Key Takeaway
New York no-fault insurance regulation limits benefit payments to applicants or healthcare providers only, blocking health insurers from claiming subrogation rights.
(1) “Article 51 of the New York Insurance Law, enacted as the Comprehensive Motor [*3]Vehicle Insurance Reparations Act (see L 1973, ch 13), governs payments to reimburse a person for basic economic loss for personal injury arising out of the use or operation of a motor vehicle, irrespective of fault. Article 51 is commonly known as the No-Fault Law. The purpose of the No-Fault Law was to promote “prompt resolution of injury claims, limiting cost to consumers and alleviating unnecessary burdens on the courts” (Pommells v Perez, 4 NY3d 566, 571 )”
(2) “The applicable regulation, 11 NYCRR 65.3.11 (a) provides, in relevant part, that “an insurer shall pay benefits for any loss, other than death benefits, directly to the applicant or, … upon assignment by the applicant …shall pay benefits directly to providers of health care services…” (emphasis added). Aetna concedes that as a health insurer it is not a “provider of health care services” as contemplated by the language of this regulation (see Health Insurance Plan of Greater New York v Allstate Insurance Co., 2007 N.Y.Slip Op 33925 ; see also Gen. Counsel Opinion 1-28-2008). Aetna argues, however, that it stands in Herrera’s shoes because Herrera assigned her no-fault rights to it.”
(3) “This argument fails for two reasons. First, since Herrera’s health care providers were able to bill and recoup payment from Aetna, an assignment by Herrera of her no-fault rights had already been made, leaving her with no rights to assign to Aetna. Second, by its very language, the no-fault regulation permits only the insured — or providers of health care services by an assignment from the insured — to receive direct no-fault benefits. Because Aetna does not fall under the term “health care provider,” Herrera could not assign her rights to it.”
What is interesting about this about this case is that the Court looks to the strict language of the regulations in coming to the conclusion major medical cannot subrogate against the no-fault carrier.
The way this used to play out (prior to the changes in the GOL and the Second Circuit affirming same) was that the major medical carrier would assert a binding lien against the EIP or even bring a lawsuit against the EIP who, in turn, would bring an action (or third-party action) against the no-fault carrier. Insofar as the GOL has gutted the subrogation rights in major medical policies, this is a paradigm that does not play out anymore. And now that there is no direct right of action between the major medical carrier and the no-fault carrier, this whole issue has seemingly disappeared.
