Source: http://nycoveragecounsel.blogspot.com/2009/11/new-york-state-legislature-passes-new.html
Timestamp: 2019-04-20 06:42:58+00:00

Document:
On November 10, 2009, both the New York State Senate and Assembly passed Senate Bill S66002, as substituted for Assembly Bill A40002. The bill was delivered to Governor Paterson, who signed it today, November 12, 2009.
20  tice law and rules are REPEALED.
54  TO BE DEDUCTED FROM THE PLAINTIFF'S RECOVERY.
2  rules is relettered subdivision (b).
5  HUNDRED ELEVEN OF THIS CHAPTER.
25  THOSE  PAYMENTS AS TO WHICH THERE IS A STATUTORY RIGHT OF REIMBURSEMENT.
37  BEEN OR ARE OBLIGATED TO BE PAID OR REIMBURSED BY SAID BENEFIT PROVIDER.
43  STATE OF NEW YORK AS OF THE EFFECTIVE DATE OF THIS STATUTE.
Sections 1, 2 and 3 of Part F of this act (the changes to CPLR § 4545) will take effect "immediately" upon the Governor's signature of this bill (which occurred on November 12, 2009) and will apply to all actions commenced on and after that date.
Sections 4, 5 (changes to CPLR Rule 4111), 6 (change to CPLR § 4213),7 (addition of General Obligations Law § 5-101), and 8 (addition of General Obligations Law § 5-335) will also apply to any applicable action or proceeding that was commenced prior to November 12, 2009, (Governor's signing date) if as of such date either the trial had not yet commenced or the parties had not "entered into" (settlement memorialized in writing or one "spread on the record") a stipulation of settlement.
For medical, dental, or podiatric malpractice actions commenced on and after July 26, 2003, the court's decision on future damages must be itemized in accordance with CPLR Rule 4111(d).
For actions brought to recover damages for personal injury, injury to property or wrongful death commenced on and after July 26, 2003, that are not medical, dental or podiatric malpractice actions, the court's decision on future damages must be itemized in accordance with the relettered CPLR Rule 4111(e).
NYSTLA is proud to announce that the New York State Senate voted to pass a mandate relief bill, S.6068 (Sampson), on July 17th, 2009, which includes an anti-subrogation provision. This is a major victory for the civil justice system and injured New Yorkers. The anti-subrogation provision amends the general obligations law to protect all settling plaintiffs and defendants in a personal injury action from certain unwarranted reimbursement and subrogation claims.
This bill will remedy recent, ill-advised Court of Appeals decisions such as Teichman v. Community Hosp. of Western Suffolk , 87 N.Y.2d 514 (1996), and Fasso v. Doerr, 12 N.Y.3d 80 (Feb. 24, 2009). These decisions incorrectly opened the door to benefits providers, such as health insurers, "double-dipping" by seeking reimbursement from settling defendants who have caused personal injuries to a plaintiff who has health insurance.
Notice that the new GOL § 5-335 specifically exempts subrogation claims for recovery of "additional first-party benefits" as provided for in Insurance Law Article 51 and defined by the prescribed APIP endorsement found at 11 NYCRR § 65-1.3. This means that APIP subrogation claims are still fully viable.
On its face, the new GOL § 5-335 will apply only to and limit non-statutory reimbursement and subrogation claims in personal injury and wrongful death actions, and, as to such actions, only insurers or entities qualifying as a "benefit provider" will be affected. GOL § 5-101(4) will define a "benefit provider" as "any insurer, health maintenance organization, health benefit plan, preferred provider organization, employee benefit plan or other entity which provides for payment or reimbursement of health care expenses, health care services, disability payments, lost wage payments or any other benefits under a policy of insurance or contract with an individual or group."
GOL § 5-335 should not apply to insurers that afford first-party property coverage benefits to their insureds and then seek to exercise their subrogation rights because those insurers should not fall within the definition of a "benefit provider" under that section.
The new law should not affect what has come to be known as New York's common law "antisubrogation rule". The common law rule operates as a party's liability defense based on coverage principles, not a recovery right of subrogation.
This is an awful new law.
1. Health Insurance rates are based upon expected net losses. With the elimination of healthcare subrogation, insurance companies will be compelled to raise their premiums rates. This means that the cost for this measure will fall entirely onto all of us who pay for healthcare.
2. Insurance company subrogation has been in place for 100s of years and came to the US when the English did... and has kept the cost of healthcare down every step of the way - placing the ultimate burden for medical expenses on the person who caused the injury.
3. This short-sighted measure was promoted and pushed through the legislature by the personal injury trial lawyers' lobby so they would not need to reduce their fees by the recoveries that had to be turned over to the healthcare carriers - the rightful recipients of any monies recovered for medical bills paid and arising from accidents.
I just wish that the insurance buyig public was made more aware of the effect of this new bill and the special interest group the legislature and Governor were looking to appease at the collective expense of the rest of us.
Roy, I agree that this is an extremely poorly drafted and conceived law. Fasso addressed all the concerned issues adequately. Now, there is the opportunity for excess & opportunism by plaitiff's counsel. See my knol: NY CPLR 4545 & GOL 5-335.
Actually, under most personal injury retainers, the liens don't come off the top -- they come out of the plaintiff's share. So this won't affect attorneys' fees at all.
Is this the end of small case litigation?
Did the Trial Bar shoot themselves - and their clients - in the Wallet?
As you know, the winds of change once again blew through the halls of the State Assembly this year with passage of The Governor’s Program Bill #95/S66002, which Governor Paterson signed into law on November 12, 2009. With it came a new section of the New York General Obligations Law (§5-335) which outlawed common law subrogation in all pending and future actions for personal injuries, medical, dental, podiatric malpractice or wrongful death. In the coming months that law will be challenged on various grounds, but before you contribute in a fight to sustain it, I ask that you consider the intended and unintended consequences of §5-335 and the effect it will have on your client’s cases and many of your practices.
Property and casualty adjusters will assign lower values to settlements in many of your cases (e.g. premises liability, slip and falls, dog bites, products liability). Your 62 year old client who slipped and fell, breaking her hip, does not have to pay back the $60,000 operation to the health carrier. Consequently, your client no longer has that claim. Rather, you are relegated to making a claim of pain and suffering, or trying to prove your client’s incontinence or arthritis was caused by the fall and not by a pre-existing condition. And, of course, there is no wage claim.
For the dog bite and small injury claims, no longer can you claim a settlement value of 3-5 times the $2,000 emergency room charge. Counsel will be required to prove specials with greater specificity. You will see settlement values decline in all areas of personal injury. In the past, if needed, you could call in the health insurer and offer to protect their interest for a fee if the defendant was particularly reticent about including anything for provable medicals. Those days are gone. Plaintiffs recoveries in this segment of the market will drop by at least 20% and the days of easy fees from health insurers are gone.
This law will not affect the incidences of medical malpractice. While it is axiomatic in commercial law that payment is only due upon the successful completion of a task, such has never been the case with medical providers who expect to be paid for their services regardless of whether or not they were performed negligently. Plaintiffs used to be able to make a claim for the cost of not only corrective surgery but for deficient services. These claims are now extinguished. Where is the value in a left-sponge or instrument case now?
There are numerous examples where there simply is not enough money to pay the plaintiffs and the subrogation claims. Those cases have been addressed by the Fasso v. Doerr decision which limits the health insurers in those situations. There is simply no need to cut out the subrogation wage claims just to spite the carriers.
Many claims which would have been questionable (like the intoxicated patron who fell from a railing and becomes a quadriplegic) are now not worth considering because there is a significantly reduced recovery potential without the medical and wage specials, subrogable or not. And, of course, under the Common Fund Doctrine, the carrier always pays the attorney for his efforts.
The death of small cases in New York is not the entire story here. It may seem insignificant to some, but small cases are for many attorneys what krill are to the food chain.
§5-335 will eliminate those cases for all but the philanthropic among us and it will diminish the ability of many plaintiffs’ attorneys to survive and prosper.
To concede that the people of New York must learn to live with a less vital plaintiffs’ bar or to leave this as part of our legacy is sinful. Knowing the impact that eliminating medical and wage damages will have on all our futures should be unacceptable.
§5-335 is not change worthy of your support.
My understanding is that these were collateral source payments for which the plaintiff was not permitted to recover from a jury, but which the defense insurers could claim as a collateral source set-off against personal injury proceeds. The comments seem to disagree with this.
The issue is more which insurance company bears the loss for the medical costs: the plaintiff (out of their recovery from a third-party), or the primary insurance that received premiums from or on the plaintiff's behalf to insure against the risk.
Personally, I think the law should have been broader, and also limit the recovery of certain workers comp liens.
What about a settlement of a personal injury claim where a lawsuit was not yet instituted? Would this new law protect the settling parties from a right of subrogation by a private health insurer?
The law talks about "plaintiffs", "defendants" and "actions and proceedings".
My initial opinion is that GOL 5-335, based on that language, would not apply to a pre-suit settlement. Agree/disagree?
Point 1: Liens have to be paid from the net of the settlement or award because they are the expense of the client. Thus, the new law has no effect on the fees of the attorney.
Insurance carriers should be paid back by tortfeasors for the expenses that have to be laid out for injured parties.
The nuance here is that carriers almost never go after the tortfeasor directly for reimbursement. Before the new law carriers merely relied on the hard work of plaintiffs' counsel and then demanded payment at the end of the case. In short, the carriers were getting a free.
If the carriers are so concerned with getting reimbursed and keeping down the cost of health care they should put their money where their mouths are and start using their subro rights to sue tortfeasors directly instead of using plaintiff's lawyers as their defacto collections counsel.
This new law puts an end to that unfair practice.

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