STATE OF NEW YORK
________________________________________________________________________
9311
IN ASSEMBLY
February 17, 2016
___________
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:
1 Section 1. Subsection (e) of section 7402 of the insurance law is
2 amended to read as follows:
3 (e) Is found, after examination, to be in such condition that its
4 further transaction of business will be hazardous to its policyholders,
5 creditors, or the public. This shall include a health insurer, as
6 defined in article eighty-one of this chapter, that is consistently
7 unable to meet the requirements of section three thousand two hundred
8 twenty-four-a of this chapter.
9 § 2. Section 7403 of the insurance law is amended by adding a new
10 subsection (e) to read as follows:
11 (e)(1) Upon a determination by the superintendent and the rehabilita-
12 tor that funds from the New York health insurance consumer protection
13 security fund are necessary to meet the requirements of article eighty-
14 one of this chapter, the superintendent shall make available such funds
15 as are necessary, pursuant to the requirements of such article.
16 (2) The superintendent shall advance such funds as may be necessary
17 pursuant to subsection (d) of section eight thousand one hundred four of
18 this chapter. The rehabilitator and the superintendent shall establish a
19 plan, if possible, for repayment of the advance, at a rate of interest
20 determined by the superintendent.
21 (3) Advances, pursuant to paragraph two of this subsection, shall, in
22 all respects except to rate of interest, be subject to the provisions of
23 section one thousand three hundred seven of this chapter, provided that
24 in the event that an insurer which has received an advance pursuant to
25 this subsection is subsequently the subject of an order of liquidation,
26 the claim of the fund for the advance and any accrued interest shall
27 have priority above claims of all nonsecured creditors, provided the
28 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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1 shall be paid immediately to the fund or as soon as assets are available
2 therefor.
3 § 3. Paragraph 1 of subsection (f) of section 7405 of the insurance
4 law, as amended by chapter 33 of the laws of 2005, is amended to read as
5 follows:
6 (1) No later than one hundred eighty days after a final order of
7 liquidation with an adjudication of insolvency of an insurer by a court
8 of competent jurisdiction of this state, the liquidator may in his sole
9 discretion make application to the court for approval of a proposal to
10 disburse assets out of marshalled assets, from time to time as such
11 assets become available, to any fund established by article seventy-six
12 of this chapter, article six-A of the workers' compensation law [and],
13 any foreign entity performing a similar function, and any fund estab-
14 lished pursuant to article eighty-one of this chapter, provided that the
15 requirements of subsection (a) of section eight thousand one hundred
16 three of this chapter have been met, having obligations because of such
17 insolvency. If the liquidator determines that there are insufficient
18 assets to disburse, the application authorized by this subsection shall
19 be considered satisfied by a filing by the liquidator stating the
20 reasons for this determination.
21 § 4. The insurance law is amended by adding a new article 81 to read
22 as follows:
23 ARTICLE 81
24 HEALTH INSURANCE GUARANTY FUND
25 Section 8101. Purpose.
26 8102. Definitions.
27 8103. New York health insurance consumer protection security
28 fund.
29 8104. Powers of the superintendent.
30 § 8101. Purpose. The purpose of this article is to protect covered
31 individuals against the failure or inability of a health insurer to
32 perform its contractual obligations due to financial impairment or
33 insolvency. To provide this protection, the legislature hereby creates a
34 New York health insurance consumer protection security fund to serve as
35 a guaranty fund mechanism capable of insuring that the financial obli-
36 gations of health insurers to their enrollees and health care providers
37 are satisfied.
38 § 8102. Definitions. As used in this article:
39 (a) "Fund" means the New York health insurance consumer protection
40 security fund created by this article.
41 (b) "Health insurer" means any organization or entity providing
42 reimbursement for a covered expense under any individual, group or blan-
43 ket policy or contract covering the kinds of insurance described in item
44 (i) of paragraph three of subsection (a) of section one thousand one
45 hundred thirteen of this chapter and licensed under article thirty-two
46 or forty-two of this chapter, which is not a member of, or participant
47 in, or a subsidiary of a member of or participant in, the funds created
48 pursuant to articles seventy-five, seventy-six, and seventy-seven of
49 this chapter; a corporation organized under article forty-three of this
50 chapter; or an organization certified under article forty-four of the
51 public health law.
52 (c) "Contractual obligation" means any payment or reimbursement owed
53 by a health insurer for a covered benefit under a policy, contract, or
54 comprehensive health benefits plan.
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1 (d) "Impaired health insurer" means a health insurer for whom the
2 superintendent has initiated a proceeding under the provisions of arti-
3 cle seventy-four of this chapter.
4 (e) "Commissioner" means the commissioner of taxation and finance.
5 § 8103. New York health insurance consumer protection security fund.
6 (a) Consistent with the provisions of subdivision one of section nine-
7 ty-seven-yyyy of the state finance law, there is hereby established a
8 New York health insurance consumer protection security fund. Such fund
9 shall be used in the payment of unpaid contractual obligations, in whole
10 or in part, by an impaired health insurer, after application of any
11 funds available from a proceeding implemented pursuant to article seven-
12 ty-four of this chapter.
13 (b)(1) Payment into the fund by health insurers shall be made through
14 an assessment based on the premiums received by a health insurer for
15 business in this state for the most recent calendar year for which
16 premium information is available, excluding premiums received for indi-
17 viduals under title XIX of the social security act. The superintendent
18 shall establish assessment levels sufficient to fully pay all unpaid
19 claims of an impaired health insurer, pursuant to subsections (b), (c)
20 and (d) of section eight thousand one hundred four of this article, and
21 to repay any transfers made pursuant to subdivision five of section
22 seventy-two of the state finance law.
23 (2) The superintendent may exempt, abate or defer, in whole or in
24 part, the assessment of a health insurer if the superintendent deter-
25 mines that payment of the assessment would endanger the ability of the
26 health insurer to fulfill its contractual obligations or place the
27 health insurer in an unsafe or unsound financial condition.
28 (3) In the event an assessment against a health insurer is exempted,
29 abated or deferred, in whole or in part, the amount by which that
30 assessment is exempted, abated or deferred shall be assessed against
31 other health insurers in a manner consistent with this section.
32 (c) Repayment of health insurers when funds become available from a
33 proceeding pursuant to article seventy-four of this chapter shall be
34 proportionate to the contribution from each health insurer.
35 § 8104. Powers of the superintendent. (a) For any impaired health
36 insurer, the superintendent shall direct the commissioner to make
37 payments from the New York health insurance consumer protection security
38 fund to ensure that payments to health care providers, or indemnity
39 payments to covered individuals, are made in full for services provided
40 that would not otherwise be fully reimbursed despite the proceedings
41 implemented pursuant to article seventy-four of this chapter. Services
42 provided either prior to the implementation of a proceeding under arti-
43 cle seventy-four of this chapter or after implementation of such
44 proceeding shall be eligible for reimbursement, in part or in whole,
45 from the fund. Payment in full shall be determined by the terms of the
46 health insurance contract, any contract between a health care provider
47 and the impaired health insurer and any applicable state or federal laws
48 or regulations including but not limited to part H of chapter sixty of
49 the laws of two thousand fourteen and section two thousand nineteen-a of
50 the Public Health Services Act, as amended by the Patient Protection and
51 affordable Care Act.
52 (b) The superintendent shall direct the commissioner to make payments
53 to ensure that payment in full is made to health care providers, or
54 indemnity payments to covered individuals, for services provided before
55 the implementation of proceedings pursuant to article seventy-four of
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1 this chapter within thirty days of the implementation of such proceed-
2 ing.
3 (c) The superintendent shall direct the commissioner to ensure that
4 payment in full is made to health care providers, or indemnity payments
5 to covered individuals, for services provided after the implementation
6 of proceedings pursuant to article seventy-four of this chapter within
7 thirty days of receipt of a claim.
8 (d) If necessary, the superintendent shall direct the commissioner to
9 advance monies from the fund to comply with the provisions of
10 subsections (b) and (c) of this section.
11 (e) The superintendent shall notify the director of the budget of the
12 need for monies to be transferred pursuant to subdivision five of
13 section seventy-two of the state finance law to meet the requirements of
14 subsections (b), (c) and (d) of this section.
15 (f) The superintendent shall direct the commissioner to use the monies
16 of the fund to repay any transfers made pursuant to subdivision five of
17 section seventy-two of the state finance law, when such funds are paid
18 pursuant to subsection (b) of section eight thousand one hundred three
19 of this article.
20 (g) The superintendent shall ensure that the cost of assessments
21 established pursuant to subdivision (b) of section eight thousand one
22 hundred three of this article are not included in premiums by any health
23 insurer.
24 § 5. Section 72 of the state finance law is amended by adding a new
25 subdivision 5 to read as follows:
26 5. Notwithstanding any provision of law to the contrary, upon notifi-
27 cation from the superintendent of financial services of the need for
28 monies to meet the requirements of subsections (b), (c) and (d) of
29 section eight thousand one hundred four of the insurance law, the direc-
30 tor of the budget shall transfer such funds as are necessary.
31 § 6. The state finance law is amended by adding a new section 97-yyyy
32 to read as follows:
33 § 97-yyyy. New York health insurance consumer protection security
34 fund. 1. There is hereby established in the custody of the commissioner
35 of the department of taxation and finance an account of the miscella-
36 neous special revenue fund to be known as the New York health insurance
37 consumer protection security fund account.
38 2. Notwithstanding any other law, rule or regulation to the contrary,
39 the commissioner of taxation and finance is hereby authorized and
40 directed to receive for deposit to the credit of the New York health
41 insurance consumer protection security fund account, assessments imposed
42 pursuant to article eighty-one of the insurance law and transfers from
43 the general fund pursuant to subdivision five of section seventy-two of
44 this article.
45 3. The commissioner of taxation and finance shall make payments from
46 the monies on deposit in the New York health insurance consumer
47 protection security fund account in the amounts and at the times deter-
48 mined by the superintendent of insurance.
49 § 7. This act shall take effect immediately and shall be applicable to
50 any health insurer determined by the superintendent of financial
51 services, on or after such effective date, to be insolvent within the
52 meaning of section 1309 of the insurance law.
