Insurance comm annual report.indd - New York State Senate
Insurance comm annual report.indd - New York State Senate
Insurance comm annual report.indd - New York State Senate
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2009/2010 Annual Report of<br />
The <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Senate</strong><br />
STANDING<br />
COMMITTEE<br />
ON<br />
INSURANCE<br />
senator neil D. Breslin<br />
Chairman
December 14, 2010<br />
Secretary of the <strong>Senate</strong><br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Senate</strong><br />
<strong>State</strong> Capitol<br />
Albany, <strong>New</strong> <strong>York</strong> 12247<br />
Dear Secretary of the <strong>Senate</strong>,<br />
I am pleased to submit to you a copy of the 2009/2010 <strong>annual</strong> <strong>report</strong> of the <strong>New</strong><br />
<strong>York</strong> <strong>State</strong> <strong>Senate</strong> Standing Committee on <strong>Insurance</strong>.<br />
This <strong>report</strong> outlines the Committee’s overall activity during the 2009/2010<br />
legislative cycle. In my first term as Chairman, I am pleased to <strong>report</strong> that the<br />
Committee approved landmark legislation to make all types of insurance more<br />
affordable and accessible to our <strong>comm</strong>unity. The Committee was active holding<br />
public hearings on subjects including, medical malpractice reform, no-fault<br />
automobile insurance fraud and the need to provide coverage for the diagnosis<br />
and treatment of autism spectrum disorder.<br />
These hearings provided us with vital information and helped the Committee<br />
develop legislation including <strong>Senate</strong> Bill 7000B which mandated that health<br />
insurance companies provide coverage for the treatment and diagnosis of autism<br />
spectrum disorder and <strong>Senate</strong> Bill 8414 “The Automobile Fraud Prevention Act<br />
of 2010.” The <strong>comm</strong>ittee also approved landmark legislation known as “Ian’s<br />
Law” which makes it illegal for insurers to drop entire classes of insurance as a<br />
pretext to deny coverage to individual policyholders. The following <strong>report</strong><br />
discusses in greater detail many of the issues the Committee was involved in,<br />
some of which will still be topics of discussion for the upcoming legislative cycle.<br />
In closing, I would like to thank each legislator and all staff members who have<br />
worked so hard to make many of these accomplishments possible, in particular<br />
Senator Seward my insurance partner. I am looking forward to an equally<br />
productive session in 2011.<br />
Sincerely,<br />
Neil D. Breslin<br />
Chairman<br />
2
Table of Contents<br />
Introduction ----------------------------------------------------------4<br />
Summary of Committee Activity----------------------------------6<br />
Property/ Casualty <strong>Insurance</strong>--------------------------------------10<br />
Health <strong>Insurance</strong>-----------------------------------------------------27<br />
Life <strong>Insurance</strong>--------------------------------------------------------36<br />
Public Hearing on Autism Spectrum Disorder-------------------41<br />
Public Hearing on Medical Malpractice Reform----------------46<br />
Public Hearing on No-Fault Fraud---------------------------------51<br />
3
Introduction<br />
This <strong>report</strong> is a synopsis of the activity of the <strong>Insurance</strong> Committee covering the 2009/ 2010<br />
legislative session. The <strong>comm</strong>ittee is chaired by Senator Neil D. Breslin, and is composed of 16<br />
senators plus the chair. The <strong>comm</strong>ittee provides oversight for all segments of the insurance<br />
industry: property/casualty, health, and life insurance. The <strong>report</strong> outlines all chaptered bills, bills<br />
which only passed the senate, public hearings, and <strong>comm</strong>ittee nominations. The <strong>comm</strong>ittee has<br />
the responsibility to regulate the growing insurance industry while at the same time ensuring the<br />
industry remains competitive.<br />
Many significant legislative initiatives were enacted into law during 2009/2010 legislative<br />
session to make health insurance more accessible and affordable. These initiatives run the gamut<br />
from extending COBRA to 36 months to making health care more affordable and available to<br />
volunteer firefighters and independent contractors. The <strong>comm</strong>ittee also approved landmark<br />
consumer protection measures such as a bill which would regulate the growing life settlement<br />
market in <strong>New</strong> <strong>York</strong> to ensure, among other things, that the medical and financial information of<br />
those who enter into a life settlement transaction is protected. These and many other noteworthy<br />
initiatives were taken during this legislative session, the rest of the <strong>report</strong> examines these and<br />
many other significant industry reforms.<br />
Senator Breslin and <strong>Insurance</strong><br />
Superintendent Wrynn<br />
Senator Breslin at the autism public hearing<br />
Troy Oechsner from the <strong>Insurance</strong><br />
Department at the autism public hearing<br />
Lorri Unumb from Autism Speaks at<br />
the autism public hearing<br />
4
The <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Senate</strong><br />
Standing Committee on <strong>Insurance</strong><br />
Honorable Neil D. Breslin<br />
Chairman<br />
Committee Members<br />
Honorable William T. Stachowski<br />
Honorable Carl Kruger<br />
Honorable Kevin S. Parker<br />
Honorable John L. Sampson<br />
Honorable Antoine M. Thompson<br />
Honorable Craig M. Johnson<br />
Honorable Pedro Espada Jr.<br />
Honorable Jose Peralta<br />
Honorable James L. Seward<br />
Honorable Kenneth P. LaValle<br />
Honorable William J. Larkin Jr.<br />
Honorable James S. Alesi<br />
Honorable Vincent L. Leibell<br />
Honorable Martin J. Golden<br />
Honorable Catharine M. Young<br />
Honorable Roy McDonald<br />
Ranking Minority Member<br />
Committee Staff<br />
Kate M. Powers<br />
Evan C. Schneider<br />
Juan Gabriel Genao<br />
David A. Rozen<br />
Counsel<br />
Committee Director<br />
Committee Clerk<br />
Legislative Fellow<br />
Central Staff<br />
Emily E. Whalen<br />
Gideon Grande<br />
Associate Counsel- Majority Counsel/ Program<br />
Fiscal Analyst- <strong>Senate</strong> Finance Committee/Majority<br />
5
Summary of Committee Activity<br />
Total number of <strong>comm</strong>ittee meetings-----------------------------------------------------<br />
Total number of bills referred to <strong>comm</strong>ittee ---------------------------------------------<br />
Total number of bills <strong>report</strong>ed from <strong>comm</strong>ittee-----------------------------------------<br />
Total number of <strong>comm</strong>ittee bills that became law---------------------------------------<br />
Total number of <strong>comm</strong>ittee bills vetoed --------------------------------------------------<br />
2009 2010<br />
7 9<br />
188 256<br />
20 42<br />
13 20<br />
1 1<br />
Public Hearings<br />
The role of health insurance in the diagnosis and<br />
treatment of autism spectrum disorder<br />
October 23, 2009<br />
<strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
<strong>Senate</strong> Standing Committee on Health<br />
<strong>Senate</strong> Standing Committee on Mental Health and Developmental Disabilities<br />
Medical Malpractice Reform<br />
December 1, 2009<br />
<strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
<strong>Senate</strong> Standing Committee on Health<br />
<strong>Senate</strong> Standing Committee on Codes<br />
No-fault Fraud in <strong>New</strong> <strong>York</strong> <strong>State</strong><br />
February 2, 2010<br />
<strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
2009-2010 Nominations<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Department<br />
Position Nominated For: Superintendent of <strong>Insurance</strong><br />
Agency Description: The <strong>Insurance</strong> Department is charged with regulating the insurance industry<br />
and with balancing the interests of insurance consumers, companies and producers. Specific<br />
statutory responsibilities include: approving the formation, consolidation or merger of insurance<br />
organizations and all new insurance products, monitoring the financial stability of insurers,<br />
overseeing the testing and licensing of agents, adjusters, consultants and insurance intermediaries<br />
and disciplining licensees who violate the <strong>Insurance</strong> Law or regulations. The Department is<br />
headed by the Superintendent, who is appointed by the Governor with the advice and consent of<br />
the <strong>Senate</strong>, and serves at the Governor’s pleasure.<br />
6
* James J. Wrynn, J.D., ARM, ACI<br />
- Employment History:<br />
1992 – 2009: Founding Member, Mackay, Wrynn & Brady, LLP<br />
1995 – 2000: Counsel, Assemblyman Mark Weprin<br />
1982-1992: Trial Attorney, McCormick, Dunne & Foley<br />
- Education:<br />
1984: J.D., St. John’s University School of Law<br />
1981: B.S., St. John’s University College of Business Administration<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Fund<br />
Position Nominated For: Commissioner<br />
Agency Description: The <strong>State</strong> <strong>Insurance</strong> Fund’s mission is to provide timely and appropriate<br />
indemnity and medical payments to injured workers; drive down the cost of workers’<br />
compensation insurance for businesses operating in the <strong>State</strong>; ensure that all NY businesses have<br />
a market for workers’’ compensation insurance available to them at a fair price; maintain a<br />
solvent state insurance fund that is always available for NY businesses; and be a competitive<br />
force in the marketplace and an industry leader in price, quality, and service. The Fund is<br />
administered by eight Commissioner’s all of whom are appointed by the Governor with the<br />
advice and consent of the <strong>Senate</strong>, and serve a term of three years, and shall serve until their<br />
successors are appointed and have qualified.<br />
* Theodore K. Cheng<br />
- Employment History:<br />
Senior Litigation Associate, Proskauer Pose, LLP<br />
Chair, <strong>New</strong> <strong>York</strong> <strong>State</strong> Commission on Increasing Diversity in the <strong>State</strong><br />
Government Workforce<br />
Special Assistant District Attorney, <strong>New</strong> <strong>York</strong> and Kings County District<br />
Attorney’s Offices<br />
Special Assistant Corporation Counsel, <strong>New</strong> <strong>York</strong> City Law Department<br />
- Education:<br />
1997: J.D., <strong>New</strong> <strong>York</strong> University School of Law<br />
1991: A.B., Harvard University<br />
* Eileen Frank<br />
- Employment History:<br />
President & CEO, JP West, Inc.<br />
Vice President & Director of Underwriting, Operations & Compliance, GAN<br />
North America <strong>Insurance</strong> Company.<br />
Officer, Commerce & Industry <strong>Insurance</strong> Co. (a division of AIG)<br />
Officer, Home <strong>Insurance</strong> Co.<br />
- Education:<br />
Dillard University<br />
* H. Sidney Holmes III<br />
- Employment History:<br />
Corporate Partner, Winston & Strawn, LLP<br />
Commissioner, Port Authority of <strong>New</strong> <strong>York</strong><br />
Board Member, <strong>New</strong> <strong>York</strong> Urban League<br />
Board Member, Brooklyn Navy Yard Development Corp.<br />
7
- Education:<br />
1979: J.D., Hofstra University School of Law<br />
1976: B.A., Columbia University<br />
* Robert H. Hurlbut<br />
- Employment History:<br />
1995: Reappointed Commissioner of the <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Fund<br />
1994: Formed and became President of Hurlbut Trust<br />
1989: Appointed Commissioner of the <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Fund<br />
1968: Founded and became President of Vari-Care, Inc.<br />
1964: Organized and became President of ROHM Services Corp.<br />
- Education:<br />
1957: Cornell University College of Hotel Administration<br />
* Steven P. Polivy<br />
- Employment History:<br />
2008 – 2010: Office Managaing Shareholder & Chair – Economic Development<br />
Practice Group, Akerman Senterfitt, LLP<br />
1996-2008: various positions (Managing Partner, Partner, Of Counsel),<br />
Stadtmauer Bailkin, LLP<br />
1995: Of Counsel, Dornbush Mensch, Madelstam & Shaeffer, LLP<br />
1986-1994: Partner/ Associate, Berger & Steingut, LLP<br />
1983-1986: Associate, Baskin & Steingut, PC<br />
1982-1983: Counsel to the Chairman, Mortgagee Affiliates Corp.<br />
1980-1982: Assistant District Attorney, Kings County District Attorney’s Office<br />
- Education:<br />
1980: J.D., Benjamin N. Cardozo School of Law<br />
1977: A.B., Vassar College<br />
* Kenneth R. Theobalds<br />
- Employment History:<br />
2002-2010: Vice President of Governmental Affairs, Entergy<br />
1992-1995: Deputy Executive Director, <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Fund<br />
1989-1992: Assistant Secretary to the Governor, Executive Chamber<br />
- Education:<br />
B.S., Cornell University<br />
Special Advisory Panel on Homeowners’ <strong>Insurance</strong>/ Catastrophe Coverage – CMAP<br />
Advisoy Council<br />
Council Description: To provide the association with advice and assistance with the operations<br />
of the coastal market assistance program.<br />
* Jeffrey H. Greenfield<br />
- Employment History:<br />
Managing Member, NGL <strong>Insurance</strong> Group, LLC<br />
Commissioner, Nassau County Planning Commission<br />
Past President, Council of <strong>Insurance</strong> Brokers of Greater <strong>New</strong> <strong>York</strong><br />
2004: President, Downstate <strong>Insurance</strong> Council<br />
1996: Chairman, BRACE (Coalition of IIAANY, PIANY and Life Underwriters)<br />
1994-1995: President, Professional <strong>Insurance</strong> Agents of <strong>New</strong> <strong>York</strong> Stat, Inc.<br />
8
* N. Stephen Ruchman<br />
- Employment History:<br />
2008 –present: Partner, B&B <strong>Insurance</strong><br />
1964-2008: Founder & Principle, Ruchman <strong>Insurance</strong> Agency<br />
1961-1964; Producer, Continental American Life <strong>Insurance</strong><br />
- Education:<br />
B.A., Michigan <strong>State</strong> University<br />
Temporary Panel on Homeowners’ <strong>Insurance</strong> Coverage<br />
Panel Description: The Temporary Panel on Homeowner’s <strong>Insurance</strong> Coverage was created to<br />
study the affordability and availability of homeowners’ insurance coverage in the Empire <strong>State</strong>,<br />
in particular to the market dynamics in the coastal homeowners' insurance market.<br />
* Floyd Holloway, Jr.<br />
Employment History:<br />
Counsel, <strong>State</strong> Farm <strong>Insurance</strong> Company<br />
2003-2005: Chairman, <strong>New</strong> <strong>York</strong> <strong>Insurance</strong> Association<br />
2001-2004: Commissioner, American Bar Association’s Minority Counsel<br />
Program<br />
Education:<br />
J.D., Georgetown University Law Center<br />
B.A., Georgetown University College of Arts and Sciences<br />
* Michael W. O’Malley<br />
Employment History:<br />
Manager, The Chubb Group of <strong>Insurance</strong> Companies<br />
Member, <strong>New</strong> <strong>York</strong> Property <strong>Insurance</strong> Underwriting Association Board of<br />
Directors<br />
Member, Florida Windstorm Underwriting Association Board of Directors<br />
Member, <strong>New</strong> Jersey <strong>Insurance</strong> Underwriting Association Board of Directors<br />
Member, Delaware and Pennsylvania Property <strong>Insurance</strong> Placement Facilities<br />
Board of Directors<br />
Education:<br />
Lehigh University<br />
* James D. Sutton<br />
Employment History:<br />
1992-present: President, James F. Sutton Agency Ltd.<br />
1982-1992: Vice President Sales and Marketing, James F. Sutton Agency Ltd.<br />
1978-1982: <strong>Insurance</strong> Underwriter, Maryland Casualty, American International<br />
Underwriters, Chubb & Son, INA International<br />
Education:<br />
B.A., Hofstra University<br />
9
PROPERTY/CASUALTY<br />
Property/Casualty insurance covers damage to or loss of policyholders’ property and legal<br />
liability for damages caused to other people or their property. It is just one segment of the<br />
insurance industry which includes auto, homeowners’ and <strong>comm</strong>ercial insurance. The property/<br />
casualty sector is a cyclical business with wide fluctuations in competition, profits, premiums,<br />
and amounts of coverage.<br />
This <strong>report</strong> encompasses the 2009 though 2010 legislative session. During these two years the<br />
<strong>comm</strong>ittee considered a wealth of legislation pertaining to property/ casualty insurance. Most<br />
notably the <strong>comm</strong>ittee approved legislation such as S. 7845, which prohibits an insurer from<br />
denying benefits for certain emergency services rendered as a result of the insured being<br />
intoxicated or under the influence of narcotics. This piece of legislation will not only ensure that<br />
health care providers are properly compensated for rendering these services, but it will also<br />
improve the level of care <strong>New</strong> <strong>York</strong>ers will receive, ultimately leading to fewer drug or alcoholrelated<br />
injuries.<br />
In the following sections we have outlined all pieces of legislation pertaining to property/<br />
casualty insurance which were either enacted into law or only passed the senate. All of these<br />
pieces of legislation sought to create a balance between the regulatory environment and<br />
consumer protection, while fostering the health of the insurance industry in <strong>New</strong> <strong>York</strong> <strong>State</strong>.<br />
2009<br />
LEGISLATION ENACTED INTO LAW<br />
Bill No./ Sponsor Chapter Title<br />
S3635B/ Breslin 293 Revises the standards relating to incorporation of stock/<br />
mutual insurance companies in <strong>New</strong> <strong>York</strong> <strong>State</strong>.<br />
S3628/ Breslin 48 Authorizes foreign insurance companies to transfer their<br />
corporate domicile to <strong>New</strong> <strong>York</strong>.<br />
S4768/ Breslin 289 Relates to establishing risk-based capital requirements<br />
applicable to fraternal benefit societies and to repeal<br />
paragraph 2 of subsection (b) of section 4530 of such<br />
laws relating thereto.<br />
S4602/ Breslin 447 Authorizes superintendent of insurance to approve a<br />
demonstration program where an eligible insurer issues<br />
group health insurance policies to eligible associations<br />
LEGISLATION WHICH PASSED THE SENATE ONLY<br />
Bill No./ Sponsor<br />
Title<br />
S5980/ Klein Requires insurers to provide victims of domestic violence with the<br />
option of providing alternative contact information<br />
10
LEGISLATION VETOED<br />
Bill No./ Sponsor<br />
Title<br />
S3577/ Breslin Relates to authorizing the issuance of limited licenses to self-service<br />
storage companies for the sale of insurance coverage on personal<br />
property stored in self-service storage spaces<br />
S3635B/ Chapter 293/ Breslin<br />
This bill revises the standards relating to the incorporation of stock or mutual insurance<br />
companies so that the incorporators of an insurance corporation need only list their city and state<br />
of residence in newspapers and the company charter. Additionally, this bill reduces the number<br />
of directors from thirteen to seven and removes the requirement that not less than two directors<br />
be residents of <strong>New</strong> <strong>York</strong> <strong>State</strong>. Lastly, this legislation reduces the number of officers who must<br />
be directors from two to one.<br />
S3628/ Chapter 48/ Breslin<br />
This law extends the scope of the existing insurer re-domestication law (Section 7120 of the<br />
<strong>Insurance</strong> Law) to apply to non-life insurance companies domiciled in another state, but<br />
authorized to do insurance business in <strong>New</strong> <strong>York</strong>. Under the bill, a foreign non-life insurance<br />
company that is authorized in <strong>New</strong> <strong>York</strong> would have the ability to change its domicile to <strong>New</strong><br />
<strong>York</strong>, with the approval of the <strong>New</strong> <strong>York</strong> Superintendent of insurance and the ranking insurance<br />
official of the foreign non-life insurer's current state of domicile.<br />
S4768/ Chapter 289/ Breslin<br />
This legislation amends the insurance law to make all authorized fraternal benefit societies<br />
subject to the risk-based capital ("RBC") requirements of insurance Law §1322. Currently, a<br />
fraternal benefit society must file an RBC <strong>report</strong> only if it provides the benefits set forth in<br />
<strong>Insurance</strong> Law §4527, or makes optional investments set forth in <strong>Insurance</strong> Law §4530. Only<br />
four fraternal benefit societies are currently subject to the RBC requirements set forth in<br />
<strong>Insurance</strong> Law §1322.<br />
Risk-based capital is a formula which looks at the volatility of an insurer’s assets to determine<br />
the health and solvency of the insurer and to better predict when a company is showing signs of<br />
financial stress.<br />
This bill amends the insurance law to make all authorized fraternal benefit societies subject to<br />
the risk-based capital requirements of <strong>Insurance</strong> Law § 1322. This would facilitate the <strong>Insurance</strong><br />
Department's ability to assess their capitalization levels as related to their insurance operations<br />
and to require implementation of remedial actions, if appropriate. As is the case for societies that<br />
are currently subject to the RBC <strong>report</strong>ing requirements pursuant to <strong>Insurance</strong> Law § 4527 and<br />
§4530, filings would be made using a form approved by the Superintendent, which may include<br />
the form and instructions developed and approved by the National Association of <strong>Insurance</strong><br />
Commissioners specifically for fraternal benefit societies.<br />
11
S4602/ Chapter 447/ Breslin<br />
This bill authorizes the superintendent of <strong>Insurance</strong> to permit a health insurance company<br />
primarily owned or controlled by a tax exempt association of independent workers to provide<br />
group health insurance coverage exclusively to the association's members.<br />
Independent contractors, part-time workers, temporary workers and other individuals who<br />
perform work outside the scope of a full-time employment relationship with an employer<br />
frequently lack access to employment-based group health insurance coverage. As a result, these<br />
independent workers, who comprise a growing portion of the workforce, are more likely than<br />
traditional employees to be uninsured.<br />
The demonstration program authorized by this bill is intended to test new models for enabling<br />
independent workers to create their own health insurance programs that meet their special needs,<br />
while ensuring compliance with solvency requirements, benefit mandates and other obligations<br />
imposed on insurers under this chapter and any regulations issued by the superintendent. The<br />
demonstration program will enable the legislature and the superintendent to evaluate whether<br />
these new models for delivering health insurance benefits to independent workers are effective<br />
and should be expanded to other segments of the population that lack access to employment<br />
based health insurance.<br />
S5980/ Passed <strong>Senate</strong>/ Klein<br />
This legislation allows victims of domestic violence to seek medical and mental health services<br />
and to use their health insurance and other insurance coverage to pay for those services without<br />
fear that insurance correspondence will be sent to the address of the policyholder, who may be<br />
the alleged abuser. Instead, this bill will allow victims of domestic violence to designate<br />
alternative contact information so they can receive insurance correspondence related to their<br />
health care or other related insurance claims in a safe location of their own choosing, such as the<br />
home of a friend or family member, a post office box or a shelter.<br />
S3577/ Veto Message No. 27 / Breslin<br />
<strong>Insurance</strong> Law Section 2131 authorizes the Superintendent of <strong>Insurance</strong> ("Superintendent") to<br />
issue limited licenses to franchisees of vehicle rental companies and wireless <strong>comm</strong>unications<br />
equipment vendors. The limited licenses authorize the franchisees and vendors to act as agents of<br />
insurance companies and sell insurance to customers in connection with the sale or lease of<br />
their products. This bill would amend the <strong>Insurance</strong> Law to permit the Superintendent to<br />
issue similar licenses to self-service storage companies. This would allow such companies to<br />
sell insurance to their customers for property placed in storage units.<br />
While the intent of this bill is laudable - to facilitate the purchase of insurance by consumers<br />
who may not otherwise be covered for a loss the bill raises several policy and technical concerns<br />
that warrant its disapproval.<br />
12
First, as noted in the sponsor's memorandum, "self-storage companies require that renters of<br />
storage space have insurance coverage to protect their stored personal property as a condition of<br />
renting storage space." However, consumers are often unaware of whether their homeowners’<br />
or renters policy already provides coverage for such losses. As such, and perhaps as a result of<br />
imprudent advice from potentially untrained or improperly trained storage space<br />
counterpersons, consumers might purchase unnecessary and expensive insurance, or fall prey<br />
to overly aggressive sales tactics.<br />
Second, while this bill requires self-service storage companies to provide brochures and other<br />
written materials to prospective customers, it does not require that such brochures and materials<br />
be filed with the <strong>Insurance</strong> Department for review prior to their use. This requirement is<br />
currently applicable to wireless <strong>comm</strong>unication equipment vendors who sell insurance and the<br />
same standards should also be applicable to self- service storage companies in order to properly<br />
protect consumers.<br />
Third, this bill does not amend <strong>Insurance</strong> Law Sections 3425 and 3426, which set forth<br />
requirements for the cancellation and nonrenewal of personal and <strong>comm</strong>ercial lines insurance<br />
policies. These lines of coverage include most self-service storage insurance policies, such as<br />
those at issue here. If left un-amended, these sections would not provide appropriate<br />
protections for self-service storage customers, and would foster confusion, errors and<br />
unnecessary expense in regard to the coverage provided by this legislation. For example,<br />
<strong>Insurance</strong> Law Section 3425, which applies to personal lines policies, mandates a minimum<br />
three-year renewal policy period, while <strong>Insurance</strong> Law Section 3426, which applies to<br />
<strong>comm</strong>ercial lines policies, mandates only a one-year renewal policy period. Both these time<br />
periods make little sense in regard to the coverage at issue, since self-storage customers seek<br />
protection only while the property is stored within the storage unit, unlike the more permanent<br />
protection provided by <strong>Insurance</strong> Law Sections 3425 and 3426.<br />
Finally, this bill provides for an immediate effective date. This will make it extremely difficult<br />
for the <strong>Insurance</strong> Department to implement the provisions of this bill in a manner that adequately<br />
protects consumers.<br />
2010<br />
LEGISLATION ENACTED INTO LAW<br />
Bill No./ Sponsor Chapter Title<br />
S638A/ Larkin 11 Requires <strong>report</strong> due the governor and legislature to<br />
include the incidence of misrepresentation by insured of<br />
the principal place where vehicles are driven and stored.<br />
S2088A/ Breslin 25 Relates to standard fire insurance policies.<br />
S5110/ Breslin 389 Authorizes municipal reciprocal insurers to offer full<br />
faith and credit surety bonds for public officers<br />
S6948/ Breslin 404 Enacts provisions relating to reciprocal insurers having a<br />
corporate attorney-in-fact wholly owned by subscribers<br />
at the reciprocal insurers.<br />
13
S6954C/ Breslin 470 Eliminates the board of fire underwriters; repealer<br />
S6949A/ Breslin 210 Relates to the listing of group policyholders in a<br />
directory.<br />
S7772/ Breslin 448 Expands definition of an independent worker and<br />
requirements for an eligible insurer's application.<br />
S1700B/ Breslin 277 Increases from $1,000 to $2,000 the property damage<br />
threshold after which a motor vehicle accident <strong>report</strong><br />
must be filed with the <strong>comm</strong>issioner of motor vehicles.<br />
S4651/ Sampson 322 Establishes that insurers providing rental vehicle<br />
reimbursement coverage shall not require an insured to<br />
utilize a particular rental vehicle company; requires an<br />
insurer writing automobile insurance which includes<br />
rental vehicle reimbursement coverage to inform the<br />
consumer of his or her right to choose a rental vehicle<br />
company to utilize in the event he or she utilizes such<br />
coverage.<br />
S7773A/ Breslin 544 Enacts provisions providing sponsored group personal<br />
insurance and allows such insurance to be written by<br />
authorized insurers.<br />
S7845/ Breslin 303 Relates to insurance losses as a result of the insured<br />
being intoxicated or under the influence of narcotics<br />
S7118A/ Breslin 368 Authorizes limited licenses to self-storage companies for<br />
the sale of insurance on personal property stored at<br />
storage facilities.<br />
LEGISLATION WHICH PASSED THE SENATE ONLY<br />
Bill No./ Sponsor<br />
Title<br />
S2092/ Breslin Relates to service contracts<br />
S3554/ Breslin Relates to insurance losses as a result of the insured being intoxicated<br />
or under the influence of narcotics<br />
S4116/ Breslin Relates to allowable investments and activities of employees of the<br />
department of insurance<br />
S5203/ Breslin Relates to requiring certain polices of insurance for public vessels<br />
which carry passengers<br />
S5203/ Breslin Requires the owners of public vessels intending to operate on navigable<br />
waters of the state to obtain marine protection and indemnity insurance<br />
S5980/ Klein Requires insurers to provide victims of domestic violence with the<br />
option of providing alternative contact information<br />
S6270A/ Breslin Authorizes the superintendent of insurance to suspend the risk to<br />
capital requirement for writing new mortgage guaranty insurance risks<br />
S7674/ Breslin Permits unauthorized foreign or alien insurers to contact nonresident<br />
persons, firms, associations or corporations to make insurance<br />
contracts.<br />
S4869B/ Breslin Establishes the "Interstate insurance product regulation compact" to<br />
14
egulate certain insurance products among member states and to<br />
promote and protect the interest of consumers of individual and group<br />
annuity, life insurance, disability income and long-term care insurance<br />
products.<br />
S7220/ Breslin Exempts large <strong>comm</strong>ercial insureds from certain rate and policy form<br />
requirements.<br />
S7794A/ Breslin Permits certain agreements by domestic mutual insurance corporations.<br />
S638A/ Chapter 11/ Larkin<br />
Within the Metro areas of <strong>New</strong> <strong>York</strong> <strong>State</strong>, automobile insurance is appropriately higher in<br />
relation to the more rural, less populated areas of <strong>New</strong> <strong>York</strong> <strong>State</strong>. The reasons for higher rates<br />
of automobile insurance in Metro areas include higher incidents of accidents, theft, and damage.<br />
The practice of misrepresenting the place where an automobile is garaged or driven is a<br />
dishonest way of reducing the costs paid for insurance. Residents of areas where insurance costs<br />
are higher should not be permitted to pay lower rates for automobile insurance based simply on<br />
documentation that states their motor vehicle is garaged in an area where insurance costs are<br />
lower. This act is causing an imbalance in the insurance pool of some regions in less populated<br />
areas of <strong>New</strong> <strong>York</strong> <strong>State</strong>, causing rates for less populated regions to be artificially inflated. This<br />
legislation seeks to <strong>report</strong> on these incidents in order to combat these abuses and make such<br />
misrepresentation a fraudulent insurance act.<br />
S2088A/ Chapter 25/ Breslin<br />
The appraisal provision required by law in the standard fire insurance policy is a vehicle to assist<br />
in quickly settling contract disputes between the insured and insurer, rather than more time<br />
consuming litigation. Without the appraisal process the insured is forced to accept an offer from<br />
the carrier that they think is deficient or to pursue recovery through litigation which is made cast<br />
prohibitive by the expenses of bringing the action. A 2002 decision of the Supreme Court,<br />
Appellate Division, Fourth Department (THOMAS H. FAHRENHOLZ V. SECURITY<br />
MUTUAL INSURANCE COMPANY AND THE KREINER COMPANY, INC), pointed out<br />
that further legislative action is required to eliminate the prohibition set forth in CPLR 7601<br />
against seeking specific performance of the appraisal provision in the standard fire insurance<br />
policy Section 7601 of the Civil Practice Law and Rules which now allows an individual to start<br />
a special proceeding to enforce a contract or agreement, exempts fire insurance policies from<br />
such proceedings.<br />
This bill amends the problems inherent in CPLR 7601 by providing clear language to allow<br />
either party to utilize the appraisal process more frequently and thereby avoid the high costs and<br />
delays inherent in protracted litigation.<br />
S2092/ Passed <strong>Senate</strong> Only/ Breslin<br />
Service contracts are popular products with consumers because it gives them peace of mind,<br />
knowing that they have managed the cost of future repairs of their vehicles. Allowing the<br />
15
provision of windshield repair and paint less dent removal service contracts be sellers and<br />
suppliers of such services will give consumers the option of purchasing such coverage<br />
in lieu of bearing the risk of repair. Through the purchase of these contracts, consumers will not<br />
have to bear the cost of repairing cracks or chips in their vehicle windshields, or removing small<br />
dents, dings or creases from their motor vehicles.<br />
This bill expands the definition of service contracts to include contracts made by a supplier or<br />
seller of a service for repair of cracks or chips in a motor vehicle windshield and for repair or<br />
removal of dents, dings or creases from a motor vehicle without affecting the existing paint<br />
finish.<br />
S3554/ Passed <strong>Senate</strong> Only/ Breslin<br />
Under the Public Health Law and the federal Emergency Medical Treatment and Active Labor<br />
Act, health services providers are required to provide emergency medical services to persons in<br />
need of such care. The <strong>Insurance</strong> Law, however, permits no-fault insurers to deny coverage<br />
where the insured person is injured while operating a vehicle in an intoxicated state. As a result,<br />
health services providers are sometimes not compensated for services they are required to render<br />
to stabilize their patients in emergency situations. This is both inequitable to doctors and, by<br />
leading doctors to avoid blood alcohol and other tests for intoxication or drug use for fear they<br />
will lead to denial of compensation, undermines medically appropriate screening procedures.<br />
This bill provides for a narrow amendment to <strong>Insurance</strong> Law § 5103(b)(2). This amendment<br />
would prohibit a no-fault insurer from excluding from coverage a person who sustains injuries as<br />
a result of operating a motor vehicle while intoxicated, with respect to necessary emergency<br />
health services rendered in a general hospital, as defined in Public Health Law § 2801(10),<br />
including ambulance services attendant thereto and related medical screening. This amendment<br />
is intended to permit a health service provider to obtain reimbursement for any necessary<br />
emergency services performed in a general hospital or by an ambulance worker outside of a<br />
general hospital, on a person who has sustained injuries as a result of operating a motor vehicle<br />
while intoxicated or drug impaired. This bill also would permit reimbursement for necessary<br />
related medical screening, such as blood alcohol and drug tests, performed in a general hospital<br />
or by an ambulance worker outside of a general hospital.<br />
S4116/ Passed <strong>Senate</strong> Only/ Breslin<br />
Section 204 of the <strong>Insurance</strong> Law was designed to ensure that the <strong>Insurance</strong> Department and its<br />
employees regulate the insurance industry in a disinterested and ethical manner. As a general<br />
matter, the statute continues to serve the legislative purposes underpinning its predecessor's<br />
enactment nearly one hundred and fifty years ago when the <strong>Insurance</strong> Department was first<br />
established, which included precluding not only impropriety but also the appearance of<br />
impropriety. Significant changes in the financial world and the nature of investments since the<br />
statute's reenactment in 1939 have raised questions as to the reach of Section 204.<br />
Section 204 was not intended to prohibit passive investment in investment companies that<br />
incidentally own a securities of insurance companies or in securities of issuers that own licensees<br />
with insurance operations that are not material to the business of the issuers taken as a whole.<br />
16
Accordingly, this bill amends Section 204 in a reasonable manner that maintains the statutory<br />
intent.<br />
The bill also provides an important safeguard in that it prohibits employees of the <strong>Insurance</strong><br />
Department from investing in mutual funds that are designed to primarily or exclusively invest in<br />
the securities of licensees of the Department. Specialty funds, sometimes call "Sector Funds,"<br />
may be designed to invest primarily in life insurance companies. An investment in such a fund<br />
by a Department employee would be prohibited by this bill.<br />
Finally, Section 16(3)(d) of the <strong>New</strong> <strong>York</strong> <strong>State</strong> banking law as amended by Chapter 318 of the<br />
laws of 1995 to make changes similar to this bill for employees of the Banking Department. The<br />
employees of the two agencies should be treated in a similar matter, and this bill accomplishes<br />
those goals.<br />
S5203/ Passed <strong>Senate</strong> Only/ Breslin<br />
On October 2, 2005, the ship, the Ethan Allen, capsized on Lake George resulting in the deaths<br />
of twenty individuals. This tragedy brought to light the fact that there is no requirement that<br />
public vessels carry liability insurance. This legislation will enhance the safety and security of<br />
the public who utilize <strong>comm</strong>ercial watercraft for recreational and business purposes.<br />
This bill requires public vessels operating in <strong>New</strong> <strong>York</strong> <strong>State</strong> to carry marine protection and<br />
indemnity insurance, permits excess line brokers to provide marine liability insurance, and<br />
allows owners of public vessels to be self-insured upon approval of the <strong>comm</strong>issioner of parks,<br />
recreation and historic preservation.<br />
S5980/ Passed <strong>Senate</strong> Only/ Klein<br />
This legislation allows victims of domestic violence to seek medical and mental health services<br />
and to use their health insurance and other insurance coverage to pay for those services without<br />
fear that insurance correspondence will be sent to the address of the policyholder, who may be<br />
the alleged abuser. Instead, this bill will allow victims of domestic violence to designate<br />
alternative contact information so they can receive insurance correspondence related to their<br />
health care or process other related insurance claims in a safe location of their own choosing,<br />
such as the home of a friend or family member, a post office box or a shelter.<br />
This bill will help protect the privacy and safety of domestic abuse victims regardless of whether<br />
they remain in the same household with their abuser. Victims who leave abusive environments<br />
will be better able to access important medical and mental health care services if they can use<br />
their existing health insurance without fear that claim and billing correspondence will reveal<br />
their location or other sensitive information. Similarly, individuals living in abusive situations<br />
will also be more likely to seek necessary treatment if their privacy can be assured, and that<br />
treatment may be able to help them connect with the resources available in their <strong>comm</strong>unities to<br />
help victims of domestic violence.<br />
17
S6270A/ Passed <strong>Senate</strong> Only/ Breslin<br />
Mortgage guaranty insurance companies are forbidden from writing business when the ratio of<br />
their total policy liability to their policyholder's surplus exceeds a ratio of 25 to 1. This standard<br />
was developed in the 1960s when the modern mortgage guaranty insurance industry was in its<br />
early stages and no risk-to-capital ratio requirement existed. Given the nascent state of the<br />
industry, the 25 to 1 rule was reasonable, but by its very nature was inflexible and not reflective<br />
of changing or special circumstances. In particular, a mortgage guaranty insurer is likely to reach<br />
the 25 to 1 standard in the midst of a high claims paying cycle (as the industry is currently<br />
experiencing), but may have more than enough capital to pay expected claims on its insurance in<br />
force. If mortgage guaranty insurers are compelled to cease writing new business as Section<br />
6502 currently dictates, the ability of those insurers to remain viable <strong>comm</strong>ercial entities, and to<br />
write insurance after the end of this high claims-paying cycle, will be impaired.<br />
Under the amendment to section 6502 (b) (1), the Superintendent is authorized to evaluate<br />
whether the risk to capital requirement should be suspended for a particular insurer and to<br />
determine the period of time and conditions under which the suspension of that requirement will<br />
apply. Permitting a mortgage guaranty insurer to operate above the 25 to 1 requirement for a<br />
limited period would allow the insurer to increase its capital base for paying claims and insuring<br />
loans in the future. Furthermore, if mortgage guaranty insurers are required to cease writing<br />
new business as triggered by the current risk to capital requirement, fewer loans will be insured<br />
in <strong>New</strong> <strong>York</strong>, further fueling pressures on the availability of mortgage finance credit. As a<br />
consequence, the housing recovery in <strong>New</strong> <strong>York</strong> (and elsewhere) will likely be impeded, with a<br />
concomitant adverse impact on the state's economic recovery.<br />
S7674/ Passed <strong>Senate</strong> Only/ Breslin<br />
Under current law, an entity cannot act on behalf of an unauthorized insurer from offices in the<br />
<strong>State</strong> even if the actions including the solicitation, negotiation or underwriting of risks do not<br />
involve <strong>New</strong> <strong>York</strong> residents. Thus, business that could otherwise be transacted in <strong>New</strong> <strong>York</strong><br />
must take place outside of the state. By forcing these companies beyond the <strong>State</strong>'s borders, the<br />
existing law drives jobs and the benefits related thereto out of the <strong>State</strong>.<br />
This legislation would allow these entities which are part of the holding company system of a<br />
domestic insurer and the unauthorized insurer, along with the employees that support them, to<br />
come into the <strong>State</strong> and set up office facilities within its borders. It would allow such entities to<br />
operate from an office in the <strong>State</strong> so that it may provide those services necessary to support an<br />
unauthorized insurer's overseas operations. Such services would include underwriting,<br />
negotiating contract terms and quoting premiums with respect to non-<strong>New</strong> <strong>York</strong> residents. This<br />
legislation would allow these entities to undertake those support functions necessary to operate<br />
their business, from within the <strong>State</strong>, without affecting <strong>New</strong> <strong>York</strong> policyholders. The protections<br />
afforded <strong>New</strong> <strong>York</strong> policyholders will be unimpaired by the proposed legislation.<br />
Importantly, this will allow jobs to be established in <strong>New</strong> <strong>York</strong> related to the conduct of business<br />
in <strong>New</strong> <strong>York</strong> that has no nexus to citizens of the <strong>State</strong> and will not affect the regulation of<br />
insurance as it relates to <strong>New</strong> <strong>York</strong> residents.<br />
18
S4869B/ Passed <strong>Senate</strong> Only/ Breslin<br />
In general, interstate compacts are used to establish the framework for cooperative solutions to<br />
multi-state challenges. There are over two hundred interstate compacts currently in existence<br />
covering a wide variety of subjects. Every state belongs to at least fourteen such compacts.<br />
This bill is based on the NAIC Model Act.<br />
The bill provides for a single point of product and rate filings subject to uniform national<br />
standards, which provides the following benefits:<br />
a. Regulatory efficiency/effectiveness: more effective use of limited regulatory resources.<br />
b. Single high-quality review of increasingly complex products.<br />
c. Leverage collective expertise of states in setting uniform standards.<br />
d. opportunity to redirect resources to other areas of consumer protection.<br />
e. Meet industry's need for single point of filing.<br />
f. Meet industry's need to get products to market in a more timely manner.<br />
g. Permit industry to compete more effectively with financial institutions such as banks and<br />
security firms.<br />
h. Provide consumers with a broader choice of products in a more timely manner.<br />
<strong>State</strong>s would still retain control over the insurance regulatory process even if a state elects to join<br />
the compact. If a state disagrees with a product standard developed by the Commission, it may<br />
opt-out of the uniform standard either by regulation or legislation. The bill would also allow<br />
companies to continue to file products in the individual states through the existing form filing<br />
process.<br />
S7220/ Passed <strong>Senate</strong> Only/ Breslin<br />
Commercial policyholders do not require the same level of regulatory protection as is warranted<br />
for personal lines insurance. Commercial policyholders often have risk management<br />
professionals on staff and possess a higher level of knowledge and sophistication relative to<br />
insurance options. Rather, <strong>comm</strong>ercial insureds need flexibility so that policies can be tailored to<br />
their particular needs. Commercial insureds also need to be able to respond rapidly to<br />
competitive forces, economic conditions and the needs of their customers. The current system in<br />
<strong>New</strong> <strong>York</strong> can hinder the ability of insurers to respond to the needs of their <strong>comm</strong>ercial<br />
customers, which has led many <strong>comm</strong>ercial insureds to utilize alternate insurance mechanisms to<br />
satisfy their insurance needs. These alternate insurance mechanisms are often unregulated or<br />
subject to minimal regulation, leaving <strong>comm</strong>ercial insureds utilizing such mechanisms without<br />
the protection of the guarantee funds, adequate solvency regulation, or other valuable regulatory<br />
protections.<br />
The attached legislation would modernize the regulation of <strong>comm</strong>ercial insurance in <strong>New</strong> <strong>York</strong><br />
and would help make <strong>New</strong> <strong>York</strong> a more attractive place for insurers to do business. This<br />
legislation would also facilitate operations and reduce costs for <strong>comm</strong>ercial policyholders<br />
because it would promote competition among carriers which would drive down premiums. In<br />
19
addition, this legislation would allow the <strong>Insurance</strong> Department to focus its resources on<br />
solvency and personal lines regulation which will, in turn, speed approvals in those areas.<br />
S7794A/ Passed <strong>Senate</strong> Only/ Breslin<br />
Existing law prohibits domestic mutual insurance companies (except those organized before<br />
January 1, 1940 to do only marine protection and indemnity insurance) from entering into an<br />
agreement with any of the company's officers or directors, or with any firm or corporation in<br />
which any such officer or director is pecuniarily interested directly or indirectly, whereby the<br />
insurance corporation agrees to pay, for the acquisition of business, any <strong>comm</strong>ission or other<br />
compensation which under the agreement is increased or diminished by the amount of such<br />
business or by the insurance corporation's earnings on such business.<br />
The <strong>Insurance</strong> Department has interpreted this law as prohibiting a mutual insurance company<br />
from entering into a profit sharing <strong>comm</strong>ission agreement with an insurance agency simply<br />
because one of the insurance company's officers also served as a director of a corporation that<br />
owned the insurance agency. The <strong>Insurance</strong> Department found that the insurance company<br />
officer had an "indirect" pecuniary interest in the insurance agency.<br />
The existing prohibition is an outdated and overly restrictive limitation put in place nearly a<br />
century ago. It serves no legitimate purpose today and is no longer practical in today's business<br />
environment. In today's business <strong>comm</strong>unity, many directors and officers of insurance<br />
companies also serve on the board of directors of various other, non-insurance business<br />
corporations. Today, many corporations are part of a larger holding company structure, and it is<br />
quite possible that a corporation where an insurance company officer serves as director, would<br />
have affiliates or subsidiaries that engage in insurance activities. This provision unnecessarily<br />
prohibits a mutual insurance company from entering into certain compensation agreements with<br />
these insurance agency affiliates and discourages mutual insurance company officers and<br />
directors from sharing their talents and serving as directors and officers of various other<br />
corporations.<br />
This bill permits domestic mutual insurance corporations to enter into certain compensation<br />
agreements with firms and corporations in which an officer or director has only an "indirect"<br />
pecuniary interest.<br />
S5110/ Chapter 389 / Breslin<br />
One of the fundamental insurance coverages that all municipalities need is full faith and credit<br />
bonds for their public officers. This is a required coverage by virtue of Public Officers law, § 11<br />
and 30, and parallel provisions of the Town, Village and General City laws. Failure to acquire<br />
such coverage for municipal officials who handle financial transactions of a municipality results<br />
in the office being vacated by operation of law.<br />
Current law puts NYMIR and the local brokers and agents in a very difficult position when<br />
trying to place these coverages. Elected officials need this coverage in order to qualify for office.<br />
They have only 30 days from the <strong>comm</strong>encement of their term to acquire it, or they are deemed<br />
20
to have vacated the office to which they were just elected. Yet even markets that continue to<br />
offer this essential coverage are now requiring credit checks and in some cases declining to<br />
extend coverage if a satisfactory credit history is not forthcoming. As the largest underwriter of<br />
local government risk in the <strong>State</strong>, this is exactly the reason NYMIR was formed, to insure that<br />
<strong>New</strong> <strong>York</strong>'s local governments will be able to acquire the insurance protections that their<br />
taxpayers require.<br />
This bill authorizes municipal reciprocal insurers the ability to offer full faith and credit surety<br />
bonds for public officers.<br />
S6948/ Chapter 404 / Breslin<br />
This legislation reinserts into section 6106 the language previously existing in the prerecodification<br />
section 415, referring to reciprocals having a corporate attorney in fact wholly<br />
owned by the subscribers of the reciprocal.<br />
In addition, the proposed bill includes a new provision in insurance law section 6107 to avoid<br />
transition difficulties that would otherwise ensue for insurers who have attorneys-in-fact wholly<br />
owned by their subscribers, but who currently are not expressly authorized to issue renewal<br />
insurance policies with the notice that the acceptance of the policy with the subscribers'<br />
agreement attached constitutes the signing of the subscribers agreement.<br />
The new procedure allows such reciprocals (and reciprocals authorized to issue non-assessable<br />
policies) to transmit to the subscribers changes to the subscribers’ agreement together with the<br />
entire subscribers’ agreement in force. In addition, the proposed change must be submitted to the<br />
subscribers with a notice stating that the failure to object to the amendment within sixty days<br />
constitutes the acceptance of the agreement as amended.<br />
All reciprocal insurer subscribers' agreement amendments must be approved by the<br />
Superintendent pursuant to subdivision (b) of section 6107 of the insurance law, and by the<br />
advisory <strong>comm</strong>ittee of the reciprocal pursuant to subdivision (d) of section 6107. Therefore, the<br />
new procedure provides essentially the same safeguards and efficiencies recognized in the<br />
procedures authorized by prior sections 415 and 416 of the insurance law before the 1984<br />
recodification<br />
S6954C/ Chapter 470 / Breslin<br />
The Board of Fire Underwriters (the "Board") was created at the request of the insurance<br />
industry in the late 1800's, to assist them in protecting insured's property in the City of <strong>New</strong><br />
<strong>York</strong>. To attain this goal, the Board created the Fire Patrol, the purpose of which was to respond<br />
to fires at or near an insured's location and attempt to remove, preserve or otherwise protect<br />
property contained therein from such fire, or other harmful effects such as smoke or water<br />
damage. The Fire Patrol was funded by self-assessments on Board members.<br />
21
However, over time the Board found that the Fire Patrol was unable to adequately protect<br />
property from fires or related damage (e.g. modern electronics, prevalent throughout residences<br />
and offices, are often damaged beyond use despite Patrol efforts). As such, the effectiveness<br />
and use of the Fire Patrol diminished to the point where it was determined by the Board that it<br />
was no longer necessary and the self-assessments were burdening member companies with<br />
unnecessary costs that only increased the eventual cost to the consumer. The result was that the<br />
Fire Patrol was disbanded in 2006.<br />
Given that the original purpose of the Board is no longer relevant, it is appropriate to provide for<br />
its dissolution.<br />
S6949A/ Chapter 210 / Breslin<br />
This legislation is necessary in order to allow the SuperGuarantee Program, or programs similar<br />
to it, to continue to operate in <strong>New</strong> <strong>York</strong> <strong>State</strong>. Through the SuperGuarantee Program, if a<br />
consumer (1) uses a service provider identified as a SuperGuarantee service provider in the<br />
yellow page directory and (2) registers for the program on the SuperGuarantee website, then in<br />
the event that the consumer encounters a problem with the service of such provider, the yellow<br />
pages publisher would initiate a dispute resolution process between the consumer and the<br />
provider. If the consumer is not satisfied with the outcome of that process, the yellow pages<br />
publisher would provide payment to the consumer. Payment would be for the lowest estimate of<br />
two other service providers to correct the problem or the amount charged under the contract<br />
between the consumer and the original SuperGuarantee service provider, not to exceed $500.<br />
There is no cost to the consumer for participating in the Program.<br />
The <strong>Insurance</strong> Department has made the determination that the SuperGuarantee Program<br />
constitutes the business of insurance under <strong>New</strong> <strong>York</strong> law. Enactment of this legislation is<br />
necessary in order for the Program to continue operating in <strong>New</strong> <strong>York</strong>. The SuperGuarantee<br />
Program provides a legitimate benefit to the consumer at no extra cost. At a time<br />
when both the time and finances of many <strong>New</strong> <strong>York</strong>ers are limited, the SuperGuarantee Program<br />
can help to ensure that <strong>New</strong> <strong>York</strong> consumers are able to resolve disputes with service providers<br />
satisfactorily, while minimizing the time and hassle involved.<br />
S7772/ Chapter 448 / Breslin<br />
Independent workers such as part-time workers, temps, freelancers and independent contractors<br />
have a particularly difficult time finding affordable health insurance because they cannot get<br />
coverage on a group basis through their employer. To address this problem, the legislature<br />
enacted A.7949-A (Silver)/S.4602A (Breslin) that creates special demonstration authority for the<br />
<strong>Insurance</strong> Department to permit a health insurer owned by a tax-exempt association of<br />
independent workers to offer coverage solely to the association's members, without having to<br />
serve the employer-based group health insurance market. A health insurer participating in this<br />
program is required to follow all insurance law, including benefit mandates, and <strong>report</strong> to the<br />
<strong>Insurance</strong> Department which will analyze the impact of the program.<br />
22
An administrator of this health insurance plan is permitted to charge a reasonable fixed fee for<br />
assessing an applicant’s eligibility for coverage. This fee is necessary to ensure that the<br />
administrator can process the applications and will only be assessed when an application is<br />
submitted.<br />
This bill amends <strong>Insurance</strong> Law §1123, to clarify the definition of "independent worker" to<br />
include (1) individuals who work full-time for a single employer on a temporary basis and (2)<br />
domestic workers such as nannies. This would insure that all independent workers have access to<br />
uninterrupted and affordable health insurance.<br />
S1700/ Chapter 277 / Breslin<br />
Prohibits insurers from imposing a surcharge for accidents where the property damage does not<br />
exceed two thousand dollars and where no physical injury resulted.<br />
This legislation amends Section 2335 of the insurance law by adding a new subsection (a),<br />
raising from one thousand to two thousand dollars the amount of property damage which, if<br />
exceeded in a motor vehicle accident, would allow an insurer to impose a policy premium<br />
surcharge.<br />
<strong>New</strong> <strong>York</strong> is always in danger of becoming the highest cost state in the nation for auto insurance.<br />
This legislation would help contain premium costs by preventing auto insurance surcharges for<br />
minor accidents.<br />
The amount of property damage for which insurers may impose a premium surcharge is currently<br />
based on the amount ($1,000) set in V&T section 605, which requires accident <strong>report</strong>ing to the<br />
Department of Motor Vehicles(See 11 NYCRR 169.1(a)). Changes in accident costs since 1991,<br />
when the current <strong>report</strong>ing threshold was enacted, mean that the most minor accidents now result<br />
in an insurance surcharge. Sometimes, the amount paid in surcharges over three years can equal<br />
or exceed the amount of the original insurance benefit. This is unfair to consumers and leads<br />
many to pay out-of-pocket for claims which they could legitimately collect from insurers.<br />
This bill prohibits insurer surcharges for accidents with property damage less than $2,000. (All<br />
accidents causing any type of injury would remain surchargeable.) The accident <strong>report</strong>ing<br />
threshold was last raised effective August 1, 1991, to $1,000 from $600. This bill, as amended,<br />
would still require minor accidents to be <strong>report</strong>ed so statistics can be kept, but would adjust the<br />
insurance premium surcharge threshold to a fairer and more reasonable amount.<br />
S4651/ Chapter 322 / Sampson<br />
There have been instances of insurers steering their customers with rental vehicle reimbursement<br />
coverage to use one particular rental vehicle company. Oftentimes, these customers are unaware<br />
of the availability of other rental vehicle companies, some of which may offer less expensive<br />
rentals than the company favored by the insurer. Consumers should not be forced to use one<br />
particular rental vehicle company or be in any way limited in their ability to utilize the coverage<br />
they purchased. When insurers re<strong>comm</strong>end only one rental vehicle company without telling the<br />
23
consumer they have the option to use any company, consumers (many of whom are distressed<br />
from suffering an accident) often hastily agree to rent from the re<strong>comm</strong>ended company,<br />
regardless of the fact that other, possibly less expensive and more convenient, options are<br />
available. This bill would ensure that consumers are afforded the opportunity to make an<br />
informed decision.<br />
This bill is based on <strong>Insurance</strong> Law section 2610, which prohibits insurers providing collision or<br />
comprehensive coverage from requiring an insured to utilize a particular repair shop, or, in<br />
processing any such claim, re<strong>comm</strong>ending or suggesting that the insured utilize a particular<br />
repair shop.<br />
S7773A/ Chapter 544 / Breslin<br />
<strong>New</strong> <strong>York</strong>'s current Employer Sponsored Group Personal Excess law (section 3445*2) permits<br />
the sale of group personal excess insurance but only to designated employees of an employer that<br />
sponsors the group. This bill:<br />
(1) Permits officers and directors to be members of an employer sponsored groups in addition to<br />
just employees, as well as the spouses and immediate family members and household members<br />
of employees.<br />
(2) Allows other types of groups, clubs or associations (not just employers) to sponsor a group<br />
insurance program. Examples include groups like stamp or coin collectors club sponsoring a<br />
group insurance program for personal property floaters covering valuable stamp or coin<br />
collections a vintage auto enthusiast club sponsoring programs for antique auto insurance, etc.<br />
Additionally, banks and other financial institutions that own large portfolios of residential<br />
properties (e.g., foreclosed homes), that are renting out such properties, could sponsor a program<br />
for renters insurance for their tenants.<br />
(3) Consistent with the examples outlined above, permit group insurance for a few new types of<br />
insurance in addition to group personal excess. specifically group personal property floaters (as<br />
in our stamp/coin collection example), group vintage vehicle insurance (as in our antique<br />
auto enthusiast club example) and group renters insurance (as in our foreclosed properties<br />
example).<br />
(4) Set standards for groups that can sponsor group programs. The standards in our proposed<br />
draft are similar to standards found in other state laws or regulations -- e.g.. a sponsor group<br />
cannot be a fictitious group, cannot have been formed for the purpose of buying or selling<br />
insurance, must involve members engaged in a <strong>comm</strong>on pursuit or enterprise, must have 25 or<br />
more members, have been in existence for at least three years, have adopted by-laws and a<br />
method to enroll or register members.<br />
(5) Adopt consumer safeguards with respect to the cancellation or nonrenewal of a group policy<br />
and with regard to premium payments collected by the sponsor group acting on behalf of the<br />
insurer.<br />
24
The rest of the law remains unchanged -- in particular, the law still clearly states that no member<br />
of a group is ever obligated to buy any insurance.<br />
These types of group insurance programs can be beneficial to the public in a number of ways.<br />
With respect to valuable collections, such as coins. stamps and other collectibles, we believe that<br />
many collectors are under-insured. There are sub limits in typical homeowners’ policies<br />
applicable to such items. So, group programs for collectors could increase their awareness of this<br />
coverage and, by grouping such homogeneous collectors, make such insurance products more<br />
affordable, too. Similarly, group programs can raise the awareness of renters insurance<br />
among tenants.<br />
The market for antique and collectible auto insurance is dominated by a few Managing General<br />
Agents. Permitting group antique auto programs could inject some additional competition into<br />
this market. And, members of antique auto clubs also have homogeneous risk characteristics -<br />
e.g., vehicles typically are garaged, driven very little, often towed to shows instead of being<br />
driven, kept in mint condition, and clubs often are formed around owning a specific type or<br />
model of car.<br />
S7845/ Chapter 303 / Breslin<br />
Under the Public Health Law and the federal Emergency Medical Treatment and Active Labor<br />
Act, health services providers are required to provide emergency medical services to persons in<br />
need of such care. The <strong>Insurance</strong> Law, however, permits no-fault insurers to deny coverage<br />
where the insured person is injured while operating a vehicle in an intoxicated state. As a result,<br />
health services providers are sometimes not compensated for services they are required to render<br />
to stabilize their patients in emergency situations. This is both inequitable to doctors and, by<br />
leading doctors to avoid blood alcohol and other tests for intoxication or drug use for fear they<br />
will lead to denial of compensation, undermines medically appropriate screening procedures.<br />
In 2008, a bill was introduced to address this situation (A.10000/S.8294-A), but it was vetoed by<br />
Governor Paterson because it was not limited to emergency care, but rather would have required<br />
no-fault carriers to have reimbursed providers for virtually all health services given to<br />
intoxicated individuals. By permitting reimbursement for necessary related medical screenings,<br />
such as blood alcohol and drug tests, more screenings will occur, underlying drug or alcohol<br />
problems will be more frequently identified and addressed, and ultimately fewer drug or alcoholrelated<br />
injuries will occur.<br />
S7118A/ Chapter 368 / Breslin<br />
Self-service storage companies require that renters of storage space have insurance coverage to<br />
protect their stored personal property as a condition of renting storage space. While some<br />
consumers have a homeowner's or renter's policy that will provide coverage for their stored<br />
property, many others lack the required insurance coverage. If self-service storage companies are<br />
permitted to obtain a limited license to offer personal effects insurance to renters of storage<br />
space, consumers will have the opportunity to obtain the required coverage to protect their<br />
valuable property.<br />
25
Personal effects insurance would cover the loss of, or damage to a renters stored personal<br />
property for events beyond the self-service storage company's control. A number of other states<br />
currently permit the issuance of limited insurance licenses to self-service storage companies<br />
authorizing them to offer personal effects insurance in connection with the rental of storage<br />
space. Existing insurance law currently provides for the issuance of a limited license to rental<br />
vehicle companies and wireless <strong>comm</strong>unications equipment vendors. A limited license<br />
authorizes these entities to offer certain types of insurance only in connection with the rental of<br />
motor vehicles or the sale of wireless <strong>comm</strong>unications equipment.<br />
This bill permits the Superintendent to issue a limited license to a self-service storage company<br />
that would permit it to offer personal effects insurance only in connection with the rental of<br />
storage space at a storage facility. Just as rental vehicle companies and wireless <strong>comm</strong>unications<br />
equipment vendors are currently required to do when offering insurance, self-service storage<br />
companies would be required to provide brochures and other written materials to prospective<br />
renters that: summarize the insurance already provided by a renter's/homeowner's insurance<br />
policy or other source of coverage, state that the purchase of insurance is not required<br />
to rent storage space, describe the process for filing a claim if insurance is purchased, contain the<br />
price, deductible, benefits, exclusions and conditions of the policy; and state that the customer<br />
may cancel the insurance at any time and any unearned premium will be refunded in accordance<br />
with applicable law.<br />
Self-service storage companies also would be required to conduct training programs for their<br />
employees and sale representatives offering insurance pursuant to the limited license that must<br />
meet the minimum standards that currently apply to training programs required by rental vehicle<br />
companies and wireless <strong>comm</strong>unications equipment vendors that offer insurance pursuant to a<br />
limited license. These training programs also must be approved by the Superintendent.<br />
Senator Breslin at the medical<br />
malpractice reform public hearing<br />
Judith Ursitti from Autism Speaks at the press<br />
conference for senate bill 7000B<br />
26
HEALTH INSURANCE<br />
The <strong>Senate</strong> <strong>Insurance</strong> Committee studied, <strong>report</strong>ed, and made re<strong>comm</strong>endations on health care<br />
provisions, regulations, insurance, liability, licensing, and delivery of services. In so doing, the<br />
Committee endeavored to ensure that <strong>New</strong> <strong>York</strong> <strong>State</strong> as provider, financier, and regulator<br />
adopts the most cost-effective means of delivery of health care services so that the greatest<br />
number of <strong>New</strong> <strong>York</strong>er’s receive quality health care.<br />
The <strong>Senate</strong> <strong>Insurance</strong> Committee also focused on assisting consumers to make informed<br />
decisions when selecting a health care plan and on identifying issues, trends and problems that<br />
may require executive, regulatory, or legislative intervention.<br />
In 2009, Chapter 240, sponsored by Senator Breslin, sought to address the problem of numerous<br />
uninsured young adults between the ages of 19 through 29 who represented 31 percent of <strong>New</strong><br />
<strong>York</strong> <strong>State</strong>'s total uninsured population. The goal of this legislation was to extend and make an<br />
available option to young adults who often are unable to afford individual direct payment<br />
insurance and frequently choose to go uninsured.<br />
As healthcare costs skyrocketed and wages remained stagnant, the <strong>Senate</strong> <strong>Insurance</strong> Chairman<br />
ensured enactment of Prior Approval legislation (S.8088/ Chapter 107). By requiring prior<br />
approval, DOI is able to use objective criteria to review many premium rates before they are<br />
increased and no longer has to rely on self-interested insurers to police themselves. By ensuring<br />
that rates are fair and correct before they are increased, consumers and insurers are able to plan<br />
for the future, ending scenarios where individuals drop their insurance coverage because they are<br />
being charged too much. Prior approval ends inappropriately excessive rate increases and helps<br />
avoid dropped coverage and out-of-control premiums.<br />
These significant pieces of legislation serve as the foundation to the future as <strong>New</strong> <strong>York</strong><br />
continues to endeavor to increase access to health insurance for all <strong>New</strong> <strong>York</strong>ers.<br />
2009<br />
LEGISLATION ENACTED INTO LAW<br />
Bill No./ Sponsor Chapter Title<br />
S5471/ Breslin 236 Relates to extending state continuation benefits from<br />
eighteen to thirty-six months.<br />
S5472A/ Breslin 237 Provides enhanced consumer and provider protections.<br />
S6030/ Breslin 240 Provides for the extension of health insurance coverage<br />
to the unmarried child of an insured through the age of<br />
29 years.<br />
S66006/ Breslin 498 Establishes a special enrollment period for employees<br />
and members with expired health coverage who wish to<br />
utilize state continuation benefits.<br />
S3068/ Breslin 7 Relates to a special enrollment period; authorizes an<br />
27
individual who does not have an election of<br />
continuation of coverage in effect on the effective date<br />
of the American Recovery and Reinvestment Act of<br />
2009, but who would be an assistance eligible<br />
individual under Title III of such act if such election<br />
were in effect, may elect continuation of coverage.<br />
LEGISLATION WHICH PASSED THE SENATE ONLY<br />
Bill No./ Sponsor<br />
S4463A/ Breslin<br />
Title<br />
Requires the NYS health foundation and state insurance fund to file<br />
<strong>annual</strong> audited financial statements with the office of the state<br />
comptroller.<br />
S5471/ Chapter 236/ Breslin<br />
<strong>New</strong> <strong>York</strong>'s unemployment rate was close to eight percent as of February 2009, up from six<br />
percent in November 2008, and climbing at a rate that exceeds the national average. An<br />
increasing number of workers are experiencing extended periods of job loss or being forced to<br />
work part-time. All of these factors contribute to a loss of group health insurance coverage.<br />
Also, as companies downsize, older workers are often offered early retirement options as an<br />
alternative to lay-offs. These individuals may not have retiree health benefits, and can be years<br />
away from Medicare. This bill extended a more affordable private health insurance option, at<br />
no direct cost to the <strong>State</strong> or employers. The bill allows workers, regardless of the size of their<br />
employer, to extend their health insurance continuation benefit from 18 months to 36 months.<br />
S5472A/ Chapter 237/ Breslin<br />
This bill enhanced consumer and provider protections by instituting a series of managed care<br />
reforms, including: (1) requiring that a provider be given notice of an adverse reimbursement<br />
change to a provider contract and an opportunity to cancel the contract; (2) requiring insurers<br />
who offer comprehensive policies to offer the same grievance procedures and provide the same<br />
access to care that is required for health maintenance organizations (HMOs); (3) requiring<br />
insurers and HMOs to pay electronic claims promptly and limiting their ability to respond<br />
to claims by sending a coordination of benefits questionnaire; (4) extending. overpayment<br />
recovery protections to all health care providers and permitting them to challenge such<br />
recoveries; (5) requiring insurers and HMOs who fail to meet a loss-ratio requirement to make<br />
efforts to locate and pay dividends or credits to former policy holders; (6) prohibiting insurers<br />
and HMOs from treating a participating provider as a non-participating provider; (7) permitting<br />
newly licensed providers and providers moving to <strong>New</strong> <strong>York</strong> to be provisionally credentialed<br />
until the final credentialing determination is made by the insurer or HMO; (8) shortening<br />
utilization review timeframes for determinations involving post-hospital home health care<br />
services; (9) allowing providers to appeal concurrent adverse determinations through the external<br />
appeal process; and (10) establishing a new external appeal standard for rare disease treatments.<br />
The bill also enhanced efficiencies by authorizing the Superintendent of <strong>Insurance</strong> to require<br />
that mandated submissions be filed electronically.<br />
28
S6030/ Chapter 240/ Breslin<br />
This bill expanded access to health insurance through a COBRA-like benefit for young adults by<br />
requiring <strong>comm</strong>ercial insurers, non-profit corporations and HMOs to offer an option to continue<br />
coverage for unmarried young adults through age 29, regardless of financial dependence, under a<br />
parent's group health insurance policy.<br />
This bill also extended a make available option to individuals, employers and other group health<br />
insurance consumers to permit them to buy family coverage which includes coverage for<br />
dependents through age 29 subject to certain criteria. Insurers must now extend the option to<br />
purchase at policy inception and, for group policies, upon each anniversary date.<br />
S66006/ Chapter 66006/ Breslin<br />
This bill helped provide continued access to group health insurance by ensuring that all people<br />
eligible for federal COBRA or state continuation coverage receive up to 36 months of coverage,<br />
regardless of when the group health insurance contract or policy is renewed, modified, altered or<br />
amended.<br />
S3068/ Chapter 7/ Breslin<br />
Expands access to the nine-month federal stimulus subsidy of 65 percent of continuation<br />
premiums available to employees that have been involuntarily terminated from their jobs<br />
between September 1, 2008 and December 31, 2009.<br />
S4463A/ Passed <strong>Senate</strong> Only/ Breslin<br />
The Bureau of Financial Reporting has concluded that the Government Accounting Standards<br />
Board considers the <strong>State</strong> <strong>Insurance</strong> Fund and the <strong>New</strong> <strong>York</strong> <strong>State</strong> Health Foundation component<br />
units of the <strong>State</strong> of <strong>New</strong> <strong>York</strong> <strong>report</strong>ing entity and requires their audited financial information to<br />
be discretely presented in the <strong>New</strong> <strong>York</strong> <strong>State</strong> Comprehensive Annual Financial Report. These<br />
entities are not required by statute to file audited financial <strong>report</strong>s with the Office of the <strong>State</strong><br />
Comptroller. This bill proposed to amend existing state laws to require that these entities file<br />
<strong>annual</strong> audited financial statements with the Office of the <strong>State</strong> Comptroller.<br />
2010<br />
LEGISLATION ENACTED INTO LAW<br />
Bill No./ Sponsor Chapter Title<br />
S5111/ Breslin 71 Relates to provisions of law which permit health<br />
services and insurance for volunteer firefighters and<br />
ambulance companies through public corporations.<br />
S5456/ Diaz 49 Requires third-party notification prior to termination of<br />
long-term care and health insurance for persons 65 and<br />
29
older.<br />
S6014B/ Breslin 515 Relates to group life and group accident and health<br />
insurance policies.<br />
S6263C/<br />
Schneiderman<br />
398 Enacts Ian's Law, which provides enhanced consumer<br />
protections in the event of an insurer's discontinuance<br />
of coverage.<br />
S8088/ Rules 107 Relates to prior approval of health insurance premium<br />
rates.<br />
S8358A/ Breslin 453 Relates to the definition of an independent worker for<br />
purposes of the health insurance demonstration<br />
program for independent workers.<br />
LEGISLATION VETOED<br />
Bill No./<br />
Sponsor<br />
S7000B/<br />
Breslin<br />
Veto Message No.<br />
Title<br />
6832 Requires that accident and health<br />
insurance policies shall provide<br />
coverage for screening, diagnosis and<br />
treatment of autism spectrum disorder.<br />
Bill No./ Sponsor<br />
S4463A/ Breslin<br />
LEGISLATION WHICH PASSED THE SENATE ONLY<br />
Title<br />
Requires the NYS health foundation and state insurance fund to file<br />
<strong>annual</strong> audited financial statements with the office of the state<br />
comptroller.<br />
Requires coverage of orally administered chemotherapy treatments.<br />
S5864/ Hassel-<br />
Thompson<br />
S6309B/ Johnson C<br />
Relates to coverage for prenatal vitamins.<br />
S7001B/ Saland<br />
Relates to coverage for refills of prescription eye drops.<br />
S7977/ Squadron Authorizes reimbursement for testing for familial dysautonomia,<br />
Canavan's disease and Tay-Sachs.<br />
S5111/ Chapter 71/ Breslin<br />
This bill allowed volunteer firefighters and ambulance workers to apply for municipal health<br />
insurance benefits, with the total cost of participation borne by the volunteer and his or her<br />
family. This program is modeled after a similar provision in the General Municipal Law that<br />
allows for volunteer school board members to purchase health benefits from the plan offered by<br />
their school district.<br />
30
S5456/ Chapter 49/ Diaz<br />
This bill required insurance companies to authorize their senior citizen clients to designate a third<br />
party for written notification in the event such companies forward notifications concerning the<br />
impending cancellation of the senior citizen clients' long-term care and health insurance policies.<br />
Thereby assisting those elderly individuals who are incapable of comprehending the cancellation<br />
of their accident and health insurance policies.<br />
S6014B/ Chapter 515/ Breslin<br />
This bill removed impediments and created the ability for insurers to tailor more attractive and<br />
available group coverage for employers and employees in <strong>New</strong> <strong>York</strong>. It allowed insurers to offer<br />
group coverage to employees of any employer who elects to take part in a group life, disability<br />
income, long term care, vision or dental policy by removing the current restriction that the group<br />
must be of a sufficient size in order to qualify for group coverage.<br />
The law will permit be issued in the group setting and, consequently, more state residents to have<br />
such coverage. The more people who have group life, disability income and long term care<br />
insurance, the fewer who may need public assistance in times of hardship.<br />
S6263C/ Chapter 398/ Schneiderman<br />
Existing law protected consumers by banning insurance companies from dropping policyholders<br />
due to their claims experience or health status. However, there was a loophole which allowed<br />
insurance companies to drop coverage for an entire class of policyholders due to one high cost<br />
individual.<br />
Ian Pearl was a victim of that loophole. Mr. Pearl required 24-hour nursing care due to muscular<br />
dystrophy - a benefit that had been covered by his insurance company, issued in the state of <strong>New</strong><br />
<strong>York</strong> as part of a small group policy. His insurance company allegedly took the claims history of<br />
Mr. Pearl and other severely ill and disabled policyholders into account when deciding which<br />
class of policies to terminate.<br />
This bill among other things, added a strong consumer protection mechanism for the previous<br />
law that states that no one with a serious medical condition who is covered under an insurance<br />
policy shall lose their coverage of benefits they have utilized in the last 12 months related to their<br />
serious medical condition when their insurance company discontinues their class of policies.<br />
S8088/ Chapter 107/ Rules<br />
This bill established a process and timeframe for the <strong>Insurance</strong> Department to prior approve<br />
changes in health insurance premiums for many insures before they become effective. The<br />
process includes public notification of requested premium rate adjustments, the opportunity for<br />
public <strong>comm</strong>ent and public notification of the final premium determination.<br />
Under the provisions of the bill, the Superintendent of <strong>Insurance</strong> is required to render a final<br />
determination on a proposed health insurance premium adjustment within 60 days or it is deemed<br />
31
effective. In instances where the Superintendent requires additional information to render his<br />
final decision, the bill provides a maximum of 20 additional days for a final determination to be<br />
made.<br />
The bill also increased the minimum medical loss ratio (MLR), the amount of premiums required<br />
to pay health claims, to 82 percent.<br />
S8358A/ Chapter 453/ Breslin<br />
This bill amended <strong>Insurance</strong> Law §1123, to clarify the definition of "independent worker" to<br />
include (1) individuals who work full-time for a single employer on a temporary basis and (2)<br />
domestic workers such as nannies. This legislation insured that all independent workers have<br />
access to uninterrupted and affordable health insurance.<br />
S7000B/ Veto Message No. 6832/ Breslin<br />
This legislation would have closed a significant gap in insurance coverage for individuals with<br />
autism. The Centers for Disease Control (CDC) has estimated that the number of children with<br />
autism is 1 in 110 nationwide. (Prior CDC estimates had been 1 in 150). Existing state law<br />
requires that insurance coverage for autism "not exclude" the diagnosis and treatment of autism<br />
spectrum disorder. Current law does not provide clarity to consumers or insurers as to the scope<br />
of required coverage and does not establish a regulatory process whereby the Commissioner of<br />
Health is authorized to promulgate rules which identify treatment and therapy options.<br />
This bill would have affirmatively required policies to provide such coverage for individuals<br />
with autism spectrum disorder throughout their entire life span. The bill also provided for an<br />
updated definition of the term "autism spectrum disorder". The bill would amend existing<br />
provisions of the insurance law to require coverage under health insurance policies issued<br />
by indemnity and nonprofit insurers, as well as health maintenance organizations. Coverage<br />
would specifically be required for the group of neurological conditions know as "autism<br />
spectrum disorder", limited only by whatever restrictions are otherwise contained in the policy.<br />
Coverage would have also been subject to utilization review, medical necessity determinations<br />
and appropriate case management.<br />
The Commissioner of Health, in consultation with the <strong>Insurance</strong> Superintendent and the<br />
Commissioners of Mental Health and Mental Retardation and Developmental Disabilities, would<br />
have been charged with responsibility for promulgating regulations identifying treatment and<br />
therapy options. The legislation would have ensured that only those treatments and therapies<br />
which have been determined by recognized medical authority as evidence-based and clinically<br />
proven would be covered.<br />
Veto Message No. 6832<br />
My time as the 55th Governor of <strong>New</strong> <strong>York</strong> <strong>State</strong> has been shaped by extraordinary fiscal<br />
and revenue crises. It has been a continual challenge to work for the betterment of the <strong>State</strong>'s<br />
residents without unnecessarily creating a gap between revenues and expenditures. A number of<br />
32
ills sent to my desk were clearly borne of compassion and good intentions, and would<br />
have been approved were it not for the unbudgeted costs associated with such legislation. One<br />
such example was a bill to cap the rent of individuals with HIV or AIDS who receive shelter<br />
assistance or an emergency shelter allowance, which I recently and reluctantly vetoed (Veto No.<br />
6818 of 2010). I am required to ask: What is it that I am saying that the Legislature is not<br />
hearing? Worthy matters deserve funding, but without making specific funding available, the<br />
Legislature gives me only heartache and the most unpleasant alternative.<br />
Autism Spectrum Disorder (ASD) encompasses conditions that range along a spectrum,<br />
including Asperger's Syndrome, Pervasive Developmental Disorder and Autistic Disorder. It<br />
is characterized by impaired social interaction, impaired <strong>comm</strong>unication and restricted or<br />
repetitive patterns of behavior. Although estimates of prevalence vary, it appears that ASD<br />
occurs in approximately one in every 110 children, is four times more likely to occur in boys<br />
than girls, and occurs in all racial, ethnic and social groups. The cause of autism is unknown and<br />
there is no cure, but early detection of ASD, when followed by the right interventions, can<br />
lead to better outcomes in functioning. Caring for a child or adult with ASD can require<br />
extraordinary emotional efforts, and impose significant financial burdens.<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> offers services and supports to individuals with ASD, and to those with other<br />
developmental disabilities, through a variety of <strong>State</strong> programs, including the Early Intervention<br />
Program, special education services for children of preschool and school age, and other<br />
services and supports through the Office for Persons with Developmental Disabilities<br />
(OPWDD). Significant <strong>State</strong> resources, along with federal dollars, support these programs each<br />
year. Nevertheless, countless families have told me of their struggles to access the services that<br />
will help their loved ones with ASD attain their full potential.<br />
This bill would require <strong>State</strong>-regulated health insurers to provide coverage for treatment and<br />
therapy options for ASD, in accordance with regulations promulgated by the Department of<br />
Health, in consultation with the <strong>State</strong> <strong>Insurance</strong> Department, OPWDD and the Office of<br />
Mental Health. The treatment and therapy options for which coverage would be mandated<br />
must be "evidence-based, peer-reviewed and clinically proven." The regulations would have to<br />
be promulgated within 12 months of the bill's enactment and would have to be updated on a<br />
regular basis, and the coverage mandate would take effect once the regulations are promulgated<br />
and apply to policies issued or renewed after that date.<br />
The agencies would require additional resources in order to carry out this function over the<br />
course of the next year, demands which were not ac<strong>comm</strong>odated in the 2010-11 budget.<br />
Moreover, health insurance premiums would rise as a result of this bill, beginning January 2012.<br />
While it is difficult to estimate the amount of the increase for a number of reasons,<br />
including the variance of needs among individuals along the autism spectrum and the fact that<br />
a person's needs my change over the course of his or her lifetime, it appears clear that both the<br />
<strong>State</strong> and local governments, which pay varying proportions of the health insurance premiums<br />
for their employees and retirees, would face significant costs as a result of the bill. In addition,<br />
the <strong>State</strong> pays the premiums for Child Health Plus, which also would increase. I believe these<br />
increased costs collectively to the <strong>State</strong> and localities would be a least $70 million <strong>annual</strong>ly. I<br />
cannot impose such an unfunded mandate on the next Governor and local governments<br />
throughout the <strong>State</strong>.<br />
33
Premiums for <strong>comm</strong>ercial insurance also would rise if the bill were enacted, the effect of<br />
which likely could be that some <strong>New</strong> <strong>York</strong>ers might lose their insurance coverage, at least<br />
until the federal Patient Protection and Affordable Care Act is fully implemented. Making<br />
sure that all <strong>New</strong> <strong>York</strong>ers have access to affordable health insurance is one of the objectives of<br />
my administration, and we must carefully consider the impact of extending coverage to<br />
additional persons if it results in the loss of coverage to others.<br />
It is clear that providing effective treatments, including certain intensive therapeutic<br />
treatments, to individuals with ASD has the potential to improve their functioning significantly,<br />
meaning that they would require fewer services, or less intensive services, in the future. In<br />
addition, the bill could shift the cost of some services that are now funded by Medicaid or other<br />
<strong>State</strong> programs to private insurance. However, it is almost impossible to quantify such savings,<br />
and they would not occur in the years the initial associated costs would be incurred.<br />
I am extremely sympathetic to the very real struggles faced by the families of individuals with<br />
ASD. ASD is a disabling disorder that is a priority for society to address. It will be a subject of<br />
my continued advocacy as a private citizen. But now I am Governor, and I cannot sign a bill<br />
that would impose costs that the Legislature does not fund. I implore the Legislature to make<br />
the necessary decisions to cause this bill to be funded adequately. If it does so and sends it to<br />
me in my remaining days as Governor, I will sign it immediately. But, I cannot agree to enact<br />
a bill that would present significant costs to the <strong>State</strong> and local governments that have not<br />
been accounted for in the <strong>State</strong> Financial Plan and that should not be approved outside of the<br />
budget.<br />
S4463A/ Passed <strong>Senate</strong> Only/ Breslin<br />
The Bureau of Financial Reporting has concluded that the Government Accounting Standards<br />
Board considers the <strong>State</strong> <strong>Insurance</strong> Fund and the <strong>New</strong> <strong>York</strong> <strong>State</strong> Health Foundation component<br />
units of the <strong>State</strong> of <strong>New</strong> <strong>York</strong> <strong>report</strong>ing entity and requires their audited financial information to<br />
be discretely presented in the <strong>New</strong> <strong>York</strong> <strong>State</strong> Comprehensive Annual Financial Report. These<br />
entities are not required by statute to file audited financial <strong>report</strong>s with the Office of the <strong>State</strong><br />
Comptroller. This bill proposed to amend existing state laws to require that these entities file<br />
<strong>annual</strong> audited financial statements with the Office of the <strong>State</strong> Comptroller.<br />
S5864A/ Passed <strong>Senate</strong> Only/ Hassell-Thompson<br />
Medical advances over the years have led to many beneficial medical treatments. One of these<br />
medical advances has been the development of an oral chemotherapy treatment. With this<br />
treatment, a patient is able to undergo chemotherapy by taking a pill in the comfort of their own<br />
home. This means that the patient does not have to go to the hospital for the traditional<br />
intravenous or injectable form of chemotherapy that is most <strong>comm</strong>only thought of when<br />
chemotherapy is discussed. In addition to being able to do the treatment in their own home, the<br />
patient also receives the added benefit of possibly not having the traditionally chemotherapy<br />
side effects such as hair loss. The patient also sleeps through the treatment as the pill is<br />
administered at bedtime, meaning that the patient sleeps while the drugs do their work. This<br />
medical advance is significant.<br />
34
However, due to a classification by insurance companies, many patients cannot reap the benefits<br />
of this advance. As this chemotherapy treatment comes in the form of a pill, insurance<br />
companies are classifying this treatment as a prescription drug treatment. This means that the<br />
patient does not get the treatment covered as a traditional chemotherapy treatment and must pay<br />
for the drug as though it were an average prescription drug. As this is not an average prescription<br />
drug, the co-pay and coverage for this drug are limited. Most patients must pay out of pocket in<br />
the highest drug price category. This means that for the majority of patients, the pill form of<br />
chemotherapy will cost tens of thousands of dollars. This is cost prohibitive for healthy patients<br />
nd limits patient access to a viable and desirable alternative to traditional chemotherapy<br />
treatment.<br />
Traditional chemotherapy treatment is covered as a major medical benefits under insurance<br />
policies, and once any deductible is met, the treatment is 100% covered. This amendment<br />
to the <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Law would have corrected this discrepancy and ensured that<br />
chemotherapy treatment, no matter how administered, are covered equally by insurance<br />
companies.<br />
S6309B/ Passed <strong>Senate</strong> Only/ Johnson C<br />
Prenatal vitamins are vitamin supplements taken before and during pregnancy with the intention<br />
of providing women with nutrients that promotes a healthy pregnancy. This legislation would<br />
have ensured women across <strong>New</strong> <strong>York</strong> <strong>State</strong> have access to quality prenatal vitamins without<br />
having to shoulder a massive financial burden. Prenatal maternity care is a vital healthcare<br />
service that needs to provided to people of all socioeconomic backgrounds.<br />
S7001B/ Passed <strong>Senate</strong> Only/ Saland<br />
This bill proposed to amend certain sections of the insurance law to allow for the refill of<br />
prescription eye drops when the refill is requested prior to the expiration of the period of<br />
suggested use.<br />
S7977/ Passed <strong>Senate</strong> Only/ Squadron<br />
Familial Dysautonomia, Canavan's disease and Tay-Sachs are genetic diseases which cause<br />
degeneration of the nervous system, and result in death. No treatment is currently available for<br />
any of these diseases; however, an infant can only be afflicted with the disease if both the<br />
mother and father are carriers. There is currently a testing system in place which screens<br />
individuals before marriage to determine if they are carriers. This legislation would have insured<br />
that individuals are able to receive reimbursement for medical screening for these diseases<br />
through their insurance carrier.<br />
35
LIFE INSURANCE<br />
The <strong>Senate</strong> <strong>Insurance</strong> Committee, focused on the existing and changing relationships among<br />
insureds, annuitants, contract owners, beneficiaries, agents, brokers and life insurance<br />
companies. The Committee examined the contracts and laws affecting those relationships as well<br />
as the external developments that impact them and employment retirement plans.<br />
The goal of this Committee is to foster legislation which decreases the cost of providing life<br />
insurance in the <strong>State</strong>, protects consumers from improper/ fraudulent sales techniques,<br />
encourages investments by life insurers, and advances education.<br />
2009<br />
LEGISLATION ENACTED INTO LAW<br />
Bill No./ Sponsor Chapter Title<br />
S4602A/ Breslin 447 Authorizes superintendent of insurance to approve a<br />
demonstration program where an eligible insurer issues<br />
group health insurance policies to eligible associations.<br />
S66009/ Breslin 499 Relates to the licensure of life settlement brokers;<br />
creates certain crimes relating to life settlement fraud;<br />
relates to premium finance agreement; repealer.<br />
4602A/ Chapter 447/ Breslin<br />
This bill authorized the superintendent of <strong>Insurance</strong> to permit a health insurance company<br />
primarily owned or controlled by a tax exempt association of independent workers to provide<br />
group health insurance coverage exclusively to the association's members.<br />
S66009/ Chapter 499/ Breslin<br />
During the AIDS epidemic, many seriously ill individuals with life insurance policies sold their<br />
policies to pay for medical care, experimental medical treatments or other essential needs.<br />
Article 78 of the <strong>Insurance</strong> Law was enacted to regulate such transactions, where an insured with<br />
a catastrophic or life-threatening illness or condition sells his or her life insurance policy. These<br />
transactions - known as viatical settlements are carried out by viatical settlement companies and<br />
viatical settlement brokers regulated by the Department under Article 78.<br />
A life settlement market developed, wherein owners of life insurance policies where the insureds<br />
do not have a catastrophic or life-threatening illness or condition are selling their policies. The<br />
insured individuals generally are senior citizens who may no longer want or need their policy<br />
and who are able to obtain a monetary benefit greater than the cash surrender value but less than<br />
the death benefit of the policy by selling their policy to a life settlement provider. These<br />
36
transactions fell outside the scope of the previously existing Article 78 and regulatory oversight<br />
of these transactions was needed.<br />
This bill therefore established a comprehensive statutory framework that regulated all such<br />
transactions whether or not the insured has a catastrophic or life threatening illness or condition.<br />
The bill used the term life settlements to describe both types of situations. The bill also regulated<br />
an additional participant that plays a role in the life settlement market today called a life<br />
settlement intermediary, that is subject to registration and other requirements set forth in the bill.<br />
The bill permitted a life settlement provider to transfer ownership of a settled policy only to<br />
certain specified persons. It also permitted the transfer of a settled policy to persons other than<br />
those specified if no personally identifying information about the policy owner or the insured is<br />
provided to such persons.<br />
Under the bill the life settlement broker owes a fiduciary duty to the owner of the policy. In<br />
addition, the bill provided for penalties and civil remedies for certain violations. This bill also<br />
provided for a transparent and fair marketplace by requiring disclosure to the policy owner of a<br />
full and complete description of all offers, counter-offers, acceptances and rejections related to<br />
the proposed life settlement, a complete reconciliation of the amount of each life settlement<br />
provider's gross offer to the net amount of proceeds to be received by the policy owner, the<br />
identity of the life settlement broker receiving any compensation with respect to the life<br />
settlement contract and the amount and terms of any compensation paid to the life settlement<br />
broker and any other person.<br />
The bill also established standards of conduct and prohibits anti-competitive behavior. Other<br />
required disclosures provide significant consumer protections. For example, the bill required<br />
disclosures advising the consumer of: (1) the life settlement broker's fiduciary duty to the owner<br />
of the policy; (2) certain tax consequences that may result from receipt of the life settlement<br />
proceeds; (3) the owner's right to rescind the life settlement contract; (4) the possible adverse<br />
impact on the insured's insurable capacity; (5) certain medical, financial or personal information<br />
that may be disclosed; and (6) the fact that the insured may be contacted at certain delineated<br />
times to determine health status, as well as other disclosures.<br />
The bill also afforded significant privacy protections with respect to the identity of the insured<br />
and the policy owner. The protection of the safety and privacy of the insured was a paramount<br />
purpose of this bill.<br />
The bill limited and specified the parties to whom and the circumstances under which such<br />
information may be disclosed. Only a licensed life settlement provider can purchase a policy<br />
from the policy owner. A life settlement provider may sell, assign or transfer ownership of a<br />
settled policy only to another licensed life settlement provider, an accredited investor, qualified<br />
institutional buyer, financing entity, special purpose entity or related provider trust.<br />
The bill also provided that any person who obtains or may obtain a settled policy shall comply<br />
with the provisions of the <strong>Insurance</strong> Law and regulations and all other applicable laws governing<br />
the protection of the identity and privacy of the insured or policy owner. In addition, a life<br />
settlement provider may sell, assign or transfer a beneficial interest in a settled policy to someone<br />
37
other than the listed persons if the provider continues to administer the settled policy and the<br />
policy owner's and insured's personally identifying information is not disclosed to such<br />
purchasers. This structure permits both the listed persons and other persons to participate fully in<br />
the marketplace while the privacy of consumers is still protected.<br />
The bill included a provision entitled Stranger Originated Life <strong>Insurance</strong> (known as STOLI) that<br />
prohibited life settlement providers (who purchase the life insurance policies from the original<br />
policy owners), life settlement brokers (who broker the life settlement transaction between the<br />
original owner of the policy and the life settlement provider) or their representatives from<br />
engaging in any activity that would facilitate the issuance of a policy for the intended benefit of a<br />
person who has no insurable interest in the life of the person insured under the policy.<br />
<strong>Insurance</strong> Law § 3205 requires that, at the time a policy is purchased, the beneficiary must have<br />
an insurable interest in the life of the person insured. The concept of insurable interest has long<br />
been affirmed in case law and codified in statute pertaining to life insurance in order to prevent<br />
the moral hazards that arise with speculation on human life. An insurable interest is a substantial<br />
interest in the continued life of the person insured rather than an interest that would arise only<br />
by a financial interest in the death of the person insured.<br />
Insurable interest is defined in section 3205 as either a substantial interest engendered by love<br />
and affection or a substantial economic interest in the continued life of the insured.<br />
The following is an example of a STOLI situation: A life insurance policy is initially purchased<br />
by an individual for the primary purpose of transferring it to a third party stranger and<br />
arrangements are made so that the policy owner does not pay or is effectively reimbursed for any<br />
policy premiums paid, the third party has no insurable interest in the life of the insured, and the<br />
policy is transferred to the third party.<br />
If it can be shown that there was a prior plan or arrangement for the individual to purchase the<br />
policy for the purpose of selling it to the third party, it may be determined that there was no<br />
insurable interest at the inception of the policy.<br />
The bill included "any beneficial interest in a trust or other entity that owns the policy where a<br />
primary purpose of the transaction is to acquire the policy" in the definition of life settlement<br />
contract. This ensured that various scenarios involving these entities will be subject to the<br />
requirements of the bill. An example of such a scenario is where a policy is purchased by a trust<br />
and the beneficial interest, i.e. the right to the death benefit, is sold to a third party stranger but<br />
the trust remains the owner of the policy. This addresses a significant concern of the Department<br />
and the life insurance industry. The bill included a provision setting forth limitations on the<br />
proceeds, fees or other consideration that persons involved in the business of premium<br />
financing can receive with respect to premium financing transactions. Premium financing is a<br />
legitimate type of loan transaction that, for example, may be used to pay large initial premiums<br />
on large policies used for certain business transactions or estate planning. The purpose of this<br />
provision was to ensure that premium financing is not used as a mechanism to effectuate a<br />
STOLI transaction by limiting the amounts that may be received by such persons to principal,<br />
interest and any reasonable costs or expenses incurred in the transaction. The provision also<br />
38
equired that any amounts received over and above the amounts listed must be remitted back to<br />
the original policy owner.<br />
2010<br />
LEGISLATION ENACTED INTO LAW<br />
Bill No./ Sponsor Chapter Title<br />
S4767B/ Breslin 441 Provides that an approved policy form that has been<br />
revised may continue to be delivered or issued for<br />
delivery in <strong>New</strong> <strong>York</strong> state without further approval.<br />
S6014B/ Breslin 515 Relates to group life and group accident and health<br />
insurance policies.<br />
LEGISLATION WHICH PASSED THE SENATE & ASSEMBLY<br />
Bill No./ Sponsor<br />
S7196A/ Klein<br />
Title<br />
Prohibits accelerated payment of death benefits or special surrender<br />
value pursuant to a life insurance policy because of residency in a<br />
nursing home.<br />
S4767B/ Chapter 441/ Breslin<br />
This bill amended the insurance law to permit the Superintendent of <strong>Insurance</strong> to waive the reapproval<br />
of an amended policy form when the amendment is due to a revision to a separate<br />
account, so long as the revision has already been approved by the <strong>Insurance</strong> Department as part<br />
of the separate account plan of operation. Under those circumstances, such amended policy form<br />
would need to be filed on an informational basis with the <strong>Insurance</strong> Department, within sixty<br />
days after approval of the amended separate account plan. This amendment also gave the<br />
Superintendent the discretion to waive other approvals of amended policy forms.<br />
S6014B/ Chapter 515/ Breslin<br />
In recent years, employee benefits have changed significantly. There was a time when employers<br />
paid a substantial portion or even all of the cost of employee benefits. Many corporations still do<br />
but, due to the increasing burden of insurance costs, employers of all sizes have also been forced<br />
to reduce their contributions to the benefit plans offered to their employees, in order to continue<br />
to afford such employee coverage. Employees have increasingly been asked to share these costs<br />
with their employer. Today, 25% of the group life insurance market is fully voluntary, in that the<br />
employee elects coverage and may pay some or all of the premiums for such coverage. By<br />
offering these voluntary products through an employer group, the employer can offer their<br />
employees the advantages of payroll deduction, limited underwriting and other efficiencies in<br />
administration that can oftentimes lead to cheaper insurance premiums for the employee.<br />
39
In looking at how best to meet the demands of the marketplace, it was determined that certain<br />
restrictions in the group laws of several states, including <strong>New</strong> <strong>York</strong>, created an impediment to a<br />
number of otherwise <strong>comm</strong>on group offerings. These provisions, written many years ago for a<br />
purpose that no longer exists (to protect insurers from adverse selection in the underwriting<br />
process), restrict employee access to voluntary coverage. Given the realities of today's employer<br />
group market, these outdated laws are ill-suited to protect and benefit consumers.<br />
This bill removed these impediments and created the ability for insurers to tailor more attractive<br />
and available group coverage for employers and employees in <strong>New</strong> <strong>York</strong>. It allowed insurers to<br />
offer group coverage to employees of any employer who elected to take part in a group life,<br />
disability income, long term care, vision or dental policy by removing the current restriction that<br />
the group must be of a sufficient size in order to qualify for group coverage.<br />
By doing this, the law will enable more coverage of this type to be issued in the group setting<br />
and, consequently, more state residents to have such coverage. The more people who have group<br />
life, disability income and long term care insurance, the fewer who may need public assistance in<br />
times of hardship.<br />
S7196A/ Passed <strong>Senate</strong> Only/ Klein<br />
As the general population becomes older, more and more individuals are looking for affordable<br />
ways to pay for the financing of their nursing home care. This bill would have expanded the<br />
definition of "life insurance" so that policies can be written in <strong>New</strong> <strong>York</strong> that provide financing<br />
for those who have been in nursing home care for at least three months, with the expectation that<br />
such persons will remain in a nursing home until death. Currently, 49 other states offer life<br />
insurers the ability to write this type of coverage in the United <strong>State</strong>s, but not <strong>New</strong> <strong>York</strong>. This<br />
bill would address this discrepancy.<br />
Senator Breslin at the press conference for<br />
senate bill 7000B<br />
Senator Breslin, Senator Seward, and<br />
<strong>comm</strong>ittee counsel Kate Powers at<br />
<strong>comm</strong>ittee meeting<br />
40
<strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Senate</strong><br />
Public Hearing on<br />
The Role of Health <strong>Insurance</strong> in the Diagnosis and Treatment of<br />
Autism Spectrum Disorder<br />
Meeting Rooms 2 and 3<br />
Empire <strong>State</strong> Plaza, Concourse Level<br />
Albany, <strong>New</strong> <strong>York</strong><br />
October 23, 2009<br />
Before:<br />
<strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
<strong>Senate</strong> Standing Committee on Health<br />
<strong>Senate</strong> Standing Committee on Mental Health and Developmental Disabilities.<br />
Present:<br />
Senator Neil D. Breslin<br />
Chair, <strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
Senator Roy J. McDonald<br />
Senator Craig Johnson<br />
______________________________________________________________________________<br />
The purpose of this hearing was to (1) explore the health care needs of individuals with autism<br />
spectrum disorder and their families; (2) explore what health insurers, the federal government,<br />
state and local governments and educational institutions are doing to meet those needs; and (3)<br />
explore whether health insurers should be mandated to provide coverage for the screening,<br />
diagnosis and treatment of autism spectrum disorder.<br />
Autism spectrum disorder (ASD), which includes autistic disorder, asperger disorder and<br />
pervasive developmental disorder – not otherwise specified, is one of the fastest growing<br />
neurodevelopmental disabilities in America. According to a recent U.S. Centers for Disease<br />
Control and Prevention (CDC) study, autism spectrum disorder affects as many as 1 in 150<br />
American children. In <strong>New</strong> <strong>York</strong> <strong>State</strong>, it is estimated that 33,000 children and youth from birth<br />
to age 17 have autism.<br />
As with other neurodevelopmental disabilities, ASD is generally not curable. However,<br />
numerous studies have concluded that children who receive intensive treatment early in life will<br />
be more functional and less likely to need lifelong services. The Autism Society of America<br />
estimates that the lifetime cost of caring for an individual with autism ranges from $3.5 to $5<br />
41
million. Therefore, the financial and societal costs of failing to provide intensive treatment early<br />
in life to children with ASD are notable.<br />
Individuals with ASD experience a wide range of medical issues. Consequently, treatment for<br />
autism spectrum disorders can include, among other things, psychiatric care, psychological care,<br />
habilitative or rehabilitative care, pediatric and developmental pediatric care, gastroenterologic<br />
care, endocrinological care, and behavioral, social skills, speech, occupational and physical<br />
therapies.<br />
<strong>State</strong> and local governments and educational institutions currently play a large role in the<br />
diagnosis and treatment of autism. For example, young children diagnosed with autism are<br />
eligible for <strong>New</strong> <strong>York</strong> <strong>State</strong>’s Early Intervention Program. Some families who have a child with<br />
autism qualify for a “Medicaid waiver” under which the parents’ income is waived when<br />
determining eligibility for Medicaid. Medicaid would then cover certain medical and nonmedical<br />
expenses associated with autism. In addition, school-aged children with autism receive<br />
various services during the school day.<br />
However, children often need intensive therapy and other health services beyond what state or<br />
local governments or schools are able to provide. It has been <strong>report</strong>ed from numerous sources<br />
that most health plans in <strong>New</strong> <strong>York</strong> do not cover or cover a very small amount of the expenses of<br />
individuals with ASD. In addition, the <strong>New</strong> <strong>York</strong> <strong>State</strong> Department of Health (DOH) <strong>report</strong>s<br />
that private health insurance pays only about 3% of the expenses of children with ASD in the<br />
Early Intervention Program. In the absence of private health coverage, families of those with<br />
ASD pay a significant portion of the cost of diagnosing and treating ASD. Such costs, which can<br />
be as high as $2,000 to $4,000 per month, place a significant financial strain on families.<br />
Historically, autism was considered a psychiatric disability and excluded from coverage by<br />
health insurers. In 2006, the <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Law was amended to prohibit insurers<br />
from excluding coverage for medical conditions solely because the treatment is provided to<br />
diagnose or treat ASD. In addition, Timothy’s Law, which was enacted in 2006, provides<br />
coverage for the treatment of autism spectrum disorders so long as the coverage is provided by a<br />
large group employer (51+ members), or, for children only, at the option of a small group<br />
employer (50 or less), or, in some instances, the health plan. While this coverage is available,<br />
reimbursement is often denied on grounds that the service is educational, the treatment is<br />
experimental or the treatment is not medically necessary. However, <strong>New</strong> <strong>York</strong> law currently<br />
does not mandate that health insurers cover specific ASD treatments or services.<br />
Several other states have laws requiring health insurers to cover treatment for ASD. A dozen<br />
other states are considering such legislation. In addition, earlier this year, the Autism Treatment<br />
Acceleration Act of 2009 (<strong>Senate</strong> Bill No. 819) was introduced in the U.S. <strong>Senate</strong>. This<br />
legislation would require, among other things, health insurers to cover the diagnosis and<br />
treatment of autism spectrum disorders.<br />
The Committees would like to hear from individuals with ASD, family members of individuals<br />
with ASD, treatment providers, health care experts and policy makers in order to evaluate the<br />
role of health insurers in the diagnosis and treatment of ASD. Specifically, witnesses may direct<br />
their testimony to the following issues:<br />
42
1) What are the health care needs of children, young adults and older adults with ASD and their<br />
families?<br />
2) What are health insurers doing to meet the needs of individuals with ASD and their families?<br />
3) What obstacles to treatment are individuals with ASD and their families encountering?<br />
4) What services, programs and resources do <strong>New</strong> <strong>York</strong> state and local government entities<br />
and schools have in place to address the needs of individuals with ASD?<br />
5) What is the federal government doing to meet the health care needs of individuals with ASD<br />
and their families?<br />
6) Should health insurers be mandated to provide coverage for the screening, diagnosis and<br />
treatment of ASD? If so:<br />
a) Which treatments and services for individuals with ASD and their families should<br />
health insurers be required to cover?<br />
b) What should the process be for determining which treatments and services must be<br />
covered? Should insurers only be required to cover treatments for ASD that have been<br />
determined necessary based upon a review of evidence-based research (e.g., the <strong>New</strong><br />
<strong>York</strong> <strong>State</strong> Department of Health’s Clinical Practice Guidelines for ASD for children<br />
under the age of three)?<br />
c) What should the process be for determining reimbursement rates to providers?<br />
d) Should there be age limits, limits on the number of visits or monetary caps on<br />
mandated treatments or services for ASD?<br />
e) What impact would this mandate have on health insurance premium rates?<br />
f) How would existing service systems that <strong>New</strong> <strong>York</strong> has in place be impacted by an<br />
insurance mandate?<br />
g) Should the mandate be reflected in a new law or should an existing law be amended?<br />
h) Do the laws of other states that mandate coverage for ASD contain age limits, limits<br />
on the number of visits or monetary caps on mandated treatments or services?<br />
7) Within the context of responding to any of the above questions, witnesses may provide<br />
<strong>comm</strong>ents on S.2366/A.6001 and S.6123/A.6888-B which are currently pending in the <strong>New</strong><br />
<strong>York</strong> <strong>State</strong> Legislature as well as S.819/H.R. 2413 which are currently pending in the U.S.<br />
Congress.<br />
43
Witness List<br />
Panel 1<br />
Marcia Roth, Parent, Budget and Policy Analyst, Autism United Coalition<br />
Heather Walters, Parent, Co-Founder, Upstate <strong>New</strong> <strong>York</strong> Autism Awareness<br />
Michael P. Smith, Chairman, Foundation for Autism Information and Research<br />
Panel 2<br />
Troy J. Oechsner, Deputy Superintendent for Health, <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Department<br />
Abby Nash, Senior <strong>Insurance</strong> Attorney, Health Bureau, <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Department<br />
Gary Lind, Deputy Commissioner, <strong>New</strong> <strong>York</strong> <strong>State</strong> Office of Mental Retardation &<br />
Developmental Disabilities, Division of Policy & Enterprise Solutions<br />
Rebecca H. Cort, Ed.D., Deputy Commissioner, <strong>New</strong> <strong>York</strong> <strong>State</strong> Education Department’s Office<br />
of Vocational and Educational Services for Individuals with Disabilities<br />
Bradley Hutton, Director, Bureau of Early Intervention, <strong>New</strong> <strong>York</strong> <strong>State</strong> Department of Health<br />
Panel 3<br />
The Honorable Craig M. Johnson, Member of <strong>Senate</strong><br />
Lorri Unumb, J.D., Senior Policy Advisor & Counsel, Autism Speaks<br />
Diane Cahill, Volunteer <strong>New</strong> <strong>York</strong> <strong>State</strong> Community Advocacy Chair, Autism Speaks<br />
Sean Shortell, Office of Congressman Paul Tonko<br />
Panel 4<br />
Andrew Baumann, President & Chief Executive Officer, <strong>New</strong> <strong>York</strong> Families for Autistic<br />
Children, Inc.<br />
Patrick Dollard, Chief Executive Officer, Center for Discovery, Inc.<br />
Fredrick W. Erlich, Chief Executive Officer, Living Resources<br />
Stephen E. Freeman, LCSW, Chief operating Officer, YAI Network/ National Institute for<br />
People with Disabilities<br />
Judith Lucas, M.D., Medical Society of <strong>New</strong> <strong>York</strong><br />
Panel 5<br />
Paul F. Macielak, President & Chief Executive Officer, <strong>New</strong> <strong>York</strong> <strong>State</strong> Health Plan Association<br />
Judith A. Langer, J.D., Public Policy Director, Wellpoint, Inc.<br />
Panel 6<br />
Eric London, M.D., Director of Treatment Research, <strong>New</strong> <strong>York</strong> <strong>State</strong> Institute for Basic<br />
Research in Developmental Disorders, <strong>State</strong>n Island, <strong>New</strong> <strong>York</strong><br />
John C. Pomeroy, M.D., Associate Professor of Pediatrics and Psychiatry and Director The<br />
Cody Center, <strong>State</strong> University of <strong>New</strong> <strong>York</strong>, Stony Brook<br />
Alison D. Curley, Ph.D., Pediatric Neuropsychologist, Niskayuna, <strong>New</strong> <strong>York</strong><br />
44
Stephen Sulkes, M.D., Professor of Pediatrics, Strong Center for Developmental Disabilities,<br />
Rochester, <strong>New</strong> <strong>York</strong><br />
Panel 7<br />
Shelly Nortz, Deputy Executive Director for Policy, Coalition for the Homeless<br />
Paige Pierce, Executive Director, Families Together in <strong>New</strong> <strong>York</strong><br />
Michael John Carley, The Global and Regional Asperger Syndrome Partnership, Inc.<br />
Jan Campito, M.S., M.Phil., Executive Board Member, Autism Society of America, Albany<br />
Chapter<br />
Overview<br />
The goal of the hearing was to explore the health care needs of individuals with autism spectrum<br />
disorder (ASD), explore what government was doing to meet those needs, including hearing<br />
about legislation on the federal level to address the issue and explore where gaps in coverage<br />
exist and what role health insurance should play in those gaps. It became apparent from the<br />
hearing, as present rates of identification of ASD increase, there is an imperative to examine and<br />
reform the reimbursement of health care.<br />
It should be noted, the purpose of the hearing was not to endorse legislation. The <strong>comm</strong>ittees<br />
were not taking a position on any of the bills discussed. The purpose was to recognize that there<br />
is a need out there and to address gaps in coverage. The hearing provided a forum to address the<br />
costs and benefits and fully consider the impact that adding services will have on premiums (i.e.:<br />
how many people would lose coverage).<br />
The Committees expressed a desire to work in collaboration with other state agencies to ensure<br />
that applicable programs, services, and treatments are available and covered by insurance<br />
companies, and that these services reflect effective practices.<br />
Following the Hearing, Senator Neil D. Breslin, Chair, <strong>Senate</strong> Standing Committee on <strong>Insurance</strong>,<br />
sponsored <strong>Senate</strong> Bill 7000B. The bill would have amended the insurance law and the public<br />
health law, in relation to coverage for the screening, diagnosis and treatment of autism spectrum<br />
disorder. S.7000/ A.10372A unanimously passed both the <strong>Senate</strong> and Assembly, but was vetoed<br />
by Governor Paterson citing fiscal hardship.<br />
45
Hearing Room A<br />
Legislative Office Building<br />
Albany, NY 12247<br />
December 1 st , 2009<br />
Before:<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Senate</strong><br />
Public Hearing on Medical Malpractice Reform<br />
<strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
<strong>Senate</strong> Standing Committee on Health<br />
<strong>Senate</strong> Standing Committee on Codes<br />
Participants:<br />
Senator Neil D. Breslin<br />
Senator James L. Seward<br />
Senator Thomas K. Duane<br />
Chair, <strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
Ranking Minority Member<br />
Chair, <strong>Senate</strong> Standing Committee on Health<br />
Senator Eric T. Schneiderman Chair, <strong>Senate</strong> Standing Committee on Codes<br />
______________________________________________________________________________<br />
The purpose of this hearing was to (1) identify the fundamental causes of high medical<br />
malpractice costs; (2) explore potential solutions to help create a medical malpractice system that<br />
encourages quality, accessible medical care; (3) promote patient safety; (4) treat victims of<br />
malpractice fairly; (5) sets reasonable insurance costs for health providers; and (6) promotes a<br />
healthy marketplace for medical liability insurers.<br />
46
Witness List<br />
Panel 1<br />
David T. Hannan, M.D., Medical Society of the <strong>State</strong> of <strong>New</strong> <strong>York</strong><br />
Donna Montalto, MPP, Executive Director, The American College of Obstetricians and<br />
Gynecologists, District II<br />
Ronald Uva, M.D., FACOG, Legislative Committee Chair, The American College of<br />
Obstetricians and Gynecologists, District II<br />
Wendy Fried, M.D., Practicing OBGYN<br />
Lee Goldman, M.D., Executive Vice President and Dean, Columbia University Medical Center<br />
Panel 2<br />
Robert S. Lagasse, M.D., Immediate Past President, <strong>New</strong> <strong>York</strong> Society of Anesthesiologists<br />
William Doscher, M.D., FACS, NY Chapter of The American College of Surgeons<br />
Samuel F. Bosco, M.D., FACEP, Co-Chair, <strong>New</strong> <strong>York</strong> ACEP Government Affairs Committee,<br />
<strong>New</strong> <strong>York</strong> American College of Emergency Physicians<br />
Panel 3<br />
Mark Thomas, General Counsel, Healthcare Association of <strong>New</strong> <strong>York</strong> <strong>State</strong><br />
Gary Fitzgerald, President, Iroquois Health Alliance<br />
Susan Waltman, General Counsel, Greater <strong>New</strong> <strong>York</strong> Hospital Association<br />
Panel 4<br />
John K. Powers, Esq, <strong>New</strong> <strong>York</strong> <strong>State</strong> Academy of Trial Lawyers<br />
Richard S. Binko, President, <strong>New</strong> <strong>York</strong> <strong>State</strong> Trial Lawyers Association<br />
Panel 5<br />
Anthony J. Bonomo, CEO, Physicians’ Reciprocal Insurers<br />
Lisa Kramer, President and CEO, Hospitals <strong>Insurance</strong> Company<br />
Mark Morris, President and CEO, Healthcare Professionals <strong>Insurance</strong> Association<br />
Robert Menotti, M.D. President, Medical Liability Mutual <strong>Insurance</strong> Company<br />
Martin Kern, Esq, Executive Director, Academic Health Professionals <strong>Insurance</strong> Association<br />
Panel 6<br />
The Honorable Judge Douglas McKeon, Presiding Justice of Appellate Term of the Supreme<br />
Court for the First Judicial Department<br />
Panel 7<br />
Ken Adams, President and CEO, The Business Council of <strong>New</strong> <strong>York</strong> <strong>State</strong><br />
Mark Kriss, <strong>New</strong> <strong>York</strong>ers for Lawsuit Reform<br />
47
Panel 8<br />
Blair Horner, <strong>New</strong> <strong>York</strong> Public Interest Research Group<br />
Arthur Levin, Center for Medical Consumers<br />
Overview<br />
<strong>New</strong> <strong>York</strong> is home to one of the nation’s best health care systems. Despite past successes in<br />
making health care more affordable and available to <strong>New</strong> <strong>York</strong>ers, long-term reform of the<br />
medical malpractice structure has not yet been achieved. Considering that health care costs are<br />
impacted by medical malpractice rates, it is imperative that we have a medical liability structure<br />
in place which ensures that medical malpractice rates remain stable and appropriate, while also<br />
guaranteeing that malpractice victims are adequately compensated, and doctors adequately<br />
protected.<br />
In 1973 the medical malpractice insurance market was largely divided between two companies:<br />
Employers <strong>Insurance</strong> Company of Wausau and the Professional <strong>Insurance</strong> Company. In the fall<br />
of 1973 Professional was placed in liquidation. In December of 1973, Employer - which had<br />
increased its premiums by 1,000% during the preceding seven year - announced it was<br />
terminating its medical malpractice insurance program.<br />
It became apparent to the <strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Insurance</strong> Department (SID) that if no action was<br />
taken, most of the <strong>State</strong>’s physicians and surgeons would be without insurance creating a statewide<br />
health care crisis.<br />
SID and the <strong>New</strong> <strong>York</strong> <strong>State</strong> Medical Society drafted legislation to establish a joint underwriting<br />
association (JUA) comprised of all insurance companies writing liability insurance in <strong>New</strong> <strong>York</strong>.<br />
The JUA would be required to provide coverage to any licensed <strong>New</strong> <strong>York</strong> doctor. While the<br />
bill was pending, the Medical Society was able to secure an agreement with the Argonaut<br />
<strong>Insurance</strong> Company to insure its members at a rate 93.5% higher than Employers. Within<br />
months they sought to raise those rates an additional 196.8%. SID blocked the increase and<br />
Argonaut left the marketplace.<br />
These events occurred against the backdrop of a rising number of judgments against medical<br />
providers in malpractice cases. No insurance company would take on the business, leaving<br />
physicians and their dependents vulnerable.<br />
MLMIC (Medical Liability Mutual <strong>Insurance</strong> Company) was created under the sponsorship of<br />
the Medical Society and licensed by NYS on May 28 th , 1975 and began operations on July 1 st ,<br />
1975. By the end of 1976 MLMIC covered 16,000 physicians and MMIA insured another 4,000.<br />
Chapter 109 of the laws of 1975 created Medical Malpractice <strong>Insurance</strong> Association (MMIA) in<br />
order to provide a market for medical malpractice insurance to both doctors and hospitals.<br />
MMIA was a JUA consisting of all insurers writing personal injury liability insurance in <strong>New</strong><br />
<strong>York</strong> <strong>State</strong>. Also in 1975, the Superintendent was empowered to prior approve all medical<br />
malpractice insurance rates in order to provide closer oversight.<br />
48
Once the crisis of 1975 was averted several other insurers entered the marketplace: Hospital<br />
Underwriters Mutual <strong>Insurance</strong> Company; Group Council Mutual <strong>Insurance</strong> Company;<br />
Physicians Reciprocal Insurers (PRI); Frontier <strong>Insurance</strong> Company; and Academic Health<br />
Professional <strong>Insurance</strong> Association.<br />
Physicians were no longer faced with the problem of availability that had existed in the mid-<br />
1970’s. Price and affordability subsequently became the central issues.<br />
By 1985, <strong>New</strong> <strong>York</strong> <strong>State</strong> faced a second crisis. Rate levels had begun to increase by more than<br />
15% each year since 1974. By 1985, rates were more than five times greater than those in 1974.<br />
Physicians were also concerned that the policies they were purchasing, although covering up to<br />
$1 million per claim with an aggregate claim limit of $3 million per year, were still insufficient<br />
with the increasing number of multi-million dollar verdicts and settlements. In 1985 most<br />
actuaries believed that many medical malpractice insurers were either insolvent or on the brink<br />
of insolvency.<br />
Also in 1985, the Legislature enacted Judiciary Law §474-a which established the fee structure<br />
for attorneys in medical malpractice cases. It is a sliding scale which still exists today: 30% for<br />
the first $250,000; 25% for the next $250,000; 20% for the next $500,000, 15% for the next<br />
$250,000, and 10% for any recovery over $1.25 million.<br />
After years of financial instability in the late 1980’s, the market stabilized and MMIA’s surplus<br />
grew considerably in the 1990’s.<br />
MMIA saw its market share dwindle in the 1990’s as the marketplace became more competitive<br />
and the experience of the voluntary market improved. As of 1997, approximately 600 (2%) of<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong>’s 30,000 insured physician’s purchased primary coverage through MMIA.<br />
As previously mentioned, prior to 2000, MMIA provided medical malpractice insurance in <strong>New</strong><br />
<strong>York</strong> pursuant to Article 55 of the <strong>Insurance</strong> Law. Chapter 147 of the Laws of 2000 amended<br />
<strong>Insurance</strong> Law §5502 (c) and dissolved MMIA transferring its fund’s balance of approximately<br />
$800 million to the <strong>State</strong>. At the same time, NY <strong>Insurance</strong> Law §5502 (c) (2) (D) mandated the<br />
Superintendent to prescribe a plan for the equitable distribution of insured’s who are unable to<br />
secure coverage in the voluntary market to authorized medical malpractice insurers.<br />
Accordingly, the Superintendent promulgated Part 430 of <strong>New</strong> <strong>York</strong> Comp. Codes R. & Reg.,<br />
tit. 11 (Regulation 170) on June 30 th , 2000 on an emergency basis and later adopted on a<br />
permanent basis effective March 7 th , 2001, and established the Medical Malpractice <strong>Insurance</strong><br />
Plan (MMIP) as an assigned risk mechanism for providing medical malpractice insurance to all<br />
eligible health care providers who are unable to secure coverage in the private market.<br />
However, the regulation also authorized the Superintendent to approve an alternative mechanism<br />
for allocating such risks, which the insurers opted for. As a result, all authorized stock, mutual<br />
and reciprocal insurers that write medical liability risks in <strong>New</strong> <strong>York</strong>, obtained the<br />
Superintendent’s approval to participate in the pool as an alternative to receiving direct<br />
assignments of eligible health care providers through MMIP. The pool itself issues the policies,<br />
49
and each member shares the liability on a several basis in proportion to the direct written<br />
premium the insurers has in the medical malpractice market.<br />
The major difference between MMIA and MMIP is that MMIA included all liability insurers in<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> while MMIP includes only medical liability insurers, a significantly narrower<br />
base. In fact, only 3 companies write approximately 90% of the medical malpractice business in<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong>, thereby assuming the amount of risk <strong>comm</strong>ensurate with their market share.<br />
This accounts for a dollar for dollar reduction in a company’s surplus.<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> now has a medical malpractice marketplace that is in severe distress. Medical<br />
liability rates have been frozen each of the past two years and the few remaining insurers in the<br />
marketplace are thinly capitalized. This has the potential to limit the ability of providers to<br />
purchase affordable medical liability coverage and could leave victims of medical malpractice<br />
with little or no recourse.<br />
Honorable Judge Douglas McKeon at the<br />
medical malpractice reform public hearing<br />
Senator Duane, chair senate health <strong>comm</strong>ittee<br />
and Senator Breslin at the medical malpractice<br />
public hearing<br />
50
Hearing Room A<br />
Legislative Office Bldg.<br />
Albany, NY<br />
February 4, 2010<br />
Before:<br />
<strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
Participants:<br />
<strong>New</strong> <strong>York</strong> <strong>State</strong> <strong>Senate</strong><br />
Public Hearing on No-Fault Fraud<br />
Senator Neil D. Breslin<br />
Senator James L. Seward<br />
Chair, <strong>Senate</strong> Standing Committee on <strong>Insurance</strong><br />
Ranking Minority Member<br />
Senator Craig Johnson<br />
______________________________________________________________________________<br />
The purpose of this hearing was to (1) identify the fundamental causes of no-fault fraud; (2)<br />
determine why there has been an apparent increase in no-fault fraud in recent years; (3) better<br />
understand how no-fault fraud is perpetrated; and (4) to explore potential solutions to reduce the<br />
incidences of no-fault fraud in <strong>New</strong> <strong>York</strong> <strong>State</strong>.<br />
The costs of fraud and abuse of the state’s no-fault system is ultimately borne by <strong>New</strong> <strong>York</strong>’s<br />
honest policyholders. During the past five years <strong>New</strong> <strong>York</strong>’s auto insurers have seen a 56 percent<br />
increase in the average cost of no-fault claims, which according to many experts is the result of<br />
fraud and abuse of the no-fault system in <strong>New</strong> <strong>York</strong>. According to the <strong>Insurance</strong> Information<br />
Institute, <strong>New</strong> <strong>York</strong>’s auto insurers saw their typical no-fault payment for the medical care of<br />
accident victims rise from approximately $5,615 per claim in 2004 to approximately $8,748 per<br />
claim in 2009. It is estimated that a significant percentage of each individuals automobile<br />
insurance premium can be contributed to insurance fraud.<br />
51
Witness List:<br />
Panel 1<br />
Steve Nachman, Esq, Deputy Superintendent for Frauds and Consumer Services, <strong>New</strong> <strong>York</strong><br />
<strong>State</strong> <strong>Insurance</strong> Department<br />
Panel 2<br />
Howard Goldblatt, Director of Government Affairs, Coalition Against <strong>Insurance</strong> Fraud<br />
Robert C. Passmore, CPCU, Senior Director - Personal Lines, Property Casualty <strong>Insurance</strong><br />
Association of America<br />
Robert Hartwig, President and Economist, <strong>Insurance</strong> Information Institute<br />
Thomas Lehmann, Area Director of Operations, National <strong>Insurance</strong> Crime Bureau<br />
Judith Fitzgerald, Vice President for Government Affairs, National <strong>Insurance</strong> Crime Bureau<br />
Panel 3<br />
Ellen Melchionni, President, <strong>New</strong> <strong>York</strong> <strong>Insurance</strong> Association<br />
Gary Henning, Assistant Vice President, American <strong>Insurance</strong> Association<br />
Paul C. Blume, Jr. Senior Vice President for <strong>State</strong> Government Affairs, Property Casualty<br />
<strong>Insurance</strong> Association of America<br />
Panel 4<br />
Edmond Valente, Attorney, <strong>State</strong> Farm, Dewey & Leboeuf<br />
Frank Carrigan, Plan Manager, <strong>New</strong> <strong>York</strong> Automobile <strong>Insurance</strong> Plan<br />
Jack Houston, Special Investigations Unit Manager, <strong>New</strong> <strong>York</strong> Automobile <strong>Insurance</strong> Plan<br />
Patrick O’Malley, <strong>New</strong> <strong>York</strong> Product Manager, Progressive <strong>Insurance</strong><br />
Panel 5<br />
James Potts, Vice President for Special Investigations, <strong>New</strong> <strong>York</strong> Central Mutual <strong>Insurance</strong><br />
Company<br />
Joe Persaud, Director – No Fault Department, American Transit <strong>Insurance</strong> Company<br />
Pat Shea, Director SIU, American Transit <strong>Insurance</strong> Company<br />
Panel 6<br />
Richard Binko,Esq, President, <strong>New</strong> <strong>York</strong> <strong>State</strong> Trial Lawyers Association<br />
James T. Snyder, Esq., Greene and Reid PLLC, <strong>New</strong> <strong>York</strong> <strong>State</strong> Academy of Trial Lawyers<br />
Skip Short, Attorney, Short and Billy, P.C.<br />
Panel 7<br />
Kevin Ryan, President, Professional <strong>Insurance</strong> Agents of NY<br />
Matthew Guilbault, Director of Government Affairs, Professional <strong>Insurance</strong> Agents of NY<br />
52
Overview<br />
The intention of the no-fault system is designed to be beneficial to both parties involved,<br />
however, over time corrupt individuals have learned how to manipulate and abuse the system.<br />
The outcome of this abuse is ultimately borne by the consumer with high automobile insurance<br />
costs. For this reason, the <strong>Senate</strong> <strong>Insurance</strong> Committee convened this public hearing to hear<br />
testimony from government representatives, the insurance industry, and advocates to determine<br />
what changes, if any, needed to be made to the no-fault system in <strong>New</strong> <strong>York</strong>.<br />
There was a clear consensus from the participants at the public hearing that the no-fault<br />
automobile insurance system needed to be further examined. Following the hearing the <strong>Senate</strong><br />
and Assembly formed a no-fault working group, chaired by Senator Neil Breslin and<br />
Assemblyman Joseph Morelle, Chair of the Assembly Standing Committee on <strong>Insurance</strong>. The<br />
working group discussed the following issues:<br />
• Arbitration<br />
• Exceptions to preclusion<br />
• Serious injury/ verbal threshold<br />
• Provider decertification<br />
• 30 day preclusion rule<br />
• Serious injury threshold<br />
• Treatment guidelines<br />
The public hearing and the working group provided us with sufficient information from all<br />
interested stakeholders to develop a comprehensive no-fault reform bill. <strong>Senate</strong> Bill 8414 “The<br />
Automobile Fraud Prevention Act of 2010” was introduced in the <strong>Senate</strong> and the Assembly.<br />
Senator Breslin,<br />
<strong>comm</strong>ittee<br />
director Evan<br />
Schneider, and<br />
Howard Goldblatt<br />
at the no-fault<br />
fraud public<br />
hearing<br />
Steve Nachman<br />
from the <strong>New</strong> <strong>York</strong><br />
<strong>State</strong> <strong>Insurance</strong><br />
Department, at the<br />
no-fault fraud<br />
public hearing<br />
Paul Blume from<br />
Property Casualty<br />
<strong>Insurance</strong><br />
Association of<br />
America at the<br />
no-fault fraud<br />
public hearing<br />
53
new york state<br />
senator Neil D. Breslin<br />
46th <strong>Senate</strong> District<br />
District Office: 502 <strong>State</strong> Capitol Bldg., Albany, NY 12247<br />
Tel: (518) 455-2225<br />
E-Mail: breslin@nysenate.gov<br />
Website: breslin.nysenate.gov