NY State Senate Bill 2017-S4545

Senate Bill S4545

2017-2018 Legislative Session

Relates to standards for prompt, fair and equitable payments of insurance commissions or other compensation arrangements

download bill text pdf

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to insurance
Feb 17, 2017	referred to insurance

2017-S4545 (ACTIVE) - Details

See Assembly Version of this Bill:: A2008
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §2119, add §3224-d, Ins L
Versions Introduced in Other Legislative Sessions:: 2013-2014: S7300, A10008
2015-2016: S1671, A3624
2019-2020: S3623
2021-2022: S3559

2017-S4545 (ACTIVE) - Summary

Establishes standards for prompt, fair and equitable payments of insurance commissions or other compensation arrangements; provides penalties for failure to meet such standards.

2017-S4545 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4545

 TITLE OF BILL :

An act to amend the insurance law, in relation to standards for
prompt, fair and equitable payments of insurance commissions or other
compensation arrangements

 PURPOSE :

To modernize the insurance law to ensure that licensed health
insurance producers, including brokers, agents and benefit
consultants, are promptly paid compensation earned for placement of
health insurance coverage.

 SUMMARY OF PROVISIONS :

Section 1 of the bill would amend subsection (d) of § 2219 of the
insurance law by adding a new paragraph (2) thereto, to ensure that
the provisions of such section are applied to major medical or any
other comprehensive type of health insurance plans and policies placed
by licensed insurance brokers inside or outside the New York State of
Health Benefit Exchange established pursuant to Governor's Executive
Order No. 42 (2012).

Section 2 of the bill would add a new § 3224-d to the Insurance Law,

to establish standards for prompt, fair and equitable payments of
insurance commissions or other compensation arrangements earned, to
licensed health insurance producers, including brokers, agents and
benefit consultants, for placement of major medical or any other
comprehensive type of health insurance coverage. Such prompt payments
would be made by health plans within 45 days of receipt of payment of
premium or other charge.

Section 3 of the bill would provide for an immediate effective date.

 JUSTIFICATION :

With the establishment of the New York State of Health Benefit
Exchange and the attendant implementation of the federal Patient
Protection and Affordable Care Act (PPACA) in the state, licensed
insurance producers have experienced extremely slow payments from
health plans & carriers for placement of health insurance coverage,
inside and outside the Exchange. In order to remain competitive and
economically viable in the fast-paced and competitive insurance
marketplace as it continues to evolve, insurance producers must have
positive cash flow to operate their insurance agencies and consulting
businesses.

This bill is wholly modeled upon existing law requiring prompt payment
of healthcare providers by health plans after provision of medical or
other healthcare services to covered patients/insureds/subscribers
(see Insurance Law § 3224-a). It is only fair that licensed insurance
producers be promptly paid upon the placement of health insurance
coverage, in a manner similar to healthcare providers upon the
rendering of medical or other healthcare services.

 LEGISLATIVE HISTORY :

S.1671 of 2015-16;
Similar to S.7300 of 2014

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
Immediately.

2017-S4545 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4545
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 17, 2017
                                ___________
 
 Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law, in relation to standards for  prompt,
   fair  and equitable payments of insurance commissions or other compen-
   sation arrangements

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subsection  (d)  of section 2119 of the insurance law, as
 amended by chapter 687 of the laws  of  2003,  is  amended  to  read  as
 follows:
   (d) (1) No insurance broker shall, in connection with the sale, solic-
 itation  or negotiation, issuance, delivery or transfer in this state of
 any contract of insurance made or negotiated in this state, directly  or
 indirectly  charge,  or receive from, the insured or prospective insured
 therein any greater sum than the rate of premium fixed therefor  by  the
 insurer  obligated  as  such  therein, unless such broker has a right to
 compensation for services created in the manner specified in  subsection
 (c) of this section.
   (2)  THE  PROVISIONS  OF  THIS SECTION SHALL APPLY TO ANY PLACEMENT OF
 MAJOR MEDICAL OR ANY OTHER COMPREHENSIVE TYPE OF HEALTH INSURANCE COVER-
 AGE BY AN INSURANCE BROKER  UNDER  CONTRACTS  OR  AGREEMENTS  ISSUED  OR
 ENTERED  INTO  BY  A  HEALTH  PLAN PURSUANT TO THIS ARTICLE AND ARTICLES
 FORTY-TWO, FORTY-THREE AND  FORTY-SEVEN  OF  THIS  CHAPTER  AND  ARTICLE
 FORTY-FOUR  OF  THE  PUBLIC  HEALTH  LAW, INSIDE OR OUTSIDE THE NEW YORK
 HEALTH BENEFIT EXCHANGE ESTABLISHED UNDER GOVERNOR'S EXECUTIVE ORDER NO.
 42 (2012) TO IMPLEMENT APPLICABLE  PROVISIONS  OF  THE  FEDERAL  PATIENT
 PROTECTION  AND  AFFORDABLE CARE ACT, PUBLIC LAW 111-148 (42 USC § 18001
 ET SEQ. (2010)).
   § 2. The insurance law is amended by adding a new  section  3224-d  to
 read as follows:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02648-01-7

 S. 4545                             2
 
   §  3224-D. STANDARDS FOR PROMPT, FAIR AND EQUITABLE PAYMENTS OF INSUR-
 ANCE COMMISSIONS OR OTHER COMPENSATION ARRANGEMENTS. NOTWITHSTANDING ANY
 OTHER PROVISIONS OF THIS CHAPTER OR ANY OTHER GENERAL OR SPECIAL LAW  TO
 THE  CONTRARY,  THIS SECTION IS INTENDED TO PROVIDE FOR PROMPT, FAIR AND
 EQUITABLE  PAYMENTS  OF  INSURANCE  COMMISSIONS  OR  OTHER  COMPENSATION
 ARRANGEMENTS TO  HEALTH  INSURANCE  PRODUCERS  FOR  PLACEMENT  OF  MAJOR
 MEDICAL  OR  ANY  OTHER  COMPREHENSIVE TYPE OF HEALTH INSURANCE COVERAGE
 UNDER CONTRACTS OR AGREEMENTS ISSUED OR ENTERED INTO BY  A  HEALTH  PLAN
 PURSUANT  TO THIS ARTICLE AND ARTICLES FORTY-TWO, FORTY-THREE AND FORTY-
 SEVEN OF THIS CHAPTER AND ARTICLE FORTY-FOUR OF THE PUBLIC  HEALTH  LAW,
 WHICH SHALL ADHERE TO THE FOLLOWING STANDARDS:
   (A)  EXCEPT  IN A CASE WHERE THE OBLIGATION OF A HEALTH PLAN TO PAY AN
 INSURANCE COMMISSION OR OTHER COMPENSATION ARRANGEMENT TO  AN  INSURANCE
 PRODUCER  UPON  RECEIPT OF PAYMENT OF PREMIUM OR OTHER CHARGE FOR PLACE-
 MENT OF MAJOR MEDICAL OR ANY OTHER COMPREHENSIVE TYPE OF  HEALTH  INSUR-
 ANCE  COVERAGE  IS  NOT  REASONABLY CLEAR, OR WHEN THERE IS A REASONABLE
 BASIS SUPPORTED BY SPECIFIC INFORMATION  AVAILABLE  FOR  REVIEW  BY  THE
 SUPERINTENDENT  THAT SUCH PAYMENT OF PREMIUM OR OTHER CHARGE WAS SUBMIT-
 TED FRAUDULENTLY, SUCH HEALTH PLAN SHALL PAY SUCH  INSURANCE  COMMISSION
 OR  OTHER COMPENSATION ARRANGEMENT TO ANY SUCH INSURANCE PRODUCER WITHIN
 FORTY-FIVE DAYS OF RECEIPT OF SUCH PAYMENT OF PREMIUM OR OTHER CHARGE.
   (B) EACH FAILURE TO  TIMELY  PAY  AN  INSURANCE  COMMISSION  OR  OTHER
 COMPENSATION ARRANGEMENT TO AN INSURANCE PRODUCER FOR PLACEMENT OF MAJOR
 MEDICAL  OR ANY OTHER COMPREHENSIVE TYPE OF HEALTH INSURANCE COVERAGE IN
 VIOLATION OF THIS SECTION SHALL  CONSTITUTE  A  SEPARATE  VIOLATION.  IN
 ADDITION TO THE PENALTIES PROVIDED IN THIS CHAPTER, ANY HEALTH PLAN THAT
 FAILS  TO  ADHERE  TO  THE  STANDARDS CONTAINED IN THIS SECTION SHALL BE
 OBLIGATED TO PAY TO AN INSURANCE PRODUCER INTEREST ON THE AMOUNT OF SUCH
 INSURANCE COMMISSION OR OTHER COMPENSATION ARRANGEMENT DUE AND OWING THE
 GREATER OF THE RATE EQUAL TO THE RATE SET BY THE COMMISSIONER  OF  TAXA-
 TION  AND  FINANCE  FOR  CORPORATE  TAXES  PURSUANT  TO PARAGRAPH ONE OF
 SUBSECTION (E) OF SECTION ONE THOUSAND NINETY-SIX  OF  THE  TAX  LAW  OR
 TWELVE  PERCENT  PER  ANNUM,  TO  BE  COMPUTED FROM THE DATE PAYMENT WAS
 REQUIRED TO BE MADE. WHEN THE AMOUNT OF INTEREST DUE ON ANY SUCH PAYMENT
 IS LESS THAN TWO DOLLARS, A HEALTH PLAN SHALL NOT  BE  REQUIRED  TO  PAY
 INTEREST ON SUCH PAYMENT.
   (C)  THE  PROVISIONS  OF  THIS SECTION SHALL APPLY TO ANY PLACEMENT OF
 MAJOR MEDICAL OR ANY OTHER COMPREHENSIVE TYPE OF HEALTH INSURANCE COVER-
 AGE UNDER CONTRACTS OR AGREEMENTS ISSUED OR ENTERED  INTO  BY  A  HEALTH
 PLAN  PURSUANT  TO  THIS ARTICLE AND ARTICLES FORTY-TWO, FORTY-THREE AND
 FORTY-SEVEN OF THIS CHAPTER AND ARTICLE FORTY-FOUR OF THE PUBLIC  HEALTH
 LAW,  INSIDE OR OUTSIDE THE NEW YORK HEALTH BENEFIT EXCHANGE ESTABLISHED
 UNDER GOVERNOR'S EXECUTIVE ORDER NO. 42 (2012) TO  IMPLEMENT  APPLICABLE
 PROVISIONS  OF  THE  FEDERAL PATIENT PROTECTION AND AFFORDABLE CARE ACT,
 PUBLIC LAW 111-148 (42 USC § 18001 ET SEQ. (2010)).
   (D) ANY CONTRACT OR AGREEMENT ENTERED INTO ON OR AFTER  THE  EFFECTIVE
 DATE  OF  THIS  SECTION  BETWEEN A HEALTH PLAN AND AN INSURANCE PRODUCER
 THAT ATTEMPTS TO ABROGATE, ALTER OR AMEND ANY OF THE PROVISIONS OF  THIS
 SECTION, SHALL BE VOID AS AGAINST PUBLIC POLICY.
   (E) FOR PURPOSES OF THIS SECTION:
   (1) "HEALTH PLAN" SHALL MEAN AN INSURER OR ORGANIZATION OR CORPORATION
 LICENSED  OR CERTIFIED PURSUANT TO ARTICLE FORTY-THREE OR FORTY-SEVEN OF
 THIS CHAPTER OR ARTICLE FORTY-FOUR OF THE PUBLIC HEALTH LAW; AND
   (2) "INSURANCE PRODUCER" SHALL  MEAN  AN  INSURANCE  AGENT,  INSURANCE
 BROKER  OR  INSURANCE CONSULTANT LICENSED PURSUANT TO ARTICLE TWENTY-ONE
 OF THIS CHAPTER.

 S. 4545                             3
 
   § 3. This act shall take effect immediately.

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