New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on July 26, 2000, representing the position of the New York State Insurance Department.

RE: Insurer Sharing of Information

Questions Presented:

1) Would it be permissible for two or more no-fault insurers to cooperate (i.e. share expenses and information) in an investigation of suspected fraud by a claimant?

2) If so, would it also be permissible for two or more insurers to conduct a joint investigation into a medical provider’s entitlement to no-fault benefits where evidence suggests that the provider may be improperly licensed, or is suspected of over-billing or improperly billing, no-fault carriers?"

Conclusion:

The above arrangements are not prohibited under the New York Insurance Law. Specifically, N.Y. Ins. Law § 406 (McKinney 1985 & Supp. 2000) provides immunity against certain claims that may arise from such activity.

Analysis:

N.Y. Ins. Law § 406 (McKinney 1985 & Supp. 2000) (emphasis added), relating to immunity, reads as follows:

In the absence of fraud or bad faith, no person shall be subject to civil liability, and no civil cause of action of any nature shall arise against such person (i) for any information relating to suspected fraudulent insurance transactions furnished to law enforcement officials, their agents and employees; and (ii) for any information relating to suspected fraudulent insurance transactions furnished to other persons subject to the provisions of this chapter; and (iii) for any such information furnished in reports to the insurance frauds bureau, its agents or employees or the workers' compensation fraud inspector general, its agents or employees. Nor shall the superintendent or any employee of the insurance frauds bureau, in the absence of fraud or bad faith, be subject to civil liability and no civil cause of action of any nature shall arise against them by virtue of the publication of any report or bulletin related to the official activities of the insurance frauds bureau. Nothing herein is intended to abrogate or modify in any way any common law privilege of immunity heretofore enjoyed by any person.

The word "person" is defined by N.Y. Gen. Constr. Law § 37 (McKinney 1951):

The term person includes a corporation and a joint-stock association. When used to designate a party whose property may be the subject of any offense, the term person also includes the state, or any other state, government or country which may lawfully own property in the state.

Thus, insurers (as "persons" who are subject to the Insurance Law) are granted immunity, in the absence of fraud or bad faith, from any civil action arising as a result of their sharing of information for the purpose of investigation of suspected fraudulent insurance practices.

For further information you may contact Associate Attorney Sam Wachtel.