News & Updates
New York’s Anti-Subrogation Law Fights Back, Knocks Out ERISA Preemption November 19, 2013
On November 13, 2013, Governor Andrew Cuomo signed New York’s Anti-Subrogation Bill into law. The new law eliminates federal preemption of New York’s General Obligations Law §§ 5-101; 5-335 (GOL) that prevents health insurers from seeking reimbursement from the victims for settlements reached in tort cases. The law was passed in response to a recent federal court decision in Wurtz v. Rawlings Co., LLC, 2013 WL1248631 (E.D.N.Y. Mar. 28, 2013). The law is effective immediately and applies to all settlements entered into on or after November 12, 2009.
According to the Legislature, the statute is aimed at eliminating the burden on the settlement of claims where claims for subrogation and reimbursement are involved.
The legislature finds that the resolution and settlement of certain types of claims have been impeded as a result of health insurers’ attempts to intervene into pending litigation, as well as similar attempts to institute subrogation and reimbursement actions against litigants. As a result, settlement of claims made by accident victims and others are imperiled and prevented, thus causing undue burdens and pressures upon the court system. In addition, defendants in such actions are being subjected to claims made by health insurers, exposing them to additional liability. (A.7828-a/S.5715-a).
Further, the legislation is intended to make clear the original purpose of the GOL to:
[E]nsure that insurers will not be able to claim or access any monies paid in settlement of a tort claim whether by way of a lien, reimbursement claim, subrogation, or otherwise so that the burden of payment for health care services, disability payments, lost wage payments, or any other benefits for the victims of torts will be borne by the insurer and not any party to a settlement of such a victim's tort claim.
Presumably, New York’s new law will be viewed as a law regulating the insurance industry, which under ERISA’s savings clause, 29 U.S.C. 1144(b)(2)(a), is exempted from preemption. While the new law will apply to fully-funded ERISA plans, it will not likely prevent self-funded ERISA plans from asserting their liens and/or subrogation rights as ERISA’s “deemer clause” exempts self-funded plans from state laws regulating insurance. Therefore, the effects of this law will be felt most heavily by health insurers under plans that are not self-funded ERISA plans.
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