Relates to the limitation of non-statutory reimbursement and subrogration

BILL NUMBER:S4576

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.