Governor Paterson VETOES No-Fault Intoxication Exclusion Cut-Back Bill

Who would have thunk that despite a vote tally of 61-0 in the State Senate and an aggressive letter-writing campaign by the Medical Society of the State of New York, Governor Paterson would have vetoed the no-fault intoxication exclusion cutback bill that passed the New York State Legislature on June 19th (see the No-Fault Intoxication Exclusion Cut Back By NYS Legislature post).

But last Thursday, September 25, 2008, that's what Paterson did -- he VETOED that bill and 38 others. Apparently the Governor thought that the bill was too expansive and would require no-fault insurers to provide PIP coverage for far more than just emergency care (which, read literally, it would have). The text of the Governor's Veto Message No. 170, however, portends, if not guarantees, the re-passage and signing of a revised bill in the future, much in the same way that former Governor Spitzer signaled the eventual passage and signing of a revised direct DJ/late notice bill with his memorandum veto of the original version:

VETO MESSAGE - No. 170

TO THE SENATE:

I am returning herewith, without my approval, the following bill:

Senate Bill Number 8294-A, entitled:

"AN ACT to amend the insurance law, in relation to entitlement to
first party benefits"

NOT APPROVED

Under the Public Health Law and the federal Emergency Medical Treatment and Active Labor Act, health services providers are required to provide emergency medical services to persons in need of such care. The Insurance Law, however, permits no fault insurers to deny coverage where the insured person is injured while operating a vehicle in an intoxicated state. As a result, health services providers are sometimes not compensated for services they are required to render to stabilize their patients.

To prevent this inequity, this bill would amend the Insurance Law to prohibit insurers from excluding from no-fault coverage a covered person who is injured while operating a motor vehicle in an intoxicated state or while impaired by a drug. This would help ensure that health services providers are compensated for the emergency services they render to an impaired driver. In order to protect insurers, the bill would provide the insurers with a right of recovery from the insured.

It is fundamental that health service providers should be compensated for the life saving services they provide to their patients. However, this bill is extremely expansive in scope and requires no fault insurers to provide coverage for far more than just emergency care. Indeed, the bill would require no fault insurers to reimburse a health service provider for all health-related services - including, pharmaceutical, therapeutic, surgical, rehabilitative and diagnostic - not merely until the patient is stabilized, but until the $50,000 no fault limit is exhausted. This would go well beyond the stated purpose of the bill, and the costs of providing such care would result in higher automobile insurance rates for the public.

However, because I believe that this bill's goals are sound, I have instructed my staff to work with the Legislature, the health services provider groups, and the insurance industry to investigate this issue further and to help enact a new bill that accomplishes the intended purpose of this bill in a manner that will protect the interests of the health services providers, injured patients and the public.

The bill is disapproved. (signed) DAVID A. PATERSON

So this is a not a goodbye, but a so long, farewell, arrivederci, auf Wiedersehen, for the intoxication exclusion cut-back bill. We'll see it again, probably in the spring 2009 legislative session.

For those of you who work for insurance companies that may become involved in the "investigat[ion] of this issue", as Governor Paterson's veto message puts it, I suggest you question whether and, if so, why the right of recovery should exist only upon a "finding" or conviction of the EIP of a violation of Vehicle & Traffic Law § 1192 (DWAI or DWI). Insurers should not be subject to plea decisions made by county district attorneys, or foreclosed from suing alcohol intoxicated or drug impaired EIPs simply because either no DWAI or DWI charges were laid or pursued by prosecuting authorities. If they are going to be required to pay emergency medical treatment costs for intoxicated/impaired drivers, why shouldn't insurers also be allowed to seek recovery if they can prove themselves, by a preponderance of the evidence, that the driver was impaired or intoxicated by alcohol or drugs? Will DAs be seeking restitution of no-fault insurers' basic economic loss (BEL) payments from EIPs on condition of accepting reduced pleas? Doubt it. Will a plea of guilty to DWAI (V&T § 1192[1]) collaterally estop the EIP from contesting liability to repay the insurer for required BEL payments made to the hospital? What about requiring hospitals to test for drugs/alcohol when before rendering the kind of emergency care for which they will be seeking payment from no-fault insurers? And providing certified copies of those test reports to insurers as part of their claims? Plenty to consider.

Since this looks like this change is inevitable, no-fault insurers should probably want to become as involved in the redrafting process as possible.

Editor's Note (01.14.11) ~~ An amended Insurance Law § 5103(b)(2) takes effect on January 26, 2011.  Read about that amendment and the New York State Insurance Department's interpretation of it here.