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A09052 Summary:BILL NO A09052
SAME AS Same as S52205, S 6068, S66002 / A40002
SPONSOR Hoyt (MS)
COSPNSR Weinstein
MLTSPNSR
Amd SS3231, 4317 & 4704, Ins L; amd SS99-r & 103, Gen Muni L; amd SS10 & 12,
Hway L; amd S351, Pub Health L; amd Pub Auth L, generally; rpld S4545 subs (a)
& (b), R4111 (e), amd R4111 & S4213, CPLR; amd S85.80, Loc Fin L; amd S5-101,
add S5-335, Gen Ob L
Enacts into law major components of legislation necessary for the efficient
operation of local governments.
A09052 Actions:BILL NO A09052
06/23/2009 referred to codes
01/06/2010 referred to codes
A09052 Votes:
A09052 Memo:BILL NUMBER:A9052
TITLE OF BILL: An act to amend the insurance law, in relation to
municipal cooperative health benefit plans, a study of community
rating and the provision of claims experience to a municipality (Part
A); to amend the general municipal law and the highway law, in
relation to mutual aid (Part B); to amend the public health law, in
relation to the composition of county and part-county boards of health
(Part C); to amend the general municipal law, in relation to
purchasing requirements (Part D); to amend the public authorities law
and the local finance law, in relation to authorizing certain bonds to
be issued or purchased by the municipal bond bank agency (Part E); and
to amend the civil practice law and rules, in relation to treating
public and private defendants equally when considering the impact of
collateral source payments in tort claims for personal injury,
property damage or wrongful death; 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; and to repeal certain provisions of the civil practice law and
rules relating to collateral source payments (Part F)
Purpose: The purpose of this bill is to encourage efficiencies and
provide local government savings that ultimately benefit local
property taxpayers by:
* making it easier for municipal governments to form cooperative
health benefit plans for their employees, which will reduce overall
health insurance costs;
* facilitating highway shared services agreements among
municipalities, and between municipalities and State agencies;
* allowing multiple counties to employ a single public health director
that would report to a single board of health;
* increasing the local competitive bidding thresholds on public works
contracts;
* equalizing the treatment of collateral sources in tort actions
against public employers; and,
* protecting parties to the settlement of a tort claim from certain
unwarranted lien, reimbursement and subrogation claims.
This bill will also authorize the State of New York Municipal Bond
Bank Agency ("MBBA") to issue bonds, notes or other obligations to
purchase bonds issued by municipalities in New York State to provide
for public improvements afforded by the American Recovery and
Reinvestment Act of 2009 ("Recovery Act"), thus enabling
municipalities to lower their borrowing costs which will generate
fiscal relief and contribute to economic growth
Summary of Provisions:
Part A: Municipal cooperative health benefit plans
Section 1 and 2 of the bill would amend Insurance Law SS 3231(d) and
4317(d), respectively, to require insurers to provide no more than
three years claims experience to a municipal corporation when it
requests such information for the purposes of forming or joining a
municipal cooperative health benefit plan pursuant to Insurance Law
Article 47.
Section 3 of the bill would amend Insurance Law S 4704(a)(2) to reduce
from five to three the minimum number of participants to establish a
municipal cooperative health benefit plan.
Section 4 of the bill would require the Insurance Department to order
a study, to be completed by September 1, 2010, of the impact on the
community-rated health insurance market of allowing municipalities
with 50 or fewer employees to join with larger municipalities to
purchase experience-rated policies.
Sections 5 requires the Superintendent of insurance to conduct a study
of the impact of the current municipal cooperative health benefit plan
reserve requirements and make recommendations for changes by October
1, 2009.
Section 6 is the effective date.
Part B: Highway Services Sharing
Section 1 of the bill would amend GML S 99-r to provide for agreements
among municipalities and between municipalities and State agencies to
provide or receive fuel, equipment, maintenance and repair, supplies,
water supply, street sweeping and maintenance, right-of-way
maintenance, storm water and other drainage, sewage disposal,
landscaping , mowing, or any other services of government.
Section 2 of the bill would amend Highway Law S 10 to include a new
provision authorizing agreements pursuant to GML S 99-r.
Section 3 of the bill would amend Highway Law S 12 to allow the State
Department of Transportation to contract with municipalities for terms
of up to five years for the control of snow and ice and other highway
maintenance activities on improved state highways in towns and
incorporated villages.
Section 4 is the effective date.
Part C: Shared Public Health Directors
Section 1 of the bill would amend Public Health Law (Pub. H. L.) S 351
to allow certain county and part-county health districts to share the
same commissioner or director and, under such circumstances, to also
have common health district board members, subject to the approval of
the State Department of Health.
Section 2 is the effective date.
Part D: Procurement Reform
Section 1 of the bill would amend GML S 103(1) to raise local
competitive bidding thresholds on public works contracts from 520,000
to 535,000.
Part E: Authorizing the Municipal Bond Bank to issue Bond for
Municipalities under the American Recovery and Reinvestment Act
Section 1 of the bill would amend Public Authorities Law ("PAL")
2431 to add to the legislative findings in support of expanding the
powers of MBBA to include the purchase of obligations issued by
municipalities to take advantage of the Recovery Act.
Section 2 of the bill would amend PAL S 2432(2) to add definitions and
clarify existing definitions to include bonds issued under the
Recovery Act.
Section 3 of the bill would amend PAL S 2434 to add a new subdivision
7-b to create an additional power for MBBA to acquire obligations
issued by municipalities, to provide for public improvements afforded
by the Recovery Act.
Section 4 of the bill would amend PAL S 2435(1) and (2) to eliminate
certain requirements contained therein as to the maximum amount of
bonds that MBBA may acquire from any one. municipality at any one
time, in connection with the issuance of Recovery Act bonds.
Section 5 of the bill adds a new section PAL S 2436-b to provide for
access by MBBA, pursuant to the procedures specified therein, to
certain sales tax revenues and mortgage recording tax revenues at
local option in the event municipalities fail to pay principal or
interest on obligations of municipalities purchased by MBBA with the
proceeds of recovery act bonds, and provides that access to such
monies shall be in addition to the state aid guarantee found in PAL
2436.
Section 6 of the bill would amend PAL S 2437 to provide that Recovery
Act bonds can be issued in public or private sales
Section 7 of the bill would amend PAL 2438(1) to exclude Recovery Act
bonds from the limitation on the aggregate amount of bonds that can be
issued by MBBA.
Section 8 of the bill would amend PAL 2442(1) to provide that the
State may amend, modify, repeal or otherwise alter laws that relate to
state aid, taxes, fees, or appropriations without impairing bond
holders.
Section 9 of the bill would amend Local Finance Law S 85.80 to prevent
any municipality whose local ARRA bonds are secured by tax revenues
and purchased by MBBA from filing for bankruptcy while local Recovery
Act bonds remain outstanding.
Section 10 of the bill would require MBBA to submit an application for
approval to the New York State Public Authorities Control Board when
issuing Recovery Bonds and that the bond issuance charge would be
waived.
Section 11 provides for an immediate effective date.
Part F: Collateral source and anti-subrogation
Sections 1 through 9 would provide for the following:
* it will now be conclusively presumed that except with respect to
payments made by a benefit provider 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 benefit providers;
* a plaintiff in a personal injury or wrongful death action who
settles with one or more of the defendants in the action could
henceforth not be charged with thereby violating the provisions of any
contract between the plaintiff and a benefit provider;
* except for those payments made by a benefit provider 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 benefit provider's claim for subrogation
or reimbursement; and,
* those defendants who are "public employers" would now have the same
rights as all other defendants to reduce their liability by virtue of
collateral source payments that the plaintiff is reasonably certain to
receive.
Existing law: Collateral Source: While under present law past and
future awards in cases against private defendants may be reduced by
collateral sources, CPLR S 4545(b) currently provides that only past
awards may be so reduced in cases against public employers.
Local Procurement: GML S 103(1) currently provides that all contracts
for public work involving an expenditure of more than $20,000 and all
purchase contracts involving an expenditure of more than $10,000 must
be awarded to the lowest responsible bidder.
Multi-County Positions: Pub. H. L. S 351 currently provides for a
county or part-county health commissioner.
Shared Highway Services: GML S 99-r currently provides that any
municipal corporation may enter into agreements with any state agency
to provide fuel, equipment, maintenance and repair, supplies, water
supply, street sweeping and maintenance, sidewalk maintenance or any
other services of government. Highway Law S 12 currently provides that
the maintenance of State highways includes the control of snow and ice
on such highways. The work of such control of snow and ice may be done
by any municipality. Any agreement authorized by this section shall be
for a term of three years.
Municipal Bond Bank: MBBA is currently authorized to purchase
obligations of municipalities for various purposes. Once those
obligations are purchased, MBBA is subject to various requirements
relating to: debt service reserve funds amounts of obligations that
can be purchased from individual municipalities, the process to be
used by MBBA in selling its bonds, and the type of state aid
guarantees that are available to MBBA in situations where the
municipalities fail to pay principal or interest on their obligations.
Current law does not authorize MBBA to access sales tax revenues or
mortgage recording taxes as available funding sources, in addition to
the state aid guarantee, in situations where municipalities fail to
pay principal or interest on their bonds.
Prior Legislative History: Some of these provisions were included in
Part HH and Part NN of A.156A/S.56A (2009-10 Executive Budget).
Statement in support: This bill seeks to modernize and reduce the
cost of local government with the aim of reducing property taxes in
New York. It would provide local governments relief from state
mandates and mitigate governmental inefficiencies created by state
law. This bill would give additional flexibility to local governments,
empowering them to find operational efficiencies. This bill contains
measures to make counties, municipalities and other local entities
more affordable, accountable, and efficient.
Collateral Source and Subrogation Changes: The various collateral
source provisions of the CPLR were enacted to eliminate the common law
collateral source rule, which prohibited tortfeasors from reducing
their obligations to a plaintiff by the amount of benefits the
plaintiff receives from other sources, such as insurance. The
statute's purpose is to eliminate the windfall of double recoveries to
plaintiffs which often resulted from the common law collateral source
rule, while still ensuring that uncompensated losses are fully
compensated. Notwithstanding the trend to eliminate the windfalls that
result from the common law rule, and to safeguard public monies,
presently all defendants except public employers may offset against
awards for future costs or expenses any amounts that would with
reasonable certainty be replaced or indemnified. This bill would
ensure that public employers are treated the same as private employers
in tort actions. New York City estimates that it would save $14.5
million annually from this reform.
At present, there is no statutory authority that addresses or limits
the extent to which a benefit provider may claim contractual
reimbursement or subrogation with respect to medical expenses it has
paid pursuant to an insurance contract or other agreement. Likewise,
there is no statutory authority that specifies whether or under what
circumstances such a benefit provider may intervene as a party in a
personal injury or wrongful death action. For example, in a medical
malpractice action, a health insurer which has provided coverage to
the plaintiff may demand reimbursement for its expenses, often
unnecessarily prolonging cases, thwarting settlement talks and making
cases more expensive to litigate. Thus, it has become important that a
statutory framework be established to facilitate settlement of cases
and reduce expenses for litigants.
This bill would preclude a benefit provider to seek reimbursement or
subrogation against a settling defendant for those benefits paid to or
on behalf of plaintiff, unless specifically set forth by statute. In
doing so, this bill would make the savings to defendants more
tangible, and allow cases to settle more quickly and without
unnecessary expense. This provision of the bill would be applicable to
actions for personal injury, medical, dental, or podiatric
malpractice, or wrongful death and would be inapplicable to the
subrogation of property damage claims.
Local Procurement: Currently, all contracts for public work involving
an expenditure of more than $20,000 must be awarded to the lowest
responsible bidder.
Insurance: This bill would amend the Insurance Law to relax the
requirements for forming a municipal cooperative health benefit plan
pursuant to Insurance Law Article 47. These changes are necessary in
light of the current stringent requirements, under which not a single
municipal cooperative health benefit plan has been formed since the
enactment of Article 47 in 1994.
Multi-County Positions: The bill would also amend the Pub. H. L. to
allow certain county and part-county health districts to share the
same commissioner/director and to have common district board members.
This change would enable small county or part-county health districts
to reduce their administrative expenses without lowering the quality
of the services they provide.
Shared Highway Services: Currently, the State Department of
Transportation may contract with municipalities only for three-year
terms and may provide only snow and ice control services to
municipalities in emergencies. The bill's amendments to the Highway
Law would make the delivery of highway services more efficient and
cost-effective at both the State and local levels.
Municipal Bond Bank: In 2009, the federal government passed the
Recovery Act which enacted into law a number of changes relating to
how municipalities could borrow to pay for public improvements.
Specifically, the Recovery Act provided new categories of taxable
bonds known as "Build America Bonds" and "Recovery Zone Economic
Development Bonds" that could be issued in lieu of tax exempt bonds
and that allow issuers to choose either to receive a direct federal
subsidy or to offer bondholders a federal tax credit. Both Build
America Bonds and Recovery Zone Economic Development Bonds may only be
issued in 2009 and 2010. Recovery Zone Economic Development Bonds may
only be issued for investment in "recovery zones." These new types of
powers can be used by municipalities to fund public infrastructure
improvements in their jurisdictions. Municipalities throughout the
State, particularly in today's economic climate, are urgently looking
to fund much-needed improvements through these new financing vehicles
which can provide substantially reduced financing cost versus tax
exempt bonds. As always, their goal is to do so in the most
cost-efficient way possible, to ensure savings for their constituents.
The reason behind the proposed amendments to the MBBA statute is to
make MBBA available to municipalities across the State, so they can
participate and benefit from the new financing options authorized
under the Recovery Act. This will allow municipalities to fund
critical infrastructure and economic development projects in the most
efficient, and cost-effective way. Since its inception, MBBA's purpose
has been to make funds available at reduced interest costs to local
governments to finance public improvements and purposes, particularly
for those municipalities not otherwise able to borrow for such
purposes. MBBA is there to streamline borrowing by local governments,
by issuing bonds in the municipal credit markets and using the
proceeds to purchase the obligations issued by municipalities. This
process allows MBBA to provide interest rate savings to
municipalities, as MBBA can sell bonds at lower interest rates due to
their inherent credit protections and higher credit rating, and pass
along the savings to municipalities. Given that both Build America
Bonds and Recovery Zone Economic Development Bonds must be issued in
taxable form, MBBA will also be able to take advantage of the market
efficiencies that can be provided to larger size issues.
As municipalities throughout the State consider using the new types of
obligations authorized under the Act, having access to MBBA financing
will ensure that they receive the most favorable rates of interest.
MBBA is a proven market participant, having issued bonds on behalf of
various state entities over the years. Its market position allows it
to issue bonds at lower rates of interest than those that can be
issued by smaller, less well known issuers.
The current statute, whose provisions dealing with the purchase of
municipal bonds of municipalities by MBBA date back to 1972, needs to
be modernized in order to allow for maximum efficiency. The statute
currently offers only one type of intercept (state aid) in situations
where the municipalities fail to pay principal or interest on the
bonds acquired by MBBA. The proposal is to add an additional source of
funding, an intercept of sales tax and/or mortgage recording tax. The
local tax revenue intercept option is proposed in order to allow
municipalities to make optimal use of the Recovery Act bonding
authorization. Additionally, certain clean-up changes are included,
dealing with limitations on the amount of bonds of individual
municipalities that can be purchased and on the way in which the MBBA
bonds are sold.
Budget Implications: The Local Government Commission on Efficiency
and Competitiveness and the Property Tax Commission had extensive
deliberations and produced comprehensive recommendations to reduce
local costs and provide taxpayer savings. This bill would implement
some of these provide significant fiscal relief and increased
operational flexibility to local governments, enabling them to better
control costs and provide: property tax relief.
Municipal Bond Bank: This bill would have no cost to the State. MBBA
Recovery Act bonds would not be a debt of the State, and would be
secured by municipalities' debt service payments on their local ARRA
bonds or, in the event of municipal default, by the intercept of State
aid and/or municipal tax revenues.
Municipalities participating in a pooled local ARRA bond issue through
MBBA would be able to issue debt at a lower cost than otherwise
possible. For the purposes of this.bill, local ARRA bonds would
include two types of taxable bonds: Build America Bonds and Recovery
Zone Economic Development Bonds. These boards, which municipalities
may issue only in 2009 and 2010, offer federal interest subsidies of
35 percent and 45 percent, respectively. Build America Bonds are not
subject to a volume cap, and the authority to issue such bonds is
granted to any municipality. Recovery Zone bonds are subject to a
volume cap, and the authority to issue such bonds is allocated among
counties and large municipalities. The U.S. Treasury Department has
allocated over $370 million to New York for Recovery Zone Economic
Development Bonds. The net interest rate on such taxable bonds, after
factoring in the subsidy, is currently lower than the interest rate on
comparable tax-exempt bonds. However, since the taxable bond market
prefers bond issues of at least $100 million, receiving the lowest
possible rate on the ARRA bonds in effect requires multiple
municipalities to participate in a pooled issue.
Effective Date: This bill has various effective dates.
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