REJECTING A HEALTH INSURER'S SUBROGATION LIEN
Medical Insurer’s clamoring for reimbursement used to be a bane of both Plaintiff and Defense Lawyers existence. They got in the way of cases settling time after time, banged out threatening letters and even intervened in some cases.
Eventually, in association with case that this office was involved in where a firefighter was gravely injured when hit by a bus, cycling to work during a transit strike, New York’s legislature passed the first “Anti Subrogation” law codified at GOL 5-101 and 5-335.
Medical insurers continued to bang away at loopholes they perceived in the law and in response in November of 2013 a New York bill strengthened the provision of New York’s Anti Subrogation laws.
There are still limitations to the Anti Subrogation rule, notably Workers Compensation, Medicaid liens and “Self Funded” health plans, and in cases where the case is not settled but tried to judgment.
If you are representing a Plaintiff in this setting make sure your advise them in writing that a subrogation claim was made, what you did to determine its validity and your opinion of its viability.
The form letter set out below is useful to reject an Insurers claimed right to reimbursement in either a plaintiff or defendants setting.
XXXXXX Recovery Services
PO Box XXX
Schaumberg, IL 60138-4003
Claimant: JANE DOE
Your case number: xxxxxxx
For the reasons stated below, your claim that they should be added as a payee to any settlement check issued to JANE DOE is rejected.
In November of 2013 Governor Andrew Cuomo signed into law New York Bill S5715/A7828 passed by both the New York Assembly and Senate.
This law strengthens the immunity that injured persons have from claims of liens by health insurers against settlements they enter into with alleged tortfeasors. The law was originally proposed in response to a recent Eastern District of New York decision which found that the original version of the laws, N.Y. Gen. Oblig. Law 5-101 and 5-335, were not “saved” from ERISA federal preemption because they were not specifically directed toward insurance entities.
The new law corrects any flaws which may have existed in prior versions by replacing the term “benefit provider” with “insurer” to pull this law directly under the purview of ERISA’s saving clause.
Additionally, the new law removes the terminology exempting insurers with “statutory rights to reimbursement” and now limits this exemption specifically to Medicare, Medicaid and worker’s compensation liens. This change removes any confusion as to whether an insured ERISA claim fell under the definition of a “statutory reimbursement right.” Finally, the law also replaces the terms “plaintiffs” and “defendants” with “persons” to clarify the legislature’s intent to allow this law to reach settled cases without requiring an injured party to formally commence the case by filing.
(Where an insurer is demanding that you as a Defendant made a settlement check payable to both them and the Plaintiff)
Although whether to reimburse your claim is strictly a matter for the claimants attention in the first place, and your request that any settlement check be made payable jointly to the claimant and you is patently improper, we also conclude that your claimed right to reimbursement is invalid ab initio.
Very truly yours;
Peter J. Creedon
(Where the insurer may in fact be a “self funded” a demand to them for proof of its can include this language)
A certified copy of the complete Plan Document for the Health Plan and any documents supplementing or amending the Plan
Certified copies of any Summary Plan Description and employee benefits booklet in effect at the time of injury, and all such documents issued subsequently during any year in which benefits were paid to, or on behalf, of the claimant;
Bargaining Agreement, Trust Agreement, Contract or other instrument under which the Health Plan is established, and any documents supplementing or amending the Plan.
Any Trust Agreement or other document establishing the funding for the Plan;
Certified copies of the Plan’s Annual Return/Report (IRS/DOL Form 5500), including all attached Financial Schedules, for the year including the date of injury and all subsequent years in which benefits were paid to, or on behalf, of the claimant.