Relates to the limitation of non-statutory reimbursement and subrogration.
TITLE OF BILL:
An act to amend the general obligation law, in relation to the limitation of non-statutory reimbursement and subrogation
This is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation of her Advisory Committee on Civil Practice.
This measure would amend General Obligations Law §5-335, which was enacted in 2009 (L. 2009, c. 494, pt. F, §8, eff. Nov. 12, 2009) to further facilitate resolution of personal injury lawsuits.
Section 5-335 was enacted in response to the Court of Appeals' decision in Fasso v Doerr, 12 NY3d 80 (2009). The Fasso court held that the parties to a personal injury lawsuit could not enter into a settlement without the consent of a health insurer that had intervened in the action, thereby upholding the right of the health benefit provider to pursue a subrogation claim. Consistent with CPLR §4545, which bars plaintiffs in personal injury actions from recovering expenses that have been paid for by collateral sources, the recently enacted GOL §5-335 creates a conclusive presumption that a personal injury settlement does not include compensation for health care costs and other expenses paid by a benefit provider. It further states that unless there is a statutory right of reimbursement, no party entering into a settlement shall be subject to a subrogation or reimbursement claim by a benefit provider with respect to the losses or expenses paid by the provider.
However, the recent decision in Rink v State of New York, 27 Misc.3d 1159 (Ct. Claims 2009), demonstrates that further clarification is necessary so that the goals underlying GOL §5-335 can be accomplished. The Rink court granted a health insurer's motion to intervene in a pending medical malpractice action, holding that GOL §5-335 addresses only situations in which the insured and tortfeasor have settled an action and not those in which litigation is still pending. The Committee believes that such intervention is impliedly precluded by current law except where intervention is sought to enforce a statutory right of reimbursement or subrogation. The measure would make that explicit. It would also provide that unless there is a statutory light of reimbursement, a benefit provider may not intervene in a personal injury or wrongful death action, in order to assert a subrogation claim or claim for reimbursement with respect to those losses or expenses.
The proposed amendment adopts the predominant view in the Appellate Divisions, under which intervention by health insurers is precluded (see Fasso, 12 NY3d at 89). Moreover, the proposal is fully consistent with the purposes underlying the collateral source provisions of CPLR §4545 as well as other 1980s legislation enacted in response to the liability crisis in that it would provide savings to parties to personal injury
litigation and liability insurers, simplify and reduce the cost of litigation, and facilitate settlement.
This measure would have no fiscal impact on the State. It would take effect immediately and apply to all actions commenced and all actions pending on such date.
2011 LEGISLATIVE HISTORY:
None. New proposal.
STATE OF NEW YORK ________________________________________________________________________ 4576 2011-2012 Regular Sessions IN SENATE April 12, 2011 ___________Introduced by Sen. BONACIC -- (at request of the Office of Court Admin- istration) -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the general obligation law, in relation to the limita- tion of non-statutory reimbursement and subrogation THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 5-335 of the general obligations law, as added by section 8 of part F of chapter 494 of the laws of 2009, is amended to read as follows: S 5-335. Limitation of non-statutory reimbursement and subrogation claims in personal injury and wrongful death actions. (a) When a plain- tiff settles with, OR OBTAINS JUDGMENT AGAINST, one or more defendants in an action for personal injuries, medical, dental, or podiatric malp- ractice, or wrongful death, it shall be conclusively presumed that the settlement OR JUDGEMENT does not include any compensation for the 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 a benefit provider, except for those payments as to which there is a statutory right of reimbursement. By entering into any such settlement OR BY SEEKING OR OBTAINING SUCH JUDGEMENT, a plaintiff shall not be deemed to have taken an action in derogation of any nonstatutory right of any benefit provider that paid or is obligated to pay those losses or expenses; nor shall a plaintiff's entry into such settlement OR RECOVERY OF SUCH JUDGEMENT constitute a violation of any contract between the plaintiff and such benefit provider. Except where there is a statutory right of reimbursement, no party entering into such a settlement OR OBTAINING SUCH A JUDGEMENT shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subroga- tion or reimbursement against any such
[settling]party, with respect toEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09309-01-1 S. 4576 2
those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider. EXCEPT WHERE THERE IS A STATUTORY RIGHT OF REIMBURSEMENT, A BENEFIT PROVIDER SHALL NOT BE PERMITTED TO INTERVENE IN AN ACTION FOR PERSONAL INJURY, MEDICAL, DENTAL, OR PODIA- TRIC MALPRACTICE, OR WRONGFUL DEATH, FOR THE PURPOSE OF ASSERTING A SUBROGATION CLAIM OR CLAIM FOR REIMBURSEMENT WITH RESPECT TO SUCH LOSSES OR EXPENSES. (b) This section shall not apply to a subrogation claim for recovery of additional first-party benefits provided pursuant to article fifty- one of the insurance law. The term "additional first-party benefits", as used in this subdivision, shall have the same meaning given it in section 65-1.3 of title 11 of the codes, rules and regulations of the state of New York as of the effective date of this statute. S 2. This act shall take effect immediately and apply to all actions commenced and all actions pending on such date.