Previous Question
You posted the following guidance in 2009: In light of the enactment of NY's anti-subrogation law (GOL 5-335 and CPLR 4545), what effect does that have on a Self-Funded ERISA plan's attempt to assert a lien on a personal injury settlement (note: notice of the lien was asserted prior to passage of the legislation?
Previous Answer
ERISA expressly preempts state laws insofar as they relate to employee benefit plans (29 U.S.C. 1144(a)).HOWEVER, under ERISA this preemption does not apply to those laws which regulate insurance, banking, or securities (29 USC 1144(b)(2)(A).This is known as the savings clause. Thus; for a state law to apply, it must be found to regulate insurance. Click here to find a summary piece we distributed after the passing of this new law. We feel that the NY law regulates insurance as we discuss in the piece below. The rub is that if state law regulates insurance (and thus is not preempted) it will apply to insurance companies. Unfortunately, the Supreme Court in FMC Corp v. Holiday, 498 US 52, 61 (1990) held that the "Deemer clause" exempts self-funded plans under ERISA from state laws that "regulate insurance" within meaning of the saving clause, and thus self-funded ERISA plans are exempt from state regulation insofar as that regulation relates to the plans. Thus, a self-funded plan would most likely NOT be affected by the new legislation. Until case law begins to build based upon this new legislation I believe this is the reasonable interpretation.
Question
Has there been any change to this analysis? My client was significantly injured while riding his bicycle when a drunk driver hit him. His New York state employer, a local school district, provides a self-funded medical plan, which paid a significant portion of the medical costs and expenses following the injury. The driver had minimal insurance and was driving a rental car.
Answer
Our position has not changed. New York’s anti-subrogation law applies to any health plan so long as the plan a) does not have a statutory right or b) does not preempt state law (self-funded ERISA). Based on the facts below we would also note that the health plan here (while self-funded) is most likely not an ERISA plan. ERISA specifically exempts employer plans offered by government entities and defines government plan as “a plan established and maintained for its employees by the Government of the United States, by the Government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” 29 U.S.C. § 1002(32). As such the state laws of New York will apply to the claim for reimbursement being made by this school district plan. Unless the plan could show a statutory basis for their claim they would be prohibited under NY law.
We hope you find this response helpful and please let us know should you have any additional questions.
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