New York Trial Court Won’t Let Plan Intervene in Tort Lawsuit
Coordination of Benefits Employee Benefits Series THOMPSON July 2011 | VOL. 19, No.3
Legal Brief
Contrary to two recent decisions, a health plan in New York failed in its effort to intervene in a plan participant’s lawsuit against a third party, which would have let the plan in on settlement negotiations or made it a party to the court’s allocation of the settlement proceeds. A recent decision, Robles v. Bruhns, 2011 WL 1564649 (N.Y. Sup. Ct., Suffolk Cty., April 26, 2011), refused to allow such an intervention. The Facts
HIP Health Plan of New York paid health benefits incurred by its plan participant under a health plan it issued. HIP moved to intervene in the tort lawsuit brought by the plan participant. In support of its motion to intervene, HIP claimed that there would be no prejudice to the parties, nor would its intervention delay the proceedings. HIP indicated that it would rely on whatever information had already been exchanged by the parties through discovery that had already taken place, and that it would abide by any court ruling that would limit the extent of its participation in the lawsuit.
The Decision
The court denied HIP’s motion to intervene, stating:
In essence, the question boils down to a battle between health insurers on one side and liability insurers on the other with a determination necessary as to which of the two should receive repayment for their outlays to their respective insureds. It is a pure policy question, best left for the legislature who can entertain and hear the arguments raised by the respective vested interests as well as from constituents or other individuals or organizations for whom the determination would have consequences, and then, through appropriate legislation, set policy accordingly.
HIP argued that it could begin a direct action against the defendants and then move to consolidate the two lawsuits. The court was skeptical of HIP’s right to do that, and relied on the fact that relevant precedents did not appear to approve of such reimbursement procedures.
Implications
We recently reported two decisions by New York trial courts in other appellate divisions that permitted the health plan to intervene in the tort decision under the terms stated by HIP in this case. They are Rink v. State of New York, 901 N.Y.S. 2d 489 (N.Y. Ct. Cl., March 22, 2010) (discussed in the October 2010 Newsletter; see App. IV, Case No. 620) and Rizzo v. Moseley, 913 N.Y.S. 2d 905 (S. Ct., Westchester County, Dec. 31, 2010) (discussed in the April 2011 Newsletter; see App. IV, Case No. 663).
The courts’ rationales in the Rink and Rizzo cases seem to more accurately explain the impact of the newly enacted New York’s General Obligations Law §5-335 than the court’s opinion in this case.
If the court had paid attention to the decision in the Rizzo case, the outcome might have been different. If the attorneys for HIP are aware of the Rizzo decision, they might attempt to appeal this case to the Second Department. It appears unlikely that the Court of Appeals (New York’s highest appellate court) will get a chance to rule on this matter any time soon.
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