S T A T E   O F   N E W   Y O R K
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                                  4644

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             April 14, 2011
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to prompt  settlement  of
  claims for health care and payments for health care services

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subsections (a), (b) and  (c)  of  section  3224-a  of  the
insurance  law,  as  amended  by  chapter  237  of the laws of 2009, are
amended to read as follows:
  (a) Except in a case where the obligation of an insurer or  an  organ-
ization  or corporation licensed or certified pursuant to article forty-
three or forty-seven of this chapter or article forty-four of the public
health law to pay a claim submitted by a policyholder or person  covered
under  such policy ("covered person") or make a payment to a health care
provider is not reasonably clear, or when there is  a  reasonable  basis
supported  by  specific  information  available for review by the super-
intendent that such claim or bill for health care services rendered  was
submitted  fraudulently,  such  insurer  or  organization or corporation
shall pay the claim to a  policyholder  or  covered  person  or  make  a
payment  to  a  health  care provider within thirty days of receipt of a
claim or bill for services rendered that is transmitted via the internet
or electronic mail, or [forty-five] THIRTY days of receipt of a claim or
bill for services rendered that is submitted by  other  means,  such  as
paper or facsimile.
  (b) In a case where the obligation of an insurer or an organization or
corporation  licensed  or  certified  pursuant to article forty-three or
forty-seven of this chapter or article forty-four of the  public  health
law  to  pay a claim or make a payment for health care services rendered
is not reasonably clear due to a good faith dispute regarding the eligi-
bility of a person for coverage, the liability  of  another  insurer  or
corporation  or organization for all or part of the claim, the amount of

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03157-01-1
              

S. 4644                             2

the claim, the benefits covered under a contract or  agreement,  or  the
manner in which services were accessed or provided, an insurer or organ-
ization  or corporation shall pay any undisputed portion of the claim in
accordance  with  this  subsection  and notify the policyholder, covered
person or health care provider in writing within [thirty] FIFTEEN calen-
dar days of the receipt of the claim:
  (1) that it is not obligated to pay the  claim  or  make  the  medical
payment, stating the specific reasons why it is not liable; or
  (2)  to request all additional information needed to determine liabil-
ity to pay the claim or make the health care payment AND TO RECEIVE SUCH
INFORMATION IN SUCH  A  MANNER  THAT  WILL  ACCOMMODATE  THE  ELECTRONIC
SUBMISSION AND TRACKING OF SUCH REQUESTED ADDITIONAL INFORMATION.
  Upon  receipt  of  the  information requested in paragraph two of this
subsection or an appeal of a claim or  bill  for  health  care  services
denied  pursuant  to  paragraph  one  of  this subsection, an insurer or
organization or corporation licensed or certified  pursuant  to  article
forty-three  or forty-seven of this chapter or article forty-four of the
public health law shall comply with subsection (a) of this section OR IF
THE CLAIM IS DENIED, THE PROVIDER SHALL COMPLY WITH PARAGRAPH  THREE  OF
THIS SUBSECTION.
  (3) IN CASES WHERE A PROVIDER HAS SUBMITTED ADDITIONAL INFORMATION AND
THE  INSURER,  AFTER  RECEIVING  SUCH ADDITIONAL INFORMATION, DETERMINES
THAT IT WILL DENY THE CLAIM, THE PROVIDER  SHALL  BE  NOTIFIED  OF  SUCH
DENIAL IN WRITING WITHIN FIFTEEN CALENDAR DAYS OF SUCH DENIAL.
  (c)  (1)  Except as provided in paragraph two of this subsection, each
claim or bill for health care services processed in  violation  of  this
section shall constitute a separate violation. In addition to the penal-
ties  provided  IN  ARTICLE  TWENTY-FOUR OF THIS CHAPTER OR ELSEWHERE in
this chapter, any insurer or organization or corporation that  fails  to
adhere  to the standards contained in this section shall be obligated to
pay to the health care provider or person submitting the claim, in  full
settlement  of the claim or bill for health care services, the amount of
the claim or health care payment plus interest on  the  amount  of  such
claim  or  health  care  payment of the greater of the rate equal to the
rate set by the commissioner of taxation and finance for corporate taxes
pursuant to paragraph one of subsection  (e)  of  section  one  thousand
ninety-six  of  the  tax law or twelve percent per annum, to be computed
from the date the claim or health care payment was required to be  made.
When  the amount of interest due on such a claim is less [then] THAN two
dollars, [and] AN insurer or organization or corporation  shall  not  be
required to pay interest on such claim.
  (2) Where a violation of this section is determined by the superinten-
dent as a result of the superintendent's own investigation, examination,
audit  or inquiry, an insurer or organization or corporation licensed or
certified pursuant to article forty-three or forty-seven of this chapter
or article forty-four of the public health law shall not be subject to a
civil penalty prescribed in paragraph one of  this  subsection,  if  the
superintendent  determines  that  the  insurer or organization or corpo-
ration has otherwise processed at  least  ninety-eight  percent  of  the
claims  submitted  in  a  calendar year in compliance with this section;
provided, however, nothing in this paragraph shall  limit,  preclude  or
exempt an insurer or organization or corporation from payment of a claim
and  payment  of interest pursuant to this section. This paragraph shall
not apply to violations of this section determined by the superintendent
resulting from individual complaints submitted to the superintendent  by
health care providers or policyholders.

S. 4644                             3

  S  2. Section 3224-a of the insurance law is amended by adding two new
subsections (i) and (j) to read as follows:
  (I)  IN  ADDITION TO THE PROVISIONS OF SUBSECTION (C) OF THIS SECTION,
ANY POLICYHOLDER OR HEALTH CARE PROVIDER MAY COMMENCE  AN  ACTION  IN  A
COURT  OF  COMPETENT  JURISDICTION  ON  HIS OR HER OWN BEHALF AGAINST AN
INSURER FOR FAILURE TO  COMPLY  WITH  ANY  OF  THE  PROVISIONS  OF  THIS
SUBSECTION.  SUCH  ACTION  SHALL  BE  BROUGHT IN THE COUNTY IN WHICH THE
ALLEGED VIOLATION OCCURRED OR WHERE THE COMPLAINANT RESIDES.  THE  COURT
MAY  IMPOSE  THE  CIVIL  PENALTY  PROVIDED FOR IN SUBSECTION (C) OF THIS
SECTION AND/OR THE PENALTY PROVIDED FOR IN SUBSECTION (A) OF SECTION TWO
THOUSAND FOUR HUNDRED SIX OF THIS CHAPTER. ANY FINAL ORDER ISSUED PURSU-
ANT TO THIS SUBSECTION MAY AWARD COSTS OF LITIGATION, INCLUDING  REASON-
ABLE  ATTORNEYS'  FEES, TO THE PREVAILING PARTY WHENEVER THE COURT DEEMS
SUCH AWARD IS APPROPRIATE.  IN  ANY  ACTION  BROUGHT  PURSUANT  TO  THIS
SUBSECTION, THE SUPERINTENDENT MAY INTERVENE AS A MATTER OF RIGHT.
  (J)  EVERY  SIX  MONTHS,  INSURERS  SHALL PREPARE A LIST OF CLAIMS FOR
WHICH THEY WILL ALWAYS REQUEST OPERATIVE NOTES AND/OR  DOCUMENTATION  OF
MEDICAL  NECESSITY AND SHALL MAKE SUCH LIST AVAILABLE TO ALL PARTICIPAT-
ING PROVIDERS. INSURERS SHALL ACCOMMODATE THE ELECTRONIC SUBMISSION  AND
TRACKING  OF SUCH OPERATIVE NOTES AND/OR DOCUMENTATION OF MEDICAL NECES-
SITY AT THE TIME OF SUBMISSION OF THE INITIAL CLAIM.
  S 3. Subsection (a) of section 2406 of the insurance law,  as  amended
by chapter 666 of the laws of 1997, is amended to read as follows:
  (a)  If  the hearing was on a charge of a defined violation the super-
intendent shall make an order on his report and  serve  a  copy  of  the
findings  and  order  upon the person charged with the violation and any
intervenor. If the superintendent finds that the  person  complained  of
has  engaged  in a defined violation, the order shall require the person
to cease and desist from engaging in such defined violation.    Further-
more,  if  the  superintendent finds, after notice and hearing, that the
person complained of has engaged in an act prohibited by  section  three
thousand  two  hundred twenty-four-a of this chapter, the superintendent
is authorized to levy a civil penalty against such person in  an  amount
up  to  five hundred dollars per day for each day beyond the date that a
bill or claim was to be processed in accordance with section three thou-
sand two hundred twenty-four-a of this chapter, but in  no  event  shall
such  penalty  exceed five thousand dollars; AND FURTHERMORE, THE SUPER-
INTENDENT MAY REVOKE ANY LICENSE ISSUED TO AN INSURER LICENSED  PURSUANT
TO  THIS CHAPTER IF, AFTER NOTICE AND HEARING, HE OR SHE FINDS THAT SUCH
INSURER HAS FAILED TO COMPLY WITH ANY REQUIREMENT IMPOSED UPON IT BY THE
PROVISIONS OF THIS SECTION MORE THAN SIX TIMES WITHIN  A  CALENDAR  YEAR
AND IF IN HIS OR HER JUDGMENT SUCH REVOCATION IS REASONABLY NECESSARY TO
PROTECT  THE  INTERESTS  OF THE PEOPLE OF THIS STATE. THE SUPERINTENDENT
MAY IN HIS OR HER DISCRETION REINSTATE ANY SUCH LICENSE  IF  HE  OR  SHE
FINDS THAT A GROUND FOR SUCH REVOCATION NO LONGER EXISTS.
  S  4.  Section  3217-a of the insurance law is amended by adding a new
subsection (f) to read as follows:
  (F) NOTWITHSTANDING ANY CONTRARY PROVISION OF  LAW,  ANY  EMPLOYER  IN
THIS  STATE  PROVIDING  A SELF-INSURED EMPLOYEE WELFARE BENEFIT PLAN, AS
DEFINED IN THE EMPLOYEE RETIREMENT  INCOME  SECURITY  ACT  OF  1974,  AS
AMENDED,  SHALL  PROVIDE  INSUREDS  WITH IDENTIFICATION CARDS INDICATING
THAT SUCH INSURED'S PLAN IS A SELF-INSURED PLAN AND SHALL INFORM PROVID-
ERS ON REQUEST THAT SUCH INSURED'S PLAN IS A SELF-INSURED PLAN.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided, however, that effective immediate-
ly, the addition, amendment and/or repeal  of  any  rule  or  regulation

S. 4644                             4

necessary  for  the implementation of this act on its effective date are
authorized and directed to be made  and  completed  on  or  before  such
effective date.