S T A T E   O F   N E W   Y O R K
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                                  6667

                            I N  S E N A T E

                            February 3, 2016
                               ___________

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

AN ACT to amend the insurance law and the state finance law, in relation
  to creating the health insurance guaranty fund

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

  Section  1.    Subsection  (e) of section 7402 of the insurance law is
amended to read as follows:
  (e) Is found, after examination, to be  in  such  condition  that  its
further  transaction of business will be hazardous to its policyholders,
creditors, or the public.   THIS SHALL  INCLUDE  A  HEALTH  INSURER,  AS
DEFINED  IN  ARTICLE  EIGHTY-ONE  OF  THIS CHAPTER, THAT IS CONSISTENTLY
UNABLE TO MEET THE REQUIREMENTS OF SECTION THREE  THOUSAND  TWO  HUNDRED
TWENTY-FOUR-A OF THIS CHAPTER.
  S  2.  Section  7403  of  the insurance law is amended by adding a new
subsection (e) to read as follows:
  (E)(1) UPON A DETERMINATION BY THE SUPERINTENDENT AND THE  REHABILITA-
TOR  THAT  FUNDS  FROM THE NEW YORK HEALTH INSURANCE CONSUMER PROTECTION
SECURITY FUND ARE NECESSARY TO MEET THE REQUIREMENTS OF ARTICLE  EIGHTY-
ONE  OF THIS CHAPTER, THE SUPERINTENDENT SHALL MAKE AVAILABLE SUCH FUNDS
AS ARE NECESSARY, PURSUANT TO THE REQUIREMENTS OF SUCH ARTICLE.
  (2) THE SUPERINTENDENT SHALL ADVANCE SUCH FUNDS AS  MAY  BE  NECESSARY
PURSUANT TO SUBSECTION (D) OF SECTION EIGHT THOUSAND ONE HUNDRED FOUR OF
THIS CHAPTER. THE REHABILITATOR AND THE SUPERINTENDENT SHALL ESTABLISH A
PLAN,  IF  POSSIBLE, FOR REPAYMENT OF THE ADVANCE, AT A RATE OF INTEREST
DETERMINED BY THE SUPERINTENDENT.
  (3) ADVANCES, PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION, SHALL,  IN
ALL RESPECTS EXCEPT TO RATE OF INTEREST, BE SUBJECT TO THE PROVISIONS OF
SECTION  ONE THOUSAND THREE HUNDRED SEVEN OF THIS CHAPTER, PROVIDED THAT
IN THE EVENT THAT AN INSURER WHICH HAS RECEIVED AN ADVANCE  PURSUANT  TO
THIS  SUBSECTION IS SUBSEQUENTLY THE SUBJECT OF AN ORDER OF LIQUIDATION,
THE CLAIM OF THE FUND FOR THE ADVANCE AND  ANY  ACCRUED  INTEREST  SHALL
HAVE  PRIORITY  ABOVE  CLAIMS  OF ALL NONSECURED CREDITORS, PROVIDED THE
REQUIREMENTS OF ARTICLE EIGHTY-ONE OF THIS CHAPTER HAVE  BEEN  MET,  AND

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

                                                           LBD13972-01-6

S. 6667                             2

SHALL BE PAID IMMEDIATELY TO THE FUND OR AS SOON AS ASSETS ARE AVAILABLE
THEREFOR.
  S  3.  Paragraph  1 of subsection (f) of section 7405 of the insurance
law, as amended by chapter 33 of the laws of 2005, is amended to read as
follows:
  (1) No later than one hundred eighty  days  after  a  final  order  of
liquidation  with an adjudication of insolvency of an insurer by a court
of competent jurisdiction of this state, the liquidator may in his  sole
discretion  make  application to the court for approval of a proposal to
disburse assets out of marshalled assets, from  time  to  time  as  such
assets  become available, to any fund established by article seventy-six
of this chapter, article six-A of the workers' compensation  law  [and],
any  foreign  entity  performing a similar function, AND ANY FUND ESTAB-
LISHED PURSUANT TO ARTICLE EIGHTY-ONE OF THIS CHAPTER, PROVIDED THAT THE
REQUIREMENTS OF SUBSECTION (A) OF SECTION  EIGHT  THOUSAND  ONE  HUNDRED
THREE  OF THIS CHAPTER HAVE BEEN MET, having obligations because of such
insolvency. If the liquidator determines  that  there  are  insufficient
assets  to disburse, the application authorized by this subsection shall
be considered satisfied by  a  filing  by  the  liquidator  stating  the
reasons for this determination.
  S  4.  The insurance law is amended by adding a new article 81 to read
as follows:
                                ARTICLE 81
                     HEALTH INSURANCE GUARANTY FUND
SECTION 8101. PURPOSE.
        8102. DEFINITIONS.
        8103. NEW YORK HEALTH  INSURANCE  CONSUMER  PROTECTION  SECURITY
                FUND.
        8104. POWERS OF THE SUPERINTENDENT.
  S  8101.  PURPOSE.  THE  PURPOSE OF THIS ARTICLE IS TO PROTECT COVERED
INDIVIDUALS AGAINST THE FAILURE OR INABILITY  OF  A  HEALTH  INSURER  TO
PERFORM  ITS  CONTRACTUAL  OBLIGATIONS  DUE  TO  FINANCIAL IMPAIRMENT OR
INSOLVENCY. TO PROVIDE THIS PROTECTION, THE LEGISLATURE HEREBY CREATES A
NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY FUND TO SERVE  AS
A  GUARANTY  FUND MECHANISM CAPABLE OF INSURING THAT THE FINANCIAL OBLI-
GATIONS OF HEALTH INSURERS TO THEIR ENROLLEES AND HEALTH CARE  PROVIDERS
ARE SATISFIED.
  S 8102. DEFINITIONS. AS USED IN THIS ARTICLE:
  (A)  "FUND"  MEANS  THE  NEW YORK HEALTH INSURANCE CONSUMER PROTECTION
SECURITY FUND CREATED BY THIS ARTICLE.
  (B) "HEALTH  INSURER"  MEANS  ANY  ORGANIZATION  OR  ENTITY  PROVIDING
REIMBURSEMENT FOR A COVERED EXPENSE UNDER ANY INDIVIDUAL, GROUP OR BLAN-
KET POLICY OR CONTRACT COVERING THE KINDS OF INSURANCE DESCRIBED IN ITEM
(I)  OF  PARAGRAPH  THREE  OF SUBSECTION (A) OF SECTION ONE THOUSAND ONE
HUNDRED THIRTEEN OF THIS CHAPTER AND LICENSED UNDER  ARTICLE  THIRTY-TWO
OR  FORTY-TWO  OF THIS CHAPTER, WHICH IS NOT A MEMBER OF, OR PARTICIPANT
IN, OR A SUBSIDIARY OF A MEMBER OF OR PARTICIPANT IN, THE FUNDS  CREATED
PURSUANT  TO  ARTICLES  SEVENTY-FIVE,  SEVENTY-SIX, AND SEVENTY-SEVEN OF
THIS CHAPTER; A CORPORATION ORGANIZED UNDER ARTICLE FORTY-THREE OF  THIS
CHAPTER;  OR  AN  ORGANIZATION CERTIFIED UNDER ARTICLE FORTY-FOUR OF THE
PUBLIC HEALTH LAW.
  (C) "CONTRACTUAL OBLIGATION" MEANS ANY PAYMENT OR  REIMBURSEMENT  OWED
BY  A  HEALTH INSURER FOR A COVERED BENEFIT UNDER A POLICY, CONTRACT, OR
COMPREHENSIVE HEALTH BENEFITS PLAN.

S. 6667                             3

  (D) "IMPAIRED HEALTH INSURER" MEANS A  HEALTH  INSURER  FOR  WHOM  THE
SUPERINTENDENT  HAS INITIATED A PROCEEDING UNDER THE PROVISIONS OF ARTI-
CLE SEVENTY-FOUR OF THIS CHAPTER.
  (E) "COMMISSIONER" MEANS THE COMMISSIONER OF TAXATION AND FINANCE.
  S  8103.  NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY FUND.
(A) CONSISTENT WITH THE PROVISIONS OF SUBDIVISION ONE OF  SECTION  NINE-
TY-SEVEN-YYYY  OF  THE  STATE FINANCE LAW, THERE IS HEREBY ESTABLISHED A
NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY FUND.  SUCH  FUND
SHALL BE USED IN THE PAYMENT OF UNPAID CONTRACTUAL OBLIGATIONS, IN WHOLE
OR  IN  PART,  BY  AN  IMPAIRED HEALTH INSURER, AFTER APPLICATION OF ANY
FUNDS AVAILABLE FROM A PROCEEDING IMPLEMENTED PURSUANT TO ARTICLE SEVEN-
TY-FOUR OF THIS CHAPTER.
  (B)(1) PAYMENT INTO THE FUND BY HEALTH INSURERS SHALL BE MADE  THROUGH
AN  ASSESSMENT  BASED  ON  THE PREMIUMS RECEIVED BY A HEALTH INSURER FOR
BUSINESS IN THIS STATE FOR THE  MOST  RECENT  CALENDAR  YEAR  FOR  WHICH
PREMIUM  INFORMATION IS AVAILABLE, EXCLUDING PREMIUMS RECEIVED FOR INDI-
VIDUALS UNDER TITLE XIX OF THE SOCIAL SECURITY ACT.  THE  SUPERINTENDENT
SHALL  ESTABLISH  ASSESSMENT  LEVELS  SUFFICIENT TO FULLY PAY ALL UNPAID
CLAIMS OF AN IMPAIRED HEALTH INSURER, PURSUANT TO SUBSECTIONS  (B),  (C)
AND  (D) OF SECTION EIGHT THOUSAND ONE HUNDRED FOUR OF THIS ARTICLE, AND
TO REPAY ANY TRANSFERS MADE PURSUANT  TO  SUBDIVISION  FIVE  OF  SECTION
SEVENTY-TWO OF THE STATE FINANCE LAW.
  (2)  THE  SUPERINTENDENT  MAY  EXEMPT,  ABATE OR DEFER, IN WHOLE OR IN
PART, THE ASSESSMENT OF A HEALTH INSURER IF  THE  SUPERINTENDENT  DETER-
MINES  THAT  PAYMENT OF THE ASSESSMENT WOULD ENDANGER THE ABILITY OF THE
HEALTH INSURER TO FULFILL  ITS  CONTRACTUAL  OBLIGATIONS  OR  PLACE  THE
HEALTH INSURER IN AN UNSAFE OR UNSOUND FINANCIAL CONDITION.
  (3)  IN  THE EVENT AN ASSESSMENT AGAINST A HEALTH INSURER IS EXEMPTED,
ABATED OR DEFERRED, IN WHOLE OR  IN  PART,  THE  AMOUNT  BY  WHICH  THAT
ASSESSMENT  IS  EXEMPTED,  ABATED  OR DEFERRED SHALL BE ASSESSED AGAINST
OTHER HEALTH INSURERS IN A MANNER CONSISTENT WITH THIS SECTION.
  (C) REPAYMENT OF HEALTH INSURERS WHEN FUNDS BECOME  AVAILABLE  FROM  A
PROCEEDING  PURSUANT  TO  ARTICLE  SEVENTY-FOUR OF THIS CHAPTER SHALL BE
PROPORTIONATE TO THE CONTRIBUTION FROM EACH HEALTH INSURER.
  S 8104. POWERS OF THE SUPERINTENDENT.  (A)  FOR  ANY  IMPAIRED  HEALTH
INSURER,  THE  SUPERINTENDENT  SHALL  DIRECT  THE  COMMISSIONER  TO MAKE
PAYMENTS FROM THE NEW YORK HEALTH INSURANCE CONSUMER PROTECTION SECURITY
FUND TO ENSURE THAT PAYMENTS TO  HEALTH  CARE  PROVIDERS,  OR  INDEMNITY
PAYMENTS  TO COVERED INDIVIDUALS, ARE MADE IN FULL FOR SERVICES PROVIDED
THAT WOULD NOT OTHERWISE BE FULLY  REIMBURSED  DESPITE  THE  PROCEEDINGS
IMPLEMENTED  PURSUANT  TO ARTICLE SEVENTY-FOUR OF THIS CHAPTER. SERVICES
PROVIDED EITHER PRIOR TO THE IMPLEMENTATION OF A PROCEEDING UNDER  ARTI-
CLE  SEVENTY-FOUR  OF  THIS  CHAPTER  OR  AFTER  IMPLEMENTATION  OF SUCH
PROCEEDING SHALL BE ELIGIBLE FOR REIMBURSEMENT, IN  PART  OR  IN  WHOLE,
FROM  THE  FUND. PAYMENT IN FULL SHALL BE DETERMINED BY THE TERMS OF THE
HEALTH INSURANCE CONTRACT, ANY CONTRACT BETWEEN A HEALTH  CARE  PROVIDER
AND THE IMPAIRED HEALTH INSURER AND ANY APPLICABLE STATE OR FEDERAL LAWS
OR  REGULATIONS  INCLUDING BUT NOT LIMITED TO PART H OF CHAPTER SIXTY OF
THE LAWS OF TWO THOUSAND FOURTEEN AND SECTION TWO THOUSAND NINETEEN-A OF
THE PUBLIC HEALTH SERVICES ACT, AS AMENDED BY THE PATIENT PROTECTION AND
AFFORDABLE CARE ACT.
  (B) THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO MAKE  PAYMENTS
TO  ENSURE  THAT  PAYMENT  IN  FULL IS MADE TO HEALTH CARE PROVIDERS, OR
INDEMNITY PAYMENTS TO COVERED INDIVIDUALS, FOR SERVICES PROVIDED  BEFORE
THE  IMPLEMENTATION  OF  PROCEEDINGS PURSUANT TO ARTICLE SEVENTY-FOUR OF

S. 6667                             4

THIS CHAPTER WITHIN THIRTY DAYS OF THE IMPLEMENTATION OF  SUCH  PROCEED-
ING.
  (C)  THE  SUPERINTENDENT  SHALL DIRECT THE COMMISSIONER TO ENSURE THAT
PAYMENT IN FULL IS MADE TO HEALTH CARE PROVIDERS, OR INDEMNITY  PAYMENTS
TO  COVERED  INDIVIDUALS, FOR SERVICES PROVIDED AFTER THE IMPLEMENTATION
OF PROCEEDINGS PURSUANT TO ARTICLE SEVENTY-FOUR OF THIS  CHAPTER  WITHIN
THIRTY DAYS OF RECEIPT OF A CLAIM.
  (D)  IF NECESSARY, THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO
ADVANCE  MONIES  FROM  THE  FUND  TO  COMPLY  WITH  THE  PROVISIONS   OF
SUBSECTIONS (B) AND (C) OF THIS SECTION.
  (E)  THE SUPERINTENDENT SHALL NOTIFY THE DIRECTOR OF THE BUDGET OF THE
NEED FOR MONIES TO  BE  TRANSFERRED  PURSUANT  TO  SUBDIVISION  FIVE  OF
SECTION SEVENTY-TWO OF THE STATE FINANCE LAW TO MEET THE REQUIREMENTS OF
SUBSECTIONS (B), (C) AND (D) OF THIS SECTION.
  (F) THE SUPERINTENDENT SHALL DIRECT THE COMMISSIONER TO USE THE MONIES
OF  THE FUND TO REPAY ANY TRANSFERS MADE PURSUANT TO SUBDIVISION FIVE OF
SECTION SEVENTY-TWO OF THE STATE FINANCE LAW, WHEN SUCH FUNDS  ARE  PAID
PURSUANT  TO  SUBSECTION (B) OF SECTION EIGHT THOUSAND ONE HUNDRED THREE
OF THIS ARTICLE.
  (G) THE SUPERINTENDENT SHALL  ENSURE  THAT  THE  COST  OF  ASSESSMENTS
ESTABLISHED  PURSUANT  TO  SUBDIVISION (B) OF SECTION EIGHT THOUSAND ONE
HUNDRED THREE OF THIS ARTICLE ARE NOT INCLUDED IN PREMIUMS BY ANY HEALTH
INSURER.
  S 5. Section 72 of the state finance law is amended by  adding  a  new
subdivision 5 to read as follows:
  5.  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, UPON NOTIFI-
CATION FROM THE SUPERINTENDENT OF FINANCIAL SERVICES  OF  THE  NEED  FOR
MONIES  TO  MEET  THE  REQUIREMENTS  OF  SUBSECTIONS (B), (C) AND (D) OF
SECTION EIGHT THOUSAND ONE HUNDRED FOUR OF THE INSURANCE LAW, THE DIREC-
TOR OF THE BUDGET SHALL TRANSFER SUCH FUNDS AS ARE NECESSARY.
  S 6. The state finance law is amended by adding a new section  97-yyyy
to read as follows:
  S  97-YYYY.  NEW  YORK  HEALTH  INSURANCE CONSUMER PROTECTION SECURITY
FUND. 1. THERE IS HEREBY ESTABLISHED IN THE CUSTODY OF THE  COMMISSIONER
OF  THE  DEPARTMENT  OF TAXATION AND FINANCE AN ACCOUNT OF THE MISCELLA-
NEOUS SPECIAL REVENUE FUND TO BE KNOWN AS THE NEW YORK HEALTH  INSURANCE
CONSUMER PROTECTION SECURITY FUND ACCOUNT.
  2.  NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE CONTRARY,
THE COMMISSIONER OF  TAXATION  AND  FINANCE  IS  HEREBY  AUTHORIZED  AND
DIRECTED  TO  RECEIVE  FOR  DEPOSIT TO THE CREDIT OF THE NEW YORK HEALTH
INSURANCE CONSUMER PROTECTION SECURITY FUND ACCOUNT, ASSESSMENTS IMPOSED
PURSUANT TO ARTICLE EIGHTY-ONE OF THE INSURANCE LAW AND  TRANSFERS  FROM
THE  GENERAL FUND PURSUANT TO SUBDIVISION FIVE OF SECTION SEVENTY-TWO OF
THIS ARTICLE.
  3. THE COMMISSIONER OF TAXATION AND FINANCE SHALL MAKE  PAYMENTS  FROM
THE  MONIES  ON  DEPOSIT  IN  THE  NEW  YORK  HEALTH  INSURANCE CONSUMER
PROTECTION SECURITY FUND ACCOUNT IN THE AMOUNTS AND AT THE TIMES  DETER-
MINED BY THE SUPERINTENDENT OF INSURANCE.
  S 7. This act shall take effect immediately and shall be applicable to
any  health  insurer  determined  by  the  superintendent  of  financial
services, on or after such effective date, to be  insolvent  within  the
meaning of section 1309 of the insurance law.