Thursday, December 23, 2010

New York Insurance Law § 5109 Does Not Preempt a No-Fault Insurer's Mallela-Based Recovery Action

Allstate Ins. Co. v. Belt Parkway Imaging, P.C.

(1st Dept., decided 11/30/2010)

While we're talking about Dr. Rabiner's MRI facilities (see post below), defendant providers contended in this case that the New York State Legislature's post-Mallela enactment of Insurance Law § 5109 overruled Mallela or preempts or precludes Mallela-based recovery actions such as this one.  New York County Supreme Court (Eileen Bransten, J.) rejected that argument in denying defendant providers' motion for summary judgment, and the Appellate Division, First Department, AFFIRMED, holding:
"A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement" (11 NYCRR 65-3.16[a][12]).  Pursuant to this regulation, the Court of Appeals held that "insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises" (see State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313, 319, 321 [2005]). Mallela was decided on March 29, 2005.  The Legislature subsequently enacted Insurance Law § 5109, which became effective on August 2, 2005.

There is no indication in § 5109 that the statute overrules Mallela. Nor is there any such indication in its legislative history, which "must be reviewed in light of the existing decisional law which the Legislature is presumed to be familiar with" (Matter of Knight-Ridder Broadcasting v Greenberg, 70 NY2d 151, 157 [1987]).

Section 5109(a) states, "The superintendent, in consultation with the commissioner of health and the commissioner of education, shall by regulation, promulgate standards and procedures for investigating and suspending or removing the authorization for providers of health services to demand or request payment for health services as specified in" Insurance Law § 5102(a)(1). However, the Superintendent of Insurance has issued no regulations pursuant to § 5109(a). Thus, if — as defendants contend — only the Superintendent can take action against fraudulently incorporated health care providers, then no one can take such action.  In light of the fact that "[t]he purpose of the regulations of which [11 NYCRR] 65-3.16(a)(12) is a part was to combat fraud" (Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, 409 [2006]), this would be an absurd result, and we reject it (Statutes § 145).

No comments: