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 June 3, 2002, representing the position of the New York State Insurance Department.

Re: Third Party Administrator Workers’ Compensation Claims

Questions Presented:

1. Is a Third Party Administrator ("TPA") license or a Workers’ Compensation ("WC") independent adjuster license required in order to administer WC claims for an out-of-state self-insured employer with occasional temporary employees in New York?

2. Are such licenses reciprocal in New York?

3. Must WC claims on New York employees be handled in New York as opposed to another state?

Conclusions:

1. The New York Insurance Department does not issue a license denominated as "third party administrator." An independent adjuster’s license would be required in a self-insurer situation when the adjustment activity includes any appearance before the N.Y. Workers’ Compensation Board, pursuant to N. Y. Workers’ Compensation Law § 50(3-d) (McKinney Supp. 2001-2002).

For information about workers’ compensation requirements of self-insured employers, contact the self-insured employers unit of the New York State Workers’ Compensation Board at 518-404–0247, or write to the Self Insurance Bureau of the Board at 20 Park Street, Albany, NY 12207.

2. There is no Insurance Law provision for reciprocity for independent adjusters.

3. No. If the WC claims must be adjusted by a New York licensed independent adjuster, then the adjuster may work at any business address which has been provided to the Licensing Bureau pursuant to N. Y. Comp. R. & Regs. tit. 11, § 26.6 (2000) (Regulation 25). Physical presence in New York is not required for licensed independent adjusters.

Facts:

A TPA located outside New York State wishes to administer WC claims for a self-insured employer. There is no description of what duties are included in such administration or most importantly, whether the TPA would be appearing before the Workers’ Compensation Board. A scenario is presented wherein an out-of-state employer such as a movie production company is self-insured for WC in its home state. The company is hired to handle the production of a movie to be made in New York over a period of two to six months. Some of the company’s employees would live in NY but be paid from the out-of-state office. An accident may cause injury to such a temporary employee in New York.

Analysis:

The Insurance Department does not issue a license denominated "third party administrator." Any person or entity, including a TPA, performing functions that require licensing, such as acting as an adjuster, insurance consultant or insurance agent, must be appropriately licensed. N.Y. Ins. Law § 2108(a)(1) (McKinney 2000) requires that adjusters be licensed as independent adjusters (who act on behalf of the insurers) or public adjusters (who act on behalf of the insured). N.Y. Comp. Codes R. & Regs. tit. 11, § 26.3(g) (2000) (Regulation 25) provides that independent adjusters adjust WC claims. Public adjusters are not authorized to adjust WC claims. N. Y. Ins. Law § 2101(g)(2) (McKinney 2000).

N.Y. Ins. Law § 2101(g)(1) (McKinney 2000), in relevant part, defines an independent adjuster as:

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. . .[with inapplicable exceptions]. (Emphasis added).

A self-insurer, such as an employer for its WC exposure, is not an insurer. Under the Insurance Law, licensing as an independent adjuster for WC claims is not required if the adjuster performs its services for a self-insurer because there would not be adjusting activity on behalf of an insurer. A person would have to be licensed as an adjuster in order to adjust on behalf of an entity that is doing an insurance business but is exempt from licensing, such as the case of an employer providing health benefits.

However, N.Y. Workers’ Compensation Law § 50(3-d) (McKinney Supp. 2001-2002) states in pertinent part:

The state insurance fund, an insurance company duly authorized or licensed to write workers’ compensation insurance in this state, a subsidiary or an affiliate of such an insurance company, or a licensed or authorized adjusting company or association may apply for a license from the board to solicit the business of representing and engage in representing self-insurers, as defined in subdivision three of this section, before the board or any officer, agent or employee of the board assigned to conduct any hearing, investigation or inquiry relative to a claim for compensation or benefits under this chapter. Any corporation formed solely for the purpose of engaging in the activities described by this subdivision shall be formed under the laws of the state of New York. (Emphasis added).

If the TPA appears before the N. Y. State Workers’ Compensation Board as part of its functions, then the TPA must become licensed by this Department.

For further information on adjusting WC claims for a self-insurer and interpretation of the Workers’ Compensation Law, please refer to the agency authorized to regulate and enforce this area of law, the New York State Workers’ Compensation Board.

The above opinion is informal and not binding on any court. For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.