The Office of General Counsel issued the following opinion on April 17, 2001 representing the position of the New York State Insurance Department.
Re: Licensing Requirements for Independent Adjusters
Must ABC Company be licensed as an independent adjuster where it acts as an intermediary between exempt insurers and preferred provider organizations, in arranging a discounted fee for service in connection with services rendered by health providers through a preferred provider organization, and provides information on this fee arrangement to patients through its subsidiary company?
Assuming that the activities performed by ABC Company relate strictly to arranging a fee schedule and do not relate to claims, it would not need to be licensed as an independent adjuster to perform these tasks.
ABC Company acts as an intermediary between "self-insurers" and preferred provider organizations in arranging a discounted fee for service in connection with services rendered by health providers through a preferred provider organization. XYZ Company is a subsidiary technology company of ABC Company that provides information to patients, who are employees of the self-insurers, relative to this discounted fee arrangement electronically or through the internet. Neither ABC Company nor XYZ Company adjusts claims on behalf of insurers.
Although the inquirer refer to the entities that ABC Company provides services for as self-insurers, they are actually exempt insurers because they provide health insurance to their employees under employee welfare benefit plans that are governed by the federal Employee Retirement and Income Security Act (ERISA, 29 U.S.C. 1001-1461). As such, they are exempt from the licensing requirements of the New York State Insurance Law. However, even those entities that adjust on behalf of exempt insurers must be licensed as independent adjusters.
N.Y. Ins. Law § 2101(g)(1) (McKinney 2000) defines the term independent adjuster as:
[A]ny person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as incidental to such claims. . .
Therefore, certain entities that function as adjusters on behalf of insurers must be licensed under N.Y. Ins. Law § 2108 (2000). Thus, the question becomes whether ABC Companys activities constitute the investigating and adjusting of claims within the purview of N.Y. Ins. Law § 2101 (g) (1) (McKinney 2000).
In determining what constitutes investigating and adjusting of claims, this Department has traditionally considered whether the duties performed in the handling of a claim required the exercise of discretionary authority conferred by the insurer, as opposed to the performance of strictly ministerial tasks. Past opinions have held that reviewing and processing claims, authorizing payments, issuing and signing checks, handling inquiries from insureds, evaluating the merits of a loss, making recommendations to the insurer, are all discretionary acts, while acts such as data processing are ministerial in nature.
Based upon the limited facts provided, it appears that ABC Company is doing is arranging the discounted fee for service and providing information to patients regarding this fee arrangement through its subsidiary. Therefore, assuming that the activities performed by ABC Company relate strictly to arranging a fee schedule and do not relate to claims, it would not need to be licensed as an independent adjuster to perform these tasks.
The scope of this opinion is limited to the licensing requirements under the Insurance Law. Licensing may be required pursuant to the New York General Business Law or some other New York State Statute.
For further information, you may contact Attorney Pascale Joasil at the New York City Office.