Subrogation Is Gone In New York. A Great Day For Injury Victims!

On November 12, 2009, Governor Patterson signed into law section 5-335 of the General Obligations Law that bars HMO’s and private health insurers from seeking any reimbursement or subrogation against any settling party to a personal injury or wrongful death action with respect to benefits it paid or is obligated to pay. The only exceptions are for claims for which there is a statutory right of reimbursement (i.e., Medicaid, Medicare, workers’ compensation) and subrogation claims to recover excess no-fault benefits.

This new law overrules two Court of Appeals decisions: Teichman v. Community Hospital of Western Suffolk, 87 N.Y.2d 514 (1996) and Fasso v. Doerr, 12 N.Y.3d 80 (2009) to the extent they recognized non-statutory rights for reimbursement or subrogation against a settling party. This law takes effect immediately and applies to both future actions and all pending cases that have not settled or gone to trial.

General Obligations Law section 5-335(a) provides, in part: “When a plaintiff settles with one or more defendants in an action for personal injuries…it shall be conclusively presumed that the settlement does not include any compensation for the cost of health care services, loss of earnings or other economic loss to the extent those losses or expenses have been or obligated to be paid or reimbursed by a benefit provider….”

The new law passed the Assembly by a vote of 135-0 and the Senate by a vote of 59-2. This statutory remedy applies only to settlements. Therefore, if recovery is had pursuant to a Judgment, the insurer still retains any rights it had to subrogation or reimbursement.

This law is a major victory in protecting the settlements of injured victims from private health insurers and HMO’s.