Governor Cuomo Signs Into Law Anti-Subrogation Bill, Amending NYS GOB §5-335

November 13th, 2013
There is some important news out of Albany: yesterday Governor Cuomo signed a bill (S5715A; A7828) amending the New York anti-subrogation law (General Obligations Law § 5-335). The new law, sponsored by NYS Assemblywoman Helene Weinstein (A.7828) and State Senator John Bonacic (S.5715),is aimed to eliminate the holding of the case of Wurtz v. Rawlings Co., LLC, 2013 WL1248631 (E.D.N.Y. 2013), which held that §5-335 was preempted as it applies to insured employee benefit plans under ERISA.The legislative intent from the bill is quite clear:

The instant legislation is intended to make clear the original purpose of  sections  5-101  and  5-335  of  the general  obligations  law  which  is to ensure that insurers will not be able to claim or access any monies paid in settlement of  a  tort  claim whether  by way of a lien, a reimbursement claim, subrogation, or other- wise so that the burden of payment for health care services,  disability payments,  lost  wage  payments or any other benefits for the victims of torts will be borne by the insurer and not any party to a settlement  of such  a  victim’s tort claim.   This law is specifically directed toward entities engaged in providing health insurance, thus falling under the “savings” clause contained in ERISA, which reserves to the states the right and the ability to regulate insurance.

The passage of this law should prevent health insurers from intervening in pending litigation or asserting a claim for reimbursement, which impedes the resolution of cases. There are a few important points to consider:

1.     The term “benefit provider” is removed and replaced with “Insurer” to make clear that this law specifically applies to insurance, and is thus saved by the ERISA savings clause.

2.     The terms “plaintiffs” and “defendants” have been removed and replaced with “Persons.” Prior, there was a question as to whether the law applied to cases that were resolved without commencing an action (thus, there were no plaintiffs and defendants). This change makes it clear  that the law will apply to all cases regardless of whether an action has been commenced.

3.     The previous law had an exception for “statutory rights of reimbursement,” which was clearly intended to apply to Medicare, Medicaid, Workers’ Compensation, and other statutes which actually provided a right of reimbursement. The Wurtz case interpreted that ERISA reimbursement claims are statutory, and thus excepted from the application of § 5-335. Instead of “statutory rights of reimbursement” generally, the new law removes that language and specifically calls out Medicare, Medicaid, Workers’ Compensation, and Article 51 of the Insurance Law.

4.     The law is effective immediately, and applies to all settlements entered into on or after November 12, 2009.

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