The Office of General Counsel issued the following informal opinion on November 13, 2000, representing the position of the New York State Insurance Department.RE: Merger of Independent Practice Associations ("IPA")
Is approval of the New York State Insurance Department required before shell IPAs can be merged into an active IPA?
No. There are no provisions in either the N. Y. Ins. Law (McKinney 2000) or the N. Y. Pub. Health Law (McKinney 1985 & Supp. 2000) that would require such approval.
Several IPAs that have no assets or liabilities and are not currently doing business would like to merge into an IPA that currently is doing business. These IPAs were established at a time when an IPA could hold a contract with only one health maintenance organization ("HMO"). When the law was amended to permit an IPA to contract with multiple HMOs, all of the contracts were assigned to one IPA, leaving the shell IPAs without assets or liabilities.
N.Y. Ins. Law Art. 71 (McKinney 2000), which contains the provisions governing mergers of insurance companies, is not applicable to IPAs because an IPA is not an insurance company. Additionally, a review of the N. Y. Pub. Health Law Art. 44 (McKinney 1985 & Supp.) and the Regulation promulgated pursuant thereto, uncovered no provisions that would require the approval of the New York State Insurance Department before this merger could occur. However we suggest that the Department of Health be contacted to obtain its opinion before proceeding with the merger.
For further information you may contact Associate Attorney Joan Siegel at the New York City Office.