen  or

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11586-01-5
              

S. 5976                             2

mechanical injury occurring in the course of labor, delivery or resusci-
tation  or  by  other  medical  services provided or not provided during
delivery admission  that  rendered  the  infant  with  a  permanent  and
substantial  motor impairment or with a developmental disability as that
term is defined by section 1.03 of the mental hygiene law, or both. This
definition shall apply to live births only.
  2.] "Fund" means the New York state medical indemnity fund.
  2. "NEUROLOGICAL INJURY" MEANS AN INJURY TO THE BRAIN OR  SPINAL  CORD
OF  A  PERSON  CAUSED  BY MEDICAL SERVICES PROVIDED OR NOT PROVIDED THAT
RENDERED THE PERSON WITH A:
  (A) PERMANENT AND SUBSTANTIAL MOTOR IMPAIRMENT, AND/OR
  (B) DISABILITY THAT (I) IS ATTRIBUTABLE TO (A) DEVELOPMENTAL DISABILI-
TIES, CEREBRAL PALSY, EPILEPSY, NEUROLOGICAL IMPAIRMENT, FAMILIAL DYSAU-
TONOMIA OR AUTISM; (B) ANY OTHER CONDITION  OF  A  PERSON  FOUND  TO  BE
CLOSELY  RELATED  TO  DEVELOPMENTAL  DISABILITIES BECAUSE SUCH CONDITION
RESULTS IN SIMILAR IMPAIRMENT OF  GENERAL  INTELLECTUAL  FUNCTIONING  OR
ADAPTIVE  BEHAVIOR  TO  THAT  OF  DEVELOPMENTALLY  DISABLED  PERSONS  OR
REQUIRES TREATMENT AND SERVICES  SIMILAR  TO  THOSE  REQUIRED  FOR  SUCH
PERSON; OR (C) DYSLEXIA RESULTING FROM A DISABILITY DESCRIBED IN SUBPAR-
AGRAPH  (A)  OR  (B)  OF  THIS  PARAGRAPH;  (II) HAS CONTINUED OR CAN BE
EXPECTED TO CONTINUE INDEFINITELY; AND (III) CONSTITUTES  A  SUBSTANTIAL
HANDICAP TO SUCH PERSON'S ABILITY TO FUNCTION NORMALLY IN SOCIETY.
  3.  "Qualifying health care costs" means the future medical, hospital,
surgical, nursing, dental, rehabilitation,  custodial,  durable  medical
equipment,  home  modifications, assistive technology, vehicle modifica-
tions, prescription and non-prescription medications, and  other  health
care  costs  actually  incurred  for  services  rendered to and supplies
utilized by qualified plaintiffs, which  are  necessary  to  meet  their
health  care needs as determined by their treating physicians, physician
assistants, or nurse practitioners  and  as  otherwise  defined  by  the
commissioner in regulation.
  4. "Qualified plaintiff" means every plaintiff or claimant who (i) has
been found by a jury or court to have sustained a [birth-related] neuro-
logical  injury  as  the  result  of  medical  malpractice,  or (ii) has
sustained a [birth-related] neurological injury as the result of alleged
medical malpractice, and has settled his or her lawsuit or claim  there-
for.
  5.  Any  reference  to  the "department of financial services" and the
"superintendent of financial services" in this title shall  mean,  prior
to  October third, two thousand eleven, respectively, the "department of
insurance" and "superintendent of insurance."
  S 3. Section 2999-i of the public health law, as added by  section  52
of part H of chapter 59 of the laws of 2011, subdivision 1 as amended by
section  29  of  part D of chapter 56 of the laws of 2012, is amended to
read as follows:
  S 2999-i. Custody and administration of the fund.  1. (a) The  commis-
sioner  of  taxation  and finance shall be the custodian of the fund and
the special account established pursuant to section ninety-nine-t of the
state finance law. All payments from the  fund  shall  be  made  by  the
commissioner  of  taxation  and  finance upon certificates signed by the
superintendent of financial services, or his or her designee, as herein-
after provided. The fund shall be separate and apart from any other fund
and from all other state monies; provided, however, that monies  of  the
fund  may be invested as set forth in paragraph (b) of this subdivision.
No monies from the fund shall be transferred  to  any  other  fund,  nor

S. 5976                             3

shall  any  such  monies be applied to the making of any payment for any
purpose other than the purpose set forth in this title.
  (b)  Any monies of the fund not required for immediate use may, at the
discretion of the [commissioner] SUPERINTENDENT of financial services in
consultation with the commissioner of health and  the  director  of  the
budget, be invested by the commissioner of taxation and finance in obli-
gations  of  the United States or the state or obligations the principal
and interest of which are guaranteed by the United States or the  state.
The  proceeds  of  any  such investment shall be retained by the fund as
assets to be used for the purposes of the fund.
  2. (a) The fund shall be administered by the superintendent of  finan-
cial  services  or his or her designee in accordance with the provisions
of this article.
  (b) The superintendent of financial services  shall  have  all  powers
necessary and proper to carry out the purposes of the fund.
  (c)  Notwithstanding  any contrary provision of this section, sections
one hundred twelve and one hundred sixty-three of the state finance  law
or  any other contrary provision of law, the superintendent of financial
services is authorized to enter into a contract or contracts  without  a
competitive bid or request for proposal process for purposes of adminis-
tering  the  fund for the first year of its operation and in preparation
therefor.
  (d) The department of financial services and the department OF  HEALTH
shall post on their websites information about the fund, eligibility for
enrollment in the fund, and the process for enrollment in the fund.
  3.  The  expense  of  administering  the  fund, including the expenses
incurred by the department OF FINANCIAL SERVICES AND/OR  THE  DEPARTMENT
OF HEALTH, shall be paid from the fund.
  4. Monies for the fund will be provided pursuant to this chapter.
  5.  For  the  state  fiscal  year  beginning April first, two thousand
[eleven] FOURTEEN and ending March thirty-first, two  thousand  [twelve,
the  state  fiscal  year  beginning April first, two thousand twelve and
ending March thirty-first, two thousand thirteen, and the  state  fiscal
year beginning April first, two thousand thirteen and ending March thir-
ty-first,  two  thousand fourteen] FIFTEEN, AND ANNUALLY THEREAFTER, the
superintendent of financial services shall cause to  be  deposited  into
the  fund  for  each  such  fiscal year the amount appropriated for such
purpose. [Beginning April first,  two  thousand  fourteen  and  annually
thereafter,  the  superintendent of financial services shall cause to be
deposited into the fund, subject to available appropriations, an  amount
equal  to  the difference between the amount appropriated to the fund in
the preceding fiscal year, as increased by the adjustment factor defined
in subdivision seven of this section, and the assets of the fund at  the
conclusion  of  that fiscal year.] THE TOTAL AMOUNT TO BE DEPOSITED INTO
THE FUND SHALL BE BASED UPON AN ACTUARIAL CALCULATION,  CONDUCTED  QUAR-
TERLY  BY  THE  SUPERINTENDENT  OF  FINANCIAL SERVICES, OF THE ESTIMATED
LIABILITIES OF THE FUND FOR THE NEXT SUCCEEDING YEAR.
  6. (a) Following the deposit referenced in subdivision  five  of  this
section, the superintendent of financial services shall conduct an actu-
arial  calculation  of  the  estimated  liabilities  of the fund for the
coming year resulting from the  qualified  plaintiffs  enrolled  in  the
fund.  The FUND administrator shall from time to time adjust such calcu-
lation.  If the total of all estimates of current liabilities equals  or
exceeds  eighty  percent  of  the fund's assets, then the fund shall not
accept any new enrollments until a new deposit has been made pursuant to
subdivision five of this section. When, as a result of such new deposit,

S. 5976                             4

the fund's liabilities no longer exceed eighty  percent  of  the  fund's
assets,  the fund administrator shall enroll new qualified plaintiffs in
the order that an application  for  enrollment  has  been  submitted  in
accordance  with  subdivision seven of section twenty-nine hundred nine-
ty-nine-j of this title.
  (b) Whenever enrollment is suspended pursuant to paragraph (a) of this
subdivision and until such time as enrollment resumes pursuant  to  such
paragraph: (i) notice of such suspension shall be promptly posted on the
[department's] website OF THE DEPARTMENT OF HEALTH and on the website of
the  department of financial services; (ii) the fund administrator shall
deny each application for enrollment that  had  been  received  but  not
accepted  prior  to  the  date  of  suspension  and each application for
enrollment received ON AND after the date of such suspension; and  (iii)
notification  of  each  such  denial  shall  be made to the plaintiff or
claimant or persons authorized to act on behalf  of  such  plaintiff  or
claimant  and all defendants in regard to such plaintiff or claimant, to
the extent they are known  to  the  fund  administrator.  Judgments  and
settlements for plaintiffs or claimants for whom applications are denied
under  this  paragraph  or  who  are  not eligible for enrollment due to
suspension pursuant to paragraph (a) of this subdivision shall be satis-
fied as if this title had not been enacted.
  (c) Following a suspension, whenever enrollment  resumes  pursuant  to
paragraph  (a)  of  this subdivision, notice that enrollment has resumed
shall be promptly posted on the [department's] website OF THE DEPARTMENT
OF HEALTH and on the website of the department of financial services.
  (d) The suspension of enrollment pursuant to  paragraph  (a)  of  this
subdivision  shall  not  impact payment under the fund for any qualified
plaintiffs already enrolled in the fund.
  [7. For purposes of this section, the adjustment factor referenced  in
this  section shall be the ten year rolling average medical component of
the consumer price index as published by the United States department of
labor, bureau of labor statistics, for the preceding ten years.]
  S 4. Section 2999-j of the public health law, as added by  section  52
of  part  H  of  chapter  59  of the laws of 2011, is amended to read as
follows:
  S 2999-j. Payments from the fund. 1. The fund shall be used to pay the
qualifying health care costs of qualified plaintiffs.
  2. The provision of qualifying health care costs to  qualified  plain-
tiffs  shall  not be subject to prior authorization, except as described
by the commissioner in regulation; provided, however,  that  such  regu-
lation  shall  not  prevent  qualified plaintiffs from receiving care or
assistance that would, at a minimum, be authorized under the  [medicaid]
MEDICAID program; and provided, further, that if any prior authorization
is  required  by  such  regulation,  the  regulation  shall require that
requests for prior authorization be processed within a reasonably prompt
period of time and shall identify a process  for  prompt  administrative
review of any denial of a request for prior authorization.
  3.  In  determining  the  amount of qualifying health care costs to be
paid from the fund, any such cost or expense  that  was  or  will,  with
reasonable  certainty, be paid, replaced or indemnified from any collat-
eral source as provided by subdivision (a) of section forty-five hundred
forty-five of the civil practice law and rules shall  not  constitute  a
qualifying  health  care  cost  and shall not be paid from the fund. For
purposes of this title, "collateral source" shall not include [medicare]
MEDICARE or Medicaid.

S. 5976                             5

  4. The amount of qualifying health care costs to be paid from the fund
shall be calculated: (a) with respect to services  provided  in  private
physician practices on the basis of one hundred percent of the usual and
customary  rates,  as  defined by the commissioner in regulation; or (b)
with  respect  to  all other services, on the basis of Medicaid rates of
reimbursement or, where no such rates are available, as defined  by  the
commissioner in regulation.
  5. Claims for the payment or reimbursement from the fund of qualifying
health  care  costs shall be made upon forms prescribed and furnished by
the fund administrator in consultation  with  the  commissioner  and  in
conjunction  with regulations establishing a mechanism for submission of
claims by health care providers directly to the fund, where practicable.
  6. (a)  Every  settlement  agreement  for  claims  arising  out  of  a
plaintiff's or claimant's [birth related] neurological injury subject to
this  title,  and  that  provides  for  the  payment  of future [medical
expenses] HEALTH CARE COSTS for the  plaintiff  or  claimant,  SHALL  BE
SUBMITTED  FOR  COURT REVIEW AND APPROVAL AND shall provide that, in the
event the [administrator of the fund determines that  the  plaintiff  or
claimant  is  a  qualified  plaintiff] COURT FINDS THAT THERE HAS BEEN A
PRIMA FACIE SHOWING THAT THE PLAINTIFF OR CLAIMANT IS A QUALIFIED PLAIN-
TIFF, all payments for future [medical expenses] HEALTH CARE COSTS shall
be paid in accordance with this title, in lieu of that  portion  of  the
settlement agreement that provides for payment of such [expenses] FUTURE
HEALTH CARE COSTS. The plaintiff's or claimant's future medical expenses
shall  be  paid  in  accordance  with this title. When such a settlement
agreement does not so provide, the court shall direct  the  modification
of the agreement to include such term as a condition of court approval.
  (b)  In  any case where the jury or court has made an award for future
[medical expenses] HEALTH CARE COSTS arising out of  a  [birth  related]
neurological  injury,  [any party to such action or person authorized to
act on behalf of such party may make  application  to  the  court  that]
SUBJECT  TO  THIS  TITLE,  THE COURT SHALL DETERMINE IF THERE HAS BEEN A
PRIMA FACIE SHOWING THAT THE PLAINTIFF OR CLAIMANT IS A QUALIFIED PLAIN-
TIFF, AND, IF THE COURT SHALL SO DETERMINE, the judgment  SHALL  reflect
that,  in lieu of that portion of the award that provides for payment of
such [expenses, and upon a determination by the fund administrator  that
the  plaintiff  is  a qualified plaintiff] FUTURE HEALTH CARE COSTS, the
future [medical expenses] HEALTH CARE COSTS of the plaintiff OR CLAIMANT
shall be paid out of the fund in accordance with this title.    [Upon  a
finding  by  the court that the applicant has made a prima facie showing
that the plaintiff is a qualified plaintiff, the court shall ensure that
the judgment so provides.]
  7. A qualified plaintiff shall be enrolled when [(a)]  such  plaintiff
or person authorized to act on behalf of such person, upon notice to all
defendants, or any of the defendants in regard to the plaintiff's claim,
upon  notice  to  such plaintiff, makes an application for enrollment by
providing the fund administrator with a certified copy of  the  judgment
or  of the court approved settlement agreement; [and (b) the fund admin-
istrator determines upon the basis of such judgment or settlement agree-
ment and any additional information the fund administrator shall request
that the relevant provisions of subdivision six  of  this  section  have
been met and that the plaintiff is a qualified plaintiff;] provided that
no enrollment shall occur when the fund is closed to enrollment pursuant
to  subdivision six of section twenty-nine hundred ninety-nine-i of this
title.
  8. As to all claims, the fund administrator shall:

S. 5976                             6

  (a) determine which of such costs are qualifying health care costs  to
be paid from the fund; and
  (b)  thereupon  certify  to  the  commissioner of taxation and finance
those costs that have been determined to be qualifying health care costs
to be paid from the fund.
  9. Payments from the fund shall be made by the commissioner  of  taxa-
tion and finance on the said certificate of the superintendent of finan-
cial  services. No payment shall be made by the commissioner of taxation
and finance in excess of the amount certified. Promptly upon receipt  of
the  said  certificate  of the superintendent of financial services, the
commissioner of taxation and finance shall pay the qualified plaintiff's
health care provider or reimburse the qualified plaintiff the amount  so
certified for payment.
  10.  Payment from the fund shall not give the fund any right of recov-
ery against any qualified plaintiff or such qualified plaintiff's attor-
ney except in the case of fraud or mistake.
  11. All health care providers shall accept from qualified  plaintiff's
or  persons  authorized to act on behalf of such plaintiff's assignments
of the right to receive payments from the  fund  for  qualifying  health
care costs.
  12.  Health  insurers  (other  than  [medicare] MEDICARE and Medicaid)
shall be the primary payers of qualifying health care costs of qualified
plaintiffs.  Such costs shall be paid from the fund only to  the  extent
that  health  insurers  or other collateral sources or other persons are
not otherwise obligated to make payments therefor. Health insurers  that
make payments for qualifying health care costs to or on behalf of quali-
fied  plaintiffs  shall have no right of recovery against and shall have
no lien upon the fund or any person or entity nor shall the fund consti-
tute an additional payment  source  to  offset  the  payments  otherwise
contractually  required  to  be made by such health insurers. The super-
intendent of financial services shall have the authority to enforce  the
provisions of this subdivision.
  13.  Except as provided for by this title, with respect to a qualified
plaintiff, no payment shall be required to be made by any  defendant  or
such  defendant's  insurer for qualifying health care costs and no judg-
ment shall be made or entered requiring that any such payment be made by
any defendant or such defendant's insurer for such health care costs.
  14. The determination of  the  qualified  plaintiff's  attorney's  fee
shall  be  based upon the entire sum awarded by the jury or the court or
the full sum of the settlement,  as  the  case  may  be.  The  qualified
plaintiff's attorney's fee shall be paid in a lump sum by the defendants
and  their  insurers  pursuant to section four hundred seventy-four-a of
the judiciary law; provided however that the portion of  the  [attorney]
ATTORNEY'S  fee  that  is  allocated to the non-fund elements of damages
shall be deducted from the non-fund portion of the award  in  a  propor-
tional manner.
  15.  The  commissioner,  in  consultation  with  the superintendent of
financial services, shall promulgate, amend and enforce  all  rules  and
regulations  necessary  for  the  proper  administration  of the fund in
accordance with the provisions  of  this  section,  including,  but  not
limited  to,  those  concerning the payment of claims and concerning the
actuarial calculations  necessary  to  determine,  annually,  the  total
amount  to  be  paid  into the fund as provided herein, and as otherwise
needed to implement this title.
  16. The commissioner shall convene a consumer advisory  committee  for
the purpose of REVIEWING THE RULES AND REGULATIONS PROMULGATED BY SUBDI-

S. 5976                             7

VISION  FIFTEEN  OF THIS SECTION AND providing information, as requested
by the commissioner, in the development of [the  regulations  authorized
by  subdivision fifteen of this section] ANY REVISIONS TO SUCH RULES AND
REGULATIONS  AND/OR  ANY  ADDITIONAL  RULES  AND REGULATIONS REQUIRED TO
IMPLEMENT THIS TITLE.
  S 5. This act shall take effect immediately and  shall  be  deemed  to
have  been in full force and effect on and after July 1, 2015, provided,
however, that:
  (a) with respect to  lawsuits  involving  birth  related  neurological
injury  subject  to  this  title (i.e., an injury to the brain or spinal
cord of a live infant caused by the deprivation of oxygen or  mechanical
injury occurring in the course of labor, delivery or resuscitation or by
other  medical  services provided or not provided during delivery admis-
sion that rendered the infant with a  permanent  and  substantial  motor
impairment or with a developmental disability as that term is defined by
section 1.03 of the mental hygiene law, or both), the provisions of this
act  shall apply if no judgment has been entered or no settlement agree-
ment has been entered into by the parties before  April  1,  2011,  and,
with respect to all other lawsuits involving neurological injury subject
to this title, the provisions of this act shall apply if no judgment has
been  entered  or  no  settlement  has  been entered into by the parties
before the effective date of this act;
  (b) this act shall not be construed to alter, change,  affect,  impair
or defeat any rights, obligations, duties or interests accrued, incurred
or conferred prior to the effective date of this act; and
  (c)  the provisions of this act shall become effective notwithstanding
the failure of the commissioner  of  health  or  the  superintendent  of
financial services to adopt or amend or promulgate rules and regulations
implementing this act.