No-Fault Intoxication Exclusion Cut-Back Bill Signed into Law -- To Take Effect January 26, 2011

On July 30, 2010, Governor Paterson signed the revised no-fault intoxication exclusion cut-back bill, S7845 Breslin, passed by the New York State Senate on June 18th and the Assembly on July 1st, into law.  This new law takes effect "on the [180th] day after it shall have become a law and shall apply to all policies issued, renewed, modified, altered or amended on or after such date."  The 180th day after July 30th is January 26, 2011. 

This 2010 version of the cut-back bill limits the exception to the PIP endorsement's intoxication exclusion to the payment of "necessary emergency health services rendered in a general hospital, as defined in [New York Public Health Law § 2801(10)] including ambulance services attendant thereto and related medical screening."  As its 2008 predecessor did, it also provides that where a covered person is "found to have violated" V&T § 1192, the no-fault insurer may sue the covered person to recover the amount of first party benefits paid or payable for that person.

The bill amends Insurance Law § 5103(b)(2) as follows (new language underlined):

Section 5103:  Entitlement to first party benefits; additional financial security required

(b)  An insurer may exclude from coverage required by subsection (a) hereof a person who:

(2) Is injured as a result of operating a motor vehicle while in an intoxicated condition or while his ability to operate such vehicle is impaired by the use of a drug within the meaning of section eleven hundred ninety-two of the vehicle and traffic law; provided, however, that an insurer shall not exclude such person from coverage with respect to necessary emergency health services rendered in a general hospital, as defined in subdivision ten of section two thousand eight hundred one of the public health law, including ambulance services attendant thereto and related medical screening. notwithstanding any other law, where the covered person is found to have violated section eleven hundred ninety two of the vehicle and traffic law, the insurer has a cause of action for the amount of first party benefits paid or payable on behalf of such covered person against such covered person.

It won't be the accident date, but the auto policy's issuance, renewal or change date that will trigger the new law's application.  New York auto policies issued, renewed, modified, altered or amended on and after January 26, 2011 must contain this new exception to the mandatory PIP endorsement's optional intoxication exclusion.  The New York State Insurance Department presumably will draft and promulgate a revised mandatory PIP endorsement for use in New York auto policies issued, renewed or changed on and after January 26, 2011. 

And does the language "found to have violated [Vehicle & Traffic Law § 1192]" in the new law mean that there must be a criminal conviction before a no-fault insurer may sue the covered person to recover health care service benefits paid for his or her emergency treatment?  New York law currently does not contain such a requirement, so this new law, which grants a new cause of action to no-fault insurers, should arguably be construed to enlarge, rather than diminish, no-fault insurers' rights in this area, right?  We'll see.

Question:   What services constitute "emergency health services" under this new law?  If a drunken or drug-impaired person is stabilized in a general hospital's emergency room and then admitted for further treatment, may the no-fault insurer decline payment for other than what qualify as "emergency health services"?  If so, how will the delineation be made, since most hospital bills don't break down their charges into emergency and non-emergency categories?  Coverage Counsel will study these questions and post more on them at a later date.

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.