New York State Insurance Department Office of General Counsel Opinions for May, June, July & August 2009

Got some catching up to do.  From the NYS Insurance Department's website come these eight Office of General Counsel Opinions from May, June, July and August 2009 relevant to property and casualty insurers doing business in New York.  See each opinion letter for its analysis.  

Limit on Charges by Providers of Health Services Under the No-Fault Law 
OGC Op. No. 09-05-01 (May 15, 2009)

Questions Presented:

1.  May a provider of health services bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because available coverage for basic economic loss has been exhausted?

2.  May a provider of health services bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because of a policy exclusion, including driving while intoxicated?

Conclusion:

1.  No.  Pursuant to N.Y. Insurance Law § 5108(a) (McKinney 2000), a provider of health services may not bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because available coverage for basic economic loss has been exhausted.

2.  No.  A medical provider may not bill a patient and/or the patient’s health insurer treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because of a policy exclusion, such as driving while intoxicated. The provider of health services is limited to billing at the no-fault rates established pursuant to Insurance Law § 5108 for any treatment of injuries arising out of the automobile accident which are covered under the no-fault law.

No-Fault Lost Wage Claim  
OGC Op. No. 09-05-04 (May 14, 2009)

Question Presented:

Is an insured person entitled to reimbursement for no-fault lost wage claims after being medically cleared to return to work when such person was employed at the time of the accident giving rise to the claim, was unable to return to work due to her injuries, and her vacant position was subsequently filled due to her inability to return to work, so that she could not resume her employment at such time when she was medically cleared to return to work?

Conclusion:

Yes.  Pursuant to N.Y. Ins. Law § 5102(a)(2), an eligible injured person is entitled to lost earnings from “work which the person would have performed had he not been injured.” When an injured insured is unable to return to work due to injuries arising from an automobile accident and the insured’s employer hires another person to fill the insured’s vacant position during the insured’s period of disability, so that the insured cannot immediately resume her employment when she is medically cleared to return to work, the insured may recover lost wages for the period after she is medically cleared but before she actually resumes work.

Fire Insurance Fee and Businessowners Policies 
OGC Op. No. 09-06-06 (June 15, 2009)

Questions Presented:

1.  What is the method for calculating the fire insurance fee for a businessowners policy that has separate, divisible premiums for property and liability coverages?

2.  Should the fire insurance fee be levied on the whole property premium, when there are portions of the premium that do not include the peril of fire?

3.  If inland marine coverage is included in a businessowners policy, is it subject to the fire insurance fee?

Conclusions:

1.  The method for calculating the fire insurance fee for a businessowners policy that has separate, divisible premiums for the property and liability coverages, as set forth in N.Y. Ins. Law § 9101(b) (McKinney 2000), is to multiply 100% of the property premium by 1.25%, subject to the exceptions discussed below.

2.  It depends. If the premium property is divisible and there are portions that do not include the peril of fire, then the fire insurance fee is not levied on that portion of the property premium. However, if the property premium is not divisible, then the fire insurance fee is levied on the whole property premium.

3.  No, if inland marine coverage is included in a businessowners policy and the premium is divisible, it is not subject to the fire insurance fee.

Interpreting the Amendments to Insurance Law § 3420 
OGC Op. No. 09-06-08 (June 23, 2009)

Questions Presented:

1.  Do the Chapter 388 amendments to Insurance Law § 3420, which apply to any “liability policy issued or delivered in this state,” include policies issued in New York but delivered outside of the state?

2.  Does the prejudice rule set forth in Insurance Law § 3420 only apply to liability policies?

3.  Does Insurance Law § 3420 apply to claims-made policies?

4.  May a third party bring a direct cause of action against a New York insurer in a foreign jurisdiction subsequent to a denial for late notice if the policy was delivered in a foreign jurisdiction that requires a judgment against, or settlement with, the insured prior to the initiation of such cause of action?

Conclusions:

1.  Yes.  The term “issued or delivered in this state” includes policies issued in New York but delivered outside of the state.

2.  Insurance Law § 3420 sets forth minimum requirements for liability policies, which includes the prejudice rule. However, insurers may provide more liberal provisions in their policies to benefit their insureds, and thus may include a prejudice rule in other kinds of policies, too.

3.  Yes, Insurance Law § 3420 applies to claims-made policies. However, Chapter 388 recognizes the distinctive nature of claims-made policies and does not allow for duplicate claims under multiple policy periods, or a late claim under a prior policy period. 

4.  No.  Insurance Law § 3104(b) allows a New York insurer to include in any policy of insurance issued for delivery in another jurisdiction any provision required by the laws of such other jurisdiction applicable to such policy.

Examinations Under Oath of Assignees 
OGC Op. No. 09-06-10 (June 24, 2009)

Question Presented:

May an insurer, when requesting verification in the form of an examination under oath of an assignee of no-fault personal injury protection (“PIP”) benefits, require a corporate assignee to designate a specific person to be examined?

Conclusion:

No.  Neither the Insurance Law nor the regulations promulgated thereunder permit an insurer to require that a corporate assignee of no-fault benefits designate a specific person of the insurer’s choice to submit to an examination under oath.

Insurer In-House Counsel 
OGC Op. No. 09-08-01 (August 4, 2009)

Question Presented:

Do the New York Insurance Law and regulations promulgated thereunder require Insurance Department approval for the creation of an insurer in-house law firm?

Answer:

No.  Neither the Insurance Law nor the regulations promulgated thereunder require Insurance Department approval for the creation of an insurer in-house law firm.

Acceptance of Third-Party Subpoena by the Superintendent 
OGC Op No 09-08-02 (August 5, 2009)

Question Presented:

May the Superintendent accept service of a subpoena on an authorized insurer when the insurer is not a defendant in the underlying legal action (“a third-party subpoena”)?

Conclusion:

No.  The Superintendent is not authorized to accept such a subpoena, because N.Y. Ins. Law § 1212 only requires an insurer to appoint the Superintendent to accept lawful process on its behalf when such process is associated with an action against the insurer.

Electronic Delivery of Insurance Policies 
OGC Op No 09-08-04 (August 7, 2009)

Questions Presented:

1.  Does Office of General Counsel (“OGC”) Opinion 09-01-01 (January 6, 2009) apply to commercial lines insurance policies?

2.  May an insurer electronically send an insurance policy to an insured without first obtaining the insured’s consent to engage in an electronic transaction, if the insurer also offers the insured the option to insist upon being sent a paper copy of the policy?

3.  Is the insurer or the insurance producer responsible for delivery of the insurance policy to the insured?

4.  If an insurance policy is issued electronically by an insurer to an insurance producer, may the producer electronically send the policy to the insured without first obtaining the insured’s consent to electronically receive the insurance policy?

Conclusions:

1.  Yes. OGC Opinion 09-01-01 (January 6, 2009) applies to commercial lines insurance policies.

2.  No. An insurer may not electronically send an insurance policy to an insured unless the insured has first consented to engage in an electronic transaction, even if the insurer provides the insured with an option to insist upon receiving a paper copy of the policy.

3.  Yes. An insurer is responsible for delivery of the insurance policy to the insured or such person that the insured designates, but the insurer may delegate such task to either its insurance agent or the insurance broker.

4.  No. Even if the insurer electronically sends the insurance policy to the insurance producer, the insurance producer may not electronically forward the policy to the insured unless the insured has consented to engage in an electronic transaction.