The Office of General Counsel issued the following opinion on October 16, 2002, representing the position of the New York State Insurance Department.
Re: Third Party Administrator Adjusting Claims
1. Must a Third Party Administrator ("TPA") operating from its Pennsylvania office be licensed as an independent adjuster in order to adjust health insurance claims of New York residents on behalf of a self-funded ERISA plan?
2. If the TPA obtains an individual adjusters license, would it cover all employees adjusting claims or are individual licenses required for such employees?
1. Yes. A TPA that adjusts claims for New York insureds must become licensed as an independent adjuster, regardless of the location of its office.
2. Individual independent adjusters licenses are required for employees of a TPA whose functions include adjusting claims within the meaning of N.Y. Ins. Law § 2101(g)(1) (McKinney 2000).
The inquirers company has an office in Pennsylvania where it acts, or intends to act, as a TPA to adjust claims on behalf of a self-funded ERISA group health insurance plan. The plans sponsor/employer is not domiciled in New York but certain insured individuals in the plan reside in New York. There is no insurance company involved. There would be communications between the inquirers office and the New York insureds by e-mail, telephone, or mail. The inquirers office would receive the claims, review same, recommend the value of the benefit allowed for the plan to make the final determination, and pay the claim out of the plans bank account.
The New York State Insurance Law does not specifically define " third party administrator" and does not regulate activities of TPAs as such. However, any person or entity that engages in activities in New York that would require licensing (e.g., acting as an adjuster) must obtain the appropriate license from the New York Insurance Department. Conducting adjusting activities with a person in New York by e-mail, telephone, or mail would constitute doing business in New York, regardless of whether the claimant was a New York resident.
Under the facts presented, the inquirers office would be acting as an independent adjuster for a self-funded ERISA plan.
N.Y. Ins. Law § 2101(g)(1) (McKinney 2000) defines independent adjuster to mean:
any 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 are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster, except that such term shall not include:
(A) any officer, director or regular salaried employee of an authorized insurer, or any manager thereof
Since the self-funded ERISA plan is not an authorized insurer, this exception under N.Y. Ins. Law § 2101(g)(1)(A) does not apply. Further, none of the other exceptions contained in this statute would apply.
N.Y. Ins. Law § 2108(a)(3) (McKinney 2000) requires that no adjuster may act on behalf of an insurer unless it is licensed as an independent adjuster. The Department considers the term "insurer" to encompass any entity that is doing an insurance business, as defined in N.Y. Ins. Law § 1101 (McKinney Supp. 2002), regardless of whether such entity must be licensed by this Department. Accordingly, the Department has consistently held that licensing is required for adjusting activities on behalf of an exempt insurer, such as a self-funded ERISA plan.
Since none of the statutory exemptions in N.Y. Ins. Law § 2101(g) (McKinney 2000) apply to an officer, director or regular salaried employee of an unauthorized insurer, any individual in your office engaging in adjusting activity that involves discretionary authority and not purely ministerial acts would require an independent adjusters license.
For further information, you may contact Associate Attorney Jeffrey A. Stonehill at the New York City office.