STATE OF NEW YORK
       ________________________________________________________________________
 
                                         1980
 
                              2001-2002 Regular Sessions
 
                    IN SENATE
 
                                   January 31, 2001
                                      ___________
 
       Introduced   by   Sens.  BRESLIN,  BROWN,  CONNOR,  DOLLINGER,  GENTILE,
         HASSELL-THOMPSON, HEVESI, KRUGER, LACHMAN, MARKOWITZ, MENDEZ, MONTGOM-
         ERY, ONORATO, OPPENHEIMER, PATERSON, SAMPSON, SANTIAGO,  SCHNEIDERMAN,
         M. SMITH,  STACHOWSKI, STAVISKY -- read twice and ordered printed, and
         when printed to be committed to the Committee on Judiciary
 
       AN ACT to amend the general obligations law, the civil practice law  and
         rules  and  the  public health law, in relation to holding health care
         organizations responsible for the consequences of their decisions
 
         The People of the State of New York, represented in Senate and  Assem-
       bly, do enact as follows:
 
    1    Section  1.  Legislative  findings.  The legislature finds that a wide
    2  variety of entities are integrating the functions of paying  for  health
    3  care,  determining what health care is paid for, and providing the care.
    4  This integration is breaking down traditional distinctions as  to  func-
    5  tion.  Increasingly,  payor determinations are governing health care and
    6  controlling decisions that in the past  were  the  exclusive  domain  of
    7  health  care  professionals  and patients. The legislature further finds
    8  that this integration makes it imperative that health care organizations
    9  be held fully responsible for the consequences of their decisions,  much
   10  as  health  care professionals have been held responsible for the conse-
   11  quences of their decisions.
   12    § 2. The general obligations law is amended by adding  a  new  section
   13  11-108 to read as follows:
   14    §  11-108.  Responsibility  of  health  care organizations.   1. Defi-
   15  nitions. For purposes  of  this  section,  unless  the  context  clearly
   16  requires otherwise:
   17    (a)   "Health  care  organization"  means  an  entity  that  approves,
   18  provides, arranges for, or pays for health care services, including  but
   19  not limited to an entity licensed under the insurance law or licensed or
   20  certified under the public health law.
 
        EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD03215-01-1

       S. 1980                             2
 
    1    (b) "Health care provider" means an entity licensed or certified under
    2  article twenty-eight, thirty-six or forty-four of the public health law;
    3  an  entity  licensed or certified under article sixteen or thirty-one of
    4  the mental hygiene law; a health care practitioner licensed or certified
    5  under  title eight of the education law; or a provider of pharmaceutical
    6  products and services or durable medical equipment.
    7    (c) "Health care service"  means  health  care  services,  treatments,
    8  products or equipment provided by a health care provider.
    9    2.  Whenever  a  health  care organization delays, fails or refuses to
   10  approve, provide, arrange for, or pay  for,  in  a  timely  manner,  any
   11  health  care  services  to a person to the extent it is contractually or
   12  legally obligated to do so, it shall be liable for any personal  injury,
   13  death or damages caused by the delay, failure or refusal.
   14    3.  The  failure  of  the person (or of any other person acting on the
   15  person's behalf) to seek an alternate provider of  or  to  pay  for  the
   16  health  care  service  shall not diminish the health care organization's
   17  liability or constitute culpable conduct for the purposes of section one
   18  thousand four hundred eleven of the civil practice law and rules.
   19    4. Nothing in this section shall limit any  other  right,  remedy,  or
   20  cause of action that any person may otherwise have.
   21    5.  No  contract  or  agreement  between  a health care provider and a
   22  health care organization shall directly or indirectly require  a  health
   23  care provider to indemnify or hold harmless the health care organization
   24  for  any liability resulting from the health care organization's acts or
   25  omissions.
   26    6. No contract or agreement between a health care organization and any
   27  entity or person shall waive or limit any liability of the  health  care
   28  organization to the entity or person under this article.
   29    7.  A  health  care  organization  shall, within ten days of a written
   30  request for same, provide to a person or  an  attorney  or  health  care
   31  practitioner  authorized  to represent or act on behalf of the person or
   32  the person's estate, an opportunity to inspect and to receive copies  of
   33  all information and records relating or pertaining to its delay, failure
   34  or  refusal  to  approve,  provide, arrange for, or pay for, in a timely
   35  manner, any health care services to the extent it  is  contractually  or
   36  legally  obligated to do so for the person. The health care organization
   37  may impose a reasonable charge, not to exceed the  charges  imposed  for
   38  inspection and copies as set forth in sections seventeen and eighteen of
   39  the public health law.
   40    8. If the time in which a plaintiff could have commenced an action for
   41  professional  malpractice  for  the act, error or omission complained of
   42  has expired prior to commencement of an action brought pursuant to  this
   43  section against a health care organization, the defendant in said action
   44  shall  be  barred  from commencing a third-party action against a person
   45  not a party who is or may be liable to that defendant for all or part of
   46  the plaintiff's claim against the defendant, and against whom the plain-
   47  tiff cannot commence an action for professional malpractice due  to  the
   48  expiration  of  the  statute of limitations prior to commencement of the
   49  action against the defendant.
   50    § 3. Section 1602 of the civil practice law and rules  is  amended  by
   51  adding a new subdivision 13 to read as follows:
   52    13.  not apply to an action against a health care organization brought
   53  pursuant to section 11-108 of the general obligations law.
   54    § 4. Subdivision 1 of section 4410 of the public health law, as  added
   55  by chapter 938 of the laws of 1976, is amended to read as follows:

       S. 1980                             3
 
    1    1.  The  provision  of comprehensive health services directly or indi-
    2  rectly, by a health maintenance organization through  its  comprehensive
    3  health services plan shall not be considered the practice of the profes-
    4  sion of medicine by such organization or plan.  However[,]:
    5    (a) this subdivision shall not be construed to limit any liability the
    6  health  maintenance  organization  or  its comprehensive health services
    7  plan would otherwise have relating to any professional services rendered
    8  by, on behalf of or in connection with the organization or plan;
    9    (b) each member, employee or agent of such organization or plan  shall
   10  be  fully  and  personally  liable  and accountable for any negligent or
   11  wrongful act or misconduct committed by him or her or any  person  under
   12  his  or  her direct supervision and control while rendering professional
   13  services on behalf of [such] the organization or plan; and
   14    (c) no contract or agreement between a health maintenance organization
   15  or its comprehensive health services plan and any health  care  provider
   16  shall require the health care provider to indemnify or hold harmless the
   17  organization  or  plan  for  any  liability the organization or plan may
   18  incur.
   19    § 5. If any provision of this act or the application thereof shall  be
   20  held to be invalid, such invalidity shall not affect other provisions or
   21  other application of any provision of this act which can be given effect
   22  without  the  invalid  provision  or  application,  and to that end, the
   23  provisions and applications of this act are severable.
   24    § 6. This act shall take effect immediately.

 
BILL NUMBER: S1980
 
SPONSOR: BRESLIN

 
TITLE OF BILL:  An act to amend the general obligations law, the civil
practice law and rules and the public health law, in relation to holding
health care organizations responsible for the consequences of their
administrative decisions
 
 
PURPOSE: To promote the rights of consumers of health care insurance
by making insurance providers legally liable for damages resulting from
the failure to provide and pay for necessary medical treatment.
 
 
SUMMARY OF PROVISIONS:
 
Section 1.  Legislative Findings.
 
Section 2.  Amends the General Obligations Law by adding a new Section
11-108 to provide that a health insurance carrier, health maintenance
organization or other managed care entity for a health care plan has the
duty to make prompt and adequate health care available to all insureds
and enrollees and can be held liable for damages for harm or personal
injury caused by its failure to exercise such care.  Additionally,
health care organizations are not given any immunity from liability if
an enrollee either chooses to receive treatment from another provider or
finds another source of payment for such treatment. This section also
prohibits a health care organization from entering into a contract with
any health care provider if such contract contains an indemnification or
hold harmless clause. This section allows for health care organizations
to charge a nominal fee for providing documentation that relate to its
delay or refusal to provide or pay for health care services.
 
Section 3.  Amends Section 1602 of the Civil Practice Law and Rules by
adding a new subdivision 13 which limits the ability of health care
organizations to claim indemnification if an action is brought against
them.
 
Section 4.  Amends subdivision 1 of Section 4410 of the Public Health
Law to indicate that although health care organizations are not consid-
ered practitioners of medicine, their liability is not diminished in
relation to the administrative decision and services they render. This
section also prohibits the inclusion of a hold harmless or indemnifica-
tion clause in any contract or agreement between health care organiza-
tions and health care providers.
 
Section 5.  Maintains that if any provision of this act is deemed inval-
id, such invalidity shall not affect the other provisions.  Regardless
of any invalid provision, the other provisions which can take effect
will be fully implemented.
 
Section 6.  Sets forth the effective date.
 
 
JUSTIFICATION: As health insurers and managed care groups are receiv-
ing greater pressure to keep medical treatment costs down, there is a
growing concern that the quality and availability of care is diminish-
ing. Insurance companies and HMOs that are striving to achieve higher
profits and a competitive edge are denying their policyholders the
access to care and treatment that they need and deserve.
 
 
This bottomline mentality has forced some disgruntled insureds to take
their cases of denial of treatment or payment for such treatment to the
courts. Those policyholders who suffer pain and injuries because of
denial of care on the part of the insurer or HMO should have the right
to place the blame on the insurer, just as a patient would sue a physi-
cian for medical malpractice. Many HMOs and insurance companies purport
that they do not make medical decisions and therefore cannot be held
liable for damages. However, the denial of payment or reimbursement for
tests or treatments is essentially denying the actual health care.
Health insurance carriers make administrative decisions on whether or
not to authorize medical procedures while considering both the necessity
of the treatment and its cost impact. In the management of these benefit
plans, cost implications too often overshadow meeting the needs of
patients.
 
HMOs have argued that they are given immunity from liability under the
1974 federal statute ERISA, the Employee Retirement Income Security Act.
The Act was created to ensure that employers fulfilled their pension
plan obligations. HMOs argue that ERISA's provisions pre-empt any state
law relating to any employee benefit plan, protecting them from malprac-
tice suits which are pursued by enrollees in an employer-sponsored
health insurance plan. While ERISA needs reform on the federal level,
this bill seeks to effect positive change in New York's health insurance
arena by making health care organizations take responsibility for their
actions. New York, like several other states that have passed similar
pieces of legislation, can provide the assurance that its residents will
receive quality health care.
 
Consumers who have experienced undue pain and suffering because of their
insurer's refusal to provide necessary medical attention need legal
recourse. By making health care organizations liable for the decisions
they make, more attention will be paid to the enrollees who require care
instead of enlarging profit margins.
 
 
LEGISLATIVE HISTORY:  1999/2000 -  S.801. Remained in Senate judiciary
committee
 
 
FISCAL IMPLICATIONS FOR STATE & LOCAL GOVERNMENTS:  None.
 
 
EFFECTIVE DATE: This act will take effect immediately.