Important Victory for Subrogation Efforts in the Face of New York Law
The Subrogator Spring/Summer 2011
Amidst the deluge of healthcare reform, anti-subrogation legislation was passed in the State of New York on November 12, 2009, which purported to eliminate the right of fully insured carriers and self-funded benefit plans, coming within the purview of state law, to pursue subrogation and reimbursement. Accordingly, benefit plans in New York which are not private, self-funded plans, no longer have an enforceable right to subrogation and/or reimbursement. The Phia Group has never accepted anti-subrogation legislation without a fight. When the Phia Group received word of the statutory shift, its attorneys immediately began to seek out ways to enforce plan rights. The law in question is a collateral source rule, which bars plaintiffs from collecting funds for losses covered by a benefit plan. The Phia Group theorized that because the benefit plan is also a victim, and because the plaintiff cannot release the responsible third party from liability for damages it caused to the benefit plan, the benefit plan is entitled to intervene.
In Rink v. State, 2010 N.Y. Slip Op. 20149, 2010 WL 1686054, similarly-minded attorneys made such an argument before the Fourth Department (covering portions of northwestern New York). That Court agreed with the theory that a benefit plan may pursue a claim directly against a responsible party, however, due to the limited jurisdiction of the Rink Court, and due to the constraining language utilized in the opinion, many attorneys in New York still refused to recognize a benefit plan’s right to reimbursement.
In the case of Rizzo v. Moseley, et. Al., Index No. 11214/07, a benefit plan that is represented by The Phia Group processed and paid hundreds of thousands of dollars in incident related claims. The Phia Group retained its CEO, Adam V. Russo’s law firm (The Law Offices of Russo & Minchoff), as well as counsel in New York (Attorneys Daniel A. Lynn and Philip H. Ziegler of Braff, Harris and Sukoneck), and filed a motion to recognize a benefit plan’s right to intervene and pursue reimbursement against responsible third parties. This case would be decided by a Court in the Ninth Judicial District of New York, less than 20 miles from Manhattan.
The Phia Group is pleased to announce that it has emerged victorious. On December 21, 2010, the Supreme Court of New York agreed with The Phia Group when it held that a benefit plan is able to intervene in a plan participant’s lawsuit without violating New York’s collateral source rule. It is now clear that, while New York law does limit rights to reimbursement, it does not prevent benefit plans from pursuing a claim against the responsible third party.
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