Establishes health care organization responsibility

Section 2. Amends the General Obligations Law by adding a new Section 11-108 to provide that a health insurance carrier, health maintenance organization or other managed care entity for a health care plan has the duty to make prompt and adequate health care available to all insureds and enrollees and can be held liable for damages for harm or personal injury caused by its failure to exercise such care. Additionally, health care organizations are not given any immunity from liability if an enrollee either chooses to receive treatment from another provider or finds another source of payment for such treatment. This section also prohibits a health care organization from entering into a contract with any health care provider if such contract contains an indemnification or hold harmless clause. This section allows for health care organizations to charge a nominal fee for providing documentation that relate to its delay or refusal to provide or pay for health care services.

Section 3. Amends Section 1602 of the Civil Practice Law and Rules by adding a new subdivision 13 which limits the ability of health care organizations to claim indemnification if an action is brought against them.

Section 4. Amends subdivision 1 of Section 4410 of the Public Health Law to indicate that although health care organizations are not considered practitioners of medicine, their liability is not diminished in relation to the administrative decision and services they render. This section also prohibits the inclusion of a hold harmless or indemnification clause in any contract or agreement between health care organizations and health care providers.

Section 5. Maintains that if any provision of this act is deemed invalid, such invalidity shall not affect the other provisions. Regardless of any invalid provision, the other provisions which can take effect will be fully implemented.

Section 6. Sets forth the effective date.

Justification

As health insurers and managed care groups are receiving greater pressure to keep medical treatment costs down, there is a growing concern that the quality and availability of care is diminishing. Insurance companies and HMOs that are striving to achieve higher profits and a competitive edge are denying their policyholders the access to care and treatment that they need and deserve. This bottomline mentality has forced some disgruntled insureds to take their cases of denial of treatment or payment for such treatment to the courts. Those policyholders who suffer pain and injuries because of denial of care on the part of the insurer or HMO should have the right to place the blame on the insurer, just as a patient would sue a physician for medical malpractice. Many HMOs and insurance companies purport that they do not make medical decisions and therefore cannot be held liable for damages. However, the denial of payment or reimbursement for tests or treatments is essentially denying the actual health care.

Health insurance carriers make administrative decisions on whether or not to authorize medical procedures while considering both the necessity of the treatment and its cost impact. In the management of these benefit plans, cost implications too often overshadow meeting the needs of patients. HMOs have argued that they are given immunity from liability under the 1974 federal statute ERISA, the Employee Retirement Income Security Act. The Act was created to ensure that employers fulfilled their pension plan obligations. HMOs argue that ERISA's provisions pre-empt any state law relating to any employee benefit plan, protecting them from malpractice suits which are pursued by enrollees in an employer-sponsored health insurance plan. While ERISA needs reform on the federal level, this bill seeks to effect positive change in New York's health insurance arena by making health care organizations take responsibility for their actions. New York, like several other states that have passed similar pieces of legislation, can provide the assurance that its residents will receive quality health care.

Consumers who have experienced undue pain and suffering because of their insurer's refusal to provide necessary medical attention need legal recourse. By making health care organizations liable for the decisions they make, more attention will be paid to the enrollees who require care instead of enlarging profit margins.

Legislative history

2007/2008 - S.740 Remained in the Senate Committee on Judiciary 2005/2006 - S.232 Remained in the Senate Committee on Judiciary 2003/2004 - S.214 Remained in the Senate Committee on Judiciary 2001/2002 - S.1980 Remained in the Senate Committee on Judiciary 1999/2000 - S.801 Remained in the Senate Committee on Judiciary

Fiscal implications for state & local governments

None.

Effective date

Immediately.