Another Issue Involving Stop Loss and Prompt Payment Statutes
An inquiry by a TPA to the New York Insurance Department asked whether stop-loss insurers are subject to the prompt-pay rules of Insurance Law § 3224-a. In April 1982, the Insurance Department issued Circular Letter 7, which provides that stop-loss insurance is not reinsurance, but rather a form of accident and health insurance that may not be placed by excess line brokers. In 1999, the Legislature confirmed that stop-loss insurance is a form of accident and health insurance by enacting Insurance Law § 4237-a. A stop-loss insurance policy is a contract or agreement issued or entered into pursuant to Article 42 of the Insurance Law. Insurance Law § 3224 applies only to policies directly providing coverage for “health care” services. Since stop-loss insurance claims are similar to disability insurance claims, which are claims under an accident and health insurance policy but not health care claims under Insurance Law § 3224-a since they do not involve payment for health care treatment, a claim under a stop-loss insurance policy is not a health care claim for the purposes of Insurance Law § 3224-a.
Insurance Law § 3216(d)(1)(H) regulates individual accident and health insurance policies and requires that payments be made immediately upon receipt of proof of loss. Further, Insurance Law § 3221(a)(12), which regulates group accident and health policies, requires payment within 60 days. Since stop-loss insurance protects a self-funded group plan, but is provided by an individual policy issued to the plan, the Department interprets the Insurance Law to allow either time period for payment of claims. In addition, § 216.6 of 11 NYCRR Part 216 (Regulation 64) sets forth the standards for the prompt, fair, and equitable settlement of accident and health insurance claims.
