New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on July 28, 2003 representing the position of the New York State Insurance Department.

Re: Contracts for the Provision of Unlimited Chiropractic Services to Patients

Question Presented:

What are the parameters under which a chiropractor or chiropractic group practice may contract with patients to provided "unlimited chiropractic care for a fixed fee"?

Conclusion:

A chiropractor or chiropractic group practice may not, for a fixed fee, agree to provide unlimited services, the need for which are occasioned by the happening of a fortuitous event. The chiropractor could, however, charge a pre-set membership fee and then offer a prearranged discount to members for each service that is dependent upon the happening of a fortuitous event, provided that the discounted fee covers the actual cost of the service rendered (i.e., labor, material and reasonable overhead).

Facts:

Certain chiropractors are offering their patients contracts that provide the patients and their families with unlimited chiropractic care for a fixed fee. While certain of these plans cover all chiropractic services, others only cover those services for which the patient’s health insurer denies payment based on lack of medical necessity. Moreover, certain plans cover services that are not occasioned by a fortuitous event.

Analysis:

N.Y. Ins. Law § 1101(a) (McKinney Supp. 2003) provides:

(1) "Insurance contract" means any agreement or other transaction whereby one party, the "insurer", is obligated to confer benefit of pecuniary value upon another party, the "insured" or "beneficiary", dependent upon the happening of a fortuitous event in which the insured or beneficiary has, or is expected to have at the time of such happening, a material interest which will be adversely affected by the happening of such event.

(2) "Fortuitous event" means any occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party.

A chiropractor who, for a pre-set membership fee, obligates himself to provide services, which are dependent upon the happening of a fortuitous event, that being the need for chiropractic services, which is beyond the control of either the patient or the chiropractor, is assuming the risk of loss in rendering such services. By doing so, the chiropractor violates N.Y. Ins. Law § 1102 (McKinney 2000), which prohibits doing an insurance business without a license.

The chiropractor could, however, charge a pre-set membership fee and then offer a prearranged discount to members for each service that is dependent upon the happening of a fortuitous event, provided that the discounted fee covers the actual cost of the service rendered (i.e., labor, material and reasonable overhead).

Insofar as those services that are not dependent upon the happening of a fortuitous event, such as a periodic examination and routine x-rays, the chiropractor may provide these services for the fixed fee without imposing any additional charge.

The Office of General Counsel Opinions dated May 17, 2002, December 14, 2000, May 30, 2000 and February 28, 2000 accurately represent the opinion of this Office on the subject. The fact that certain of these plans cover all chiropractic services, while others only cover those services for which the patient’s health insurer denies payment based on lack of medical necessity, does not change the analysis. The controlling fact is whether the chiropractic service being provided is occasioned by a fortuitous event. Moreover, it makes no difference whether the individual chiropractor or the group practice enters into the contract with the patient.

For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.