The Office of General Counsel issued the following informal opinion on August 14, 2001, representing the position of the New York State Insurance Department.
Re: Medical Malpractice Insurance, Excess Coverage
Is a New York insurer obligated to provide excess coverage for a physician who primarily practices in another jurisdiction and is insured by an insurer licensed in that jurisdiction, but not in New York?
The physician in question is not entitled to excess coverage in New York. The physician may, however, be entitled to purchase a primary policy covering his or her risks in New York.
The physician in question has a primary practice in Pennsylvania. A small portion of the practice is in New York. The physician has had admitting privileges at two New York hospitals. Each hospital has recently instituted a requirement that, in order to maintain such privileges, a physician must have aggregate insurance coverage with policy limits of $2 million per occurrence and $6 million for all occurrences in the policy year.
The physician in question has primary coverage with an insurer licensed Pennsylvania, but not in New York, with policy limits of $500,000/$1.5 million. The physician also has excess coverage with the Pennsylvania Medical Professional Liability Catastrophe Loss Fund (Fund), operated in accordance with 40 Pa. Cons. Stat. Ann. §1301.701 et seq. (West 2000), in the amount of $700,000/$2.1 million.
The hospitals have refused to certify the physician for the statutory excess insurance program operated pursuant to 1986 N.Y. Laws 266 §18, as modified, because the underlying coverage is not with a licensed New York insurer. In addition, several licensed New York insurers have refused to issue the physician a New York policy of excess coverage because the New York practice is less than 50% of the total practice.
The Department was inquired as to what recourse the physician may have.
Pennsylvania law, 40 Pa. Cons. Stat. Ann. §1301.701(a)(1)(iii), requires physicians whose practice is more than 50% in Pennsylvania to either self-insure their risks up to $500,000/$1.5 million or purchase insurance from an insurer licensed in Pennsylvania up to those limits. The Fund, in accordance with statute, 40 Pa. Cons. Stat. Ann. §1301.701(d)(3), then provides excess coverage in an amount of $700,000/$2.1 million, which is paid for by the physician by means of a surcharge paid to the Fund based on his or her primary coverage premium. 40 Pa. Cons. Stat. Ann. §1301.701(e)(1).
It is the Departments understanding that the hospitals have no issue with the coverage provided by the primary Pennsylvania policy and the Fund, but believe that the aggregate coverage of $1.2 million/$3.6 million is inadequate.
The New York statutory excess program provides coverage to eligible physicians, defined in 1986 N.Y. Laws 266 §18(1)(a) as those with underlying coverage in the amount of $1 million/$3 million from, among other things, an insurer licensed in New York, as provided by 1986 N.Y. Laws 266 §18(1)(2), which states:
Every general hospital which maintains facilities for providing emergency medical care shall certify to the commissioner of health and the superintendent of insurance as eligible for purchase of a policy for excess insurance coverage in accordance with subdivision one of this section, those physicians ... who request such certification of eligibility and who have professional privileges in such hospital and who, from time to time, provide emergency medical care in such hospital to persons who require such care. In the event that a physician has professional privileges in more than one general hospital, such certification of eligibility shall be provided by the general hospital designated by such physician as the general hospital with which the physician is primarily affiliated, as may be defined pursuant to regulations of the commissioner of health (emphasis added).
The Regulations of the Department of Health, N.Y. Comp. R. & Regs. tit. 10, §91.2 (2001) provide, in pertinent part:
(a) Physicians who have professional privileges in a general hospital providing emergency medical care and who, from time to time, provide emergency medical care in such hospital, and who wish to avail themselves of the excess malpractice insurance coverage shall submit a request in writing to the hospital with which the physician or dentist is primarily affiliated, as determined pursuant to this section for certification of eligibility for purchase of excess malpractice insurance coverage as defined in section 91.1 of this Part. This request shall contain appropriate documentation and assurances that the required primary insurance is in force and will be maintained. This request shall set forth the number of admissions for each hospital where the physician or dentist has admitting privileges and the number of consultative visits for each hospital where he/she provides such services. If the physician...has professional privileges in more than one general hospital, then the physician shall designate and submit the request for certification to the general hospital with which he/she is primarily affiliated. Primary affiliation shall be determined based on such factors as the number of hospital admissions or consultative services in the designated hospital in the immediate preceding fiscal year compared with hospital admissions and/or services for such period in other general hospitals in which the physician from time to time, provides emergency medical to persons who require such care (emphasis added).
(b)(1) A physician should designate as his/her primary affiliation that facility where the practitioner has the majority of admissions and/or consultative services (emphasis added).
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(c)(1) A hospital shall accept the designation of primary affiliation by a physician requesting such designation in accordance with paragraph (b)(1) of this section, unless it has knowledge requiring it to reject the designation .
(2) If the hospital rejects a designation or then it must provide written justification and specific reasons for denying the request to the physician based upon the criteria set forth in subdivision (a) of this section, section within five business days of receipt of the written request. If the hospital does not reject within five business days, the request for designation shall be deemed acceptable.
Based upon the facts presented, it appears that the physician in question, with primary coverage in an insurer not licensed in New York, does not have qualifying underlying primary coverage as required by 1986 N.Y. Laws 266 §18(1)(a). Furthermore, the hospitals determination that the physician did not meet the criteria set forth in N.Y. Comp. R. & Regs. tit. 10, §91.2, in that such hospital was not the physicians primary hospital, appears to be proper. Accordingly, the physician is not entitled to the coverage provided in accordance with 1986 N.Y. Laws 266 §18.
There is no requirement that a New York licensed insurer provide coverage that would "wrap around" another insurers policy providing professional liability insurance only for New York risks. It is possible, however, that an insurer licensed in New York might be willing to issue an independent policy covering only the physicians New York risks.
If no insurer is willing to issue an independent policy covering only New York risks, the physician may wish to contact the New York Medical Malpractice Insurance Plan (Plan), N.Y. Comp. R. & Regs. tit. 11, §430.0(c) (2001), which provides coverage for eligible health care providers unable to secure coverage in the voluntary market, and which might be able to provide a policy covering the physicians New York risks in the required amount. The servicing insurer for the Plan is: Medical Liability Mutual Insurance Company, Two Park Avenue, New York, NY 10016.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.