NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7828A
SPONSOR: Weinstein
 
TITLE OF BILL: An act 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
 
PURPOSE OF BILL: Chapter 494 of the laws of 2009, inter alia added a
new subdivision 4 to section 5-101 of the general obligations law and
amended section 5-335 of the general obligations law. That legislation
was intended to protect parties to the settlement of a tort claim from
certain unwarranted lien, reimbursement and subrogation claims by insur-
ers.
The purpose of this bill is to correct any misunderstanding as to the
applicability and scope of that law by refining its definition and
applicability to precluding liens, reimbursements and subrogation claims
with respect to any cost of health care services, loss of earnings or
other economic loss to the extent those losses or expenses have been or
are obligated to be paid or reimbursed by an insurer.
 
SUMMARY OF PROVISIONS OF BILL: This bill would provide for the
following:
1) It will now be conclusively presumed that, except with respect to
Medicare, Medicaid, Automobile No-Fault or Workers' Compensation
payments for which there is a statutory right of reimbursement, the
monies 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 an insurer; and
2) Except for those payments made by Medicare, Medicaid or an insurer
providing Workers' Compensation benefits 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 insurers' claim for subrogation or reimbursement.
 
JUSTIFICATION: In 2009, the legislature enacted the current General
Obligations Law §§ 5-101 and 5-335 to protect plaintiffs and defendants
from unwarranted liens, reimbursement and subrogation claims by insur-
ers. Since the 2009 enactment of the current law, it has been relied
upon by all parties to settlements involving tort claims.
In a recent federal court decision (Wurtz v. Rawlings Co., LLC, 2013 WL
1248631 (E.D.N.Y.)), federal ERISA law was found to preempt New York's
General Obligation Law with regard to an insurer's (of an ERISA plan)
right of subrogation, undermining the intent of this legislature.
This bill is a corrective measure that will bring the General Obligation
Law clearly under ERISA's savings clause, which allows States to regu-
late an insurer's subrogation rights. As this was the legislature's
original intent, the bill will apply to all settlements entered into on
or after November 12, 2009 -- the effective date of that year's amend-
ments to the relevant provisions of the General Obligations Law. This
will ensure that parties who have entered into settlements in the expec-
tation that New York law apply, will not now be harmed by this federal
court's ruling.
 
LEGISLATIVE HISTORY: New bill, 2013.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT: None.
 
EFFECTIVE DATE: Immediately apply to any settlement entered into on or
after November 12, 2009.
STATE OF NEW YORK
________________________________________________________________________
7828--A
2013-2014 Regular Sessions
IN ASSEMBLY
June 5, 2013
___________
Introduced by M. of A. WEINSTEIN -- read once and referred to the
Committee on Judiciary -- reported and referred to the Committee on
Codes -- reported and referred to the Committee on Rules -- Rules
Committee discharged, bill amended, ordered reprinted as amended and
recommitted to the Committee on Rules
AN ACT 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
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative intent. The legislature finds that the resol-
2 ution and settlement of certain types of claims have been impeded as a
3 result of health insurers' attempts to intervene into pending liti-
4 gation, as well as similar attempts to institute subrogation and
5 reimbursement actions against litigants. As a result, settlement of
6 claims made by accident victims and others are imperiled and prevented,
7 thus causing undue burdens and pressures upon the court system. In addi-
8 tion, defendants in such actions are being subjected to claims made by
9 health insurers, exposing them to additional liability.
10 Chapter 494 of the laws of 2009 was enacted to add a new subdivision 4
11 to section 5-101 of the general obligations law and to add a new section
12 5-335 of the general obligations law "in relation to protecting parties
13 to the settlement of a tort claim from certain unwarranted lien,
14 reimbursement and subrogation claims". However, one federal court, the
15 United States District Court for the Eastern District of New York, in
16 Wurtz v. Rawlings Co., LLC, 2013 WL1248631 (E.D.N.Y), has held that this
17 legislation was preempted to the extent it applies to any insured
18 employee benefit plan covered by the Employee Retirement Income Security
19 Act of 1974, as amended (ERISA). The instant legislation is intended to
20 make clear the original purpose of sections 5-101 and 5-335 of the
21 general obligations law which is to ensure that insurers will not be
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11329-05-3
A. 7828--A 2
1 able to claim or access any monies paid in settlement of a tort claim
2 whether by way of a lien, a reimbursement claim, subrogation, or other-
3 wise so that the burden of payment for health care services, disability
4 payments, lost wage payments or any other benefits for the victims of
5 torts will be borne by the insurer and not any party to a settlement of
6 such a victim's tort claim. This law is specifically directed toward
7 entities engaged in providing health insurance, thus falling under the
8 "savings" clause contained in ERISA, which reserves to the states the
9 right and the ability to regulate insurance.
10 § 2. Subdivision 4 of section 5-101 of the general obligations law, as
11 added by section 7 of part F of chapter 494 of the laws of 2009, is
12 amended to read as follows:
13 4. As used in section 5-335 of this article, the term ["benefit
14 provider"] "insurer" means any [insurer, health maintenance organiza-
15 tion, health benefit plan, preferred provider organization, employee
16 benefit plan] insurance company or other entity which provides for
17 payment or reimbursement of health care expenses, health care services,
18 disability payments, lost wage payments or any other benefits under a
19 policy of insurance or an insurance contract with an individual or
20 group.
21 § 3. Section 5-335 of the general obligations law, as added by section
22 8 of part F of chapter 494 of the laws of 2009, is amended to read as
23 follows:
24 § 5-335. Limitation of [non-statutory] reimbursement and subrogation
25 claims in personal injury and wrongful death actions. (a) When a [plain-
26 tiff] person settles [with] a claim, whether in litigation or otherwise,
27 against one or more [defendants in an action] other persons for personal
28 injuries, medical, dental, or podiatric malpractice, or wrongful death,
29 it shall be conclusively presumed that the settlement does not include
30 any compensation for the cost of health care services, loss of earnings
31 or other economic loss to the extent those losses or expenses have been
32 or are obligated to be paid or reimbursed by [a benefit provider, except
33 for those payments as to which there is a statutory right of reimburse-
34 ment] an insurer. By entering into any such settlement, a [plaintiff]
35 person shall not be deemed to have taken an action in derogation of any
36 [nonstatutory] right of any [benefit provider] insurer that paid or is
37 obligated to pay those losses or expenses; nor shall a [plaintiff's]
38 person's entry into such settlement constitute a violation of any
39 contract between the [plaintiff] person and such [benefit provider]
40 insurer.
41 [Except where there is a statutory right of reimbursement, no party]
42 No person entering into such a settlement shall be subject to a subroga-
43 tion claim or claim for reimbursement by [a benefit provider] an insurer
44 and [a benefit provider] an insurer shall have no lien or right of
45 subrogation or reimbursement against any such settling [party] person or
46 any other party to such a settlement, with respect to those losses or
47 expenses that have been or are obligated to be paid or reimbursed by
48 said [benefit provider] insurer.
49 (b) This section shall not apply to a subrogation claim for recovery
50 of additional first-party benefits provided pursuant to article fifty-
51 one of the insurance law. The term "additional first-party benefits", as
52 used in this subdivision, shall have the same meaning given it in
53 section 65-1.3 of title 11 of the codes, rules and regulations of the
54 state of New York as of the effective date of this statute.
55 (c) This section shall not apply to a subrogation or reimbursement
56 claim for recovery of benefits provided by Medicare or Medicaid, specif-
A. 7828--A 3
1 ically authorized pursuant to article fifty-one of the insurance law, or
2 pursuant to a policy of insurance or an insurance contract providing
3 workers' compensation benefits.
4 § 4. This act shall take effect immediately and shall apply to all
5 settlements entered into on or after November 12, 2009.