The Second Coming of No -- Offsetting HCRA Surcharges Against Aggregate No-Fault Limits

Back in December 2009, I posted about the New York State Insurance Department's withdrawal after only 81 days of Circular Letter No. 21 (2009), entitled "The New York State Health Care Reform Act and No-Fault Insurance", which for a time superseded Circular Letter No. 16 (1996) and Supplement No. 1 to Circular Letter No. 16 (1996).  It all had to do with the the Department's position on whether New York no-fault insurers and self-insurers could offset an applicant's aggregate no-fault benefit limit by the amount of any HCRA surcharges paid directly to the New York State Department of Health's (“DOH”) Office of Pool Administration.  The Department's position on that question from November 22, 1996 through September 16, 2009 was YES, such HCRA surcharge payments could be applied as an offset, NO from September 16 through December 6, 2009, and YES again from December 7, 2009 to present, retroactive to its 1996 circular letter.

Soon it'll be NO again.  Yesterday, the Department released a draft of Circular Letter No. XX dated July XX, 2010.  Alike its withdrawn 2009 predecessor, this proposed circular letter again supersedes and withdraws Circular Letter No. 16 (1996) and Supplement No. 1 to Circular Letter No. 16 (1996) and again advises New York no-fault insurers and self-insurers that the Department has "reconsidered its position on this issue."

Quoting a June 16, 2010 opinion of the Department's Office of General Counsel, which is not yet posted to the Department's website, the proposed circular letter states:

The Legislature clearly intended payment to health providers to be included as part of basic economic loss when it enacted Article 51 of the Insurance Law. There is no similar evidence, however, that the Legislature intended payment of the surcharge to be included as a reimbursable health expense under the no-fault law. To the contrary, when it enacted the law providing for HCRA surcharge, the Legislature did not amend the no-fault law in any manner. Accordingly, the interpretive guidance set forth in Circular Letter No. 16 no longer should be followed, and insurers may not offset the HCRA surcharge against any no-fault benefits to which an injured person is entitled under Insurance Law § 5102(a).  In view of OGC Opinion No. 06-16-2010, insurers and self-insurers may not offset an applicant's aggregate no-fault benefit limit for the payment of a surcharge when the surcharge is paid directly to the DOH's Office of Pool Administration.

The last sentence should probably be its own paragraph, rather than within the proposed circular letter's quotation of OGC Opinion No. 06-16-2010 (which are usually numbered YY-MM-DD).  One of my regular Insurance Department readers -- please tell Debra Parris.

According to the Department's website, the proposed circular letter will be available for review for only five (5) business days, or through July 14, 2010.  Comments on the proposed circular letter may be directed here.