SOURCE: Hach Rose Schirripa & Cheverie, LLP

August 12, 2014 13:49 ET

Second Circuit Upholds New York Anti-Subrogation Law Preventing Insurers From "Double-Dipping"/ Collecting Plan Members' Settlement Proceeds

NEW YORK, NY--(Marketwired - Aug 12, 2014) -  Hach Rose Schirripa & Cheverie, LLP and Harfenist Kraut & Perlstein LLP have obtained a victory in an appeal filed on behalf of a putative plaintiff class against whom medical liens were wrongly asserted by The Rawlings Company, LLC, ("Rawlings"), UnitedHealth Group Incorporated ("UnitedHealth Group"), and Oxford Health Plans (NY), Inc. ("Oxford").

New York's General Obligations Law §5-335 provides that any clause in a health insurance policy or contract which gave the benefit provider a lien or right of subrogation or reimbursement against the settling party, with respect to medical expenses that have been paid or that were obligated to be paid or reimbursed by the benefit provider was now void. However, in clear contravention of NY GOL §5-335, Rawlings, on behalf of Oxford/UnitedHealth Group, continued to contact plaintiffs to assert medical liens on settlement proceeds from their personal injury, medical, dental, podiatric malpractice, or wrongful death cases or claims arising and/or pending in New York. 

In Wurtz, et al. v. The Rawlings Company, LLC, et al. (E.D.N.Y. No. 12-cv-1182), the putative plaintiff class sought a declaratory judgment barring defendants from asserting and collecting any lien, right of subrogation, or right of reimbursement under fully insured health insurance plans against plaintiffs or claimants that have settled tort claims arising or pending in New York. Defendants moved to dismiss plaintiffs' claims arguing complete and express preemption under ERISA.

The Second Circuit (No. 13-1695-cv) vacated the district court's decision, agreeing with plaintiffs that NY GOL §5-335 was not preempted under ERISA, because the New York statute fell within the "savings clause," which exempts any law that "regulates insurance." The decision is retroactive, dating back to the statute's enactment in 2009.

The case was remanded back to the district court for further proceedings where the putative plaintiff class also seeks monetary damages from the defendants for violation of New York's deceptive acts and practices law -- General Business Law Section 349 -- and for unjust enrichment for all liens collected to date. 

If you wish to obtain additional information regarding the decision, please visit us at www.hrsclaw.com or contact Frank R. Schirripa, Esq. (fschirripa@hrsclaw.com or at (212) 213-8311).

Contact Information

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