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

George E. Pataki
Governor

Howard Mills
Acting Superintendent

The Office of General Counsel issued the following opinion on March 18, 2005 representing the position of the New York State Insurance Department.

Re: Group Accidental Death & Personal Loss Coverage, Newborn Infants

Question Presented:

Does New York Insurance Law § 4235(f)(2) (McKinney 2000 and 2005 Supplement) require coverage of dependent children from birth for Accidental Death & Dismemberment Insurance?

Conclusion:

Yes such coverage is required.

Facts:

A Connecticut domiciled life insurer licensed to transact an accident & health insurance business in New York has submitted an Accidental Death & Dismemberment policy to be issued to Association Groups, presumably those authorized to take delivery of group accident policies in accordance with New York Insurance Law § 4235(c)(1)(H) or (K). The policy will inform the insured member:

You may cover your unmarried children: over 14 days but under 19 years of age and who depend solely upon you for support . . . . Your children include: Your biological children, Your adopted Children, Your stepchildren, Any other child you support who lives with you in a parent-child relationship.

The Health Bureau has stated that commencing coverage for children only after the age of 14 days would be violative of New York Insurance Law § 4235(f)(2). Aetna allegedly reads New York Insurance Law § 4235(f)(2) in conjunction with New York Insurance Law § 4235(f)(1) as being limited to hospital, surgical and medical coverage. In support of such contention, the following has been indicated:

Within Section 4235(f)(2), all of the discussion of the newborn mandate (e.g. ‘necessary care and treatment of medically diagnosed . . .’) relates to medical coverage but not to accident coverage. Within the broader context of Section 4235(f), all of the discussion in (f)(1), (3) and (4) also relates to medical coverage, but not to accident coverage.

We believe that the only appropriate and legally supportable conclusion is that the newborn mandate does not apply to accidental death and dismemberment insurance. This is consistent with the fact that while virtually every state has a requirement that newborns be covered from birth, we are aware of no state which applies such a mandate to this coverage. If notwithstanding the above information, the Department’s position continues to be that the newborn mandate applies to accidental death and dismemberment coverage, we respectfully request that this issue be referred to the Department’s General Counsel for a formal opinion.

Analysis:

New York Insurance Law § 1113(a)(3) (McKinney 2000 and 2005 Supplement) defines accident and health insurance:

‘Accident and health insurance,’ means (i) insurance against death or personal injury by accident or by any specified kind or kinds of accident and insurance against sickness, ailment or bodily injury, including insurance providing disability benefits pursuant to article nine of the workers' compensation law, except as specified in item (ii) hereof; and (ii) non-cancelable disability insurance, meaning insurance against disability resulting from sickness, ailment or bodily injury (but excluding insurance solely against accidental injury) under any contract which does not give the insurer the option to cancel or otherwise terminate the contract at or after one year from its effective date or renewal date.

Accident insurance is defined in N.Y. Comp. Codes R. & Regs. Tit. 11, § 52.9 (1999):

Accident insurance is an insurance policy which provides coverage, singly or in combination, for death, dismemberment, disability, or hospital and medical care caused by accident or specified kinds of accidents.

Accidental Death & Dismemberment Insurance is thus encompassed within the first clause of New York Insurance Law § 1113(a)(3(i) and the definition of N.Y. Comp. Codes R. & Regs. tit. 11, § 52.9.

New York Insurance Law § 4235(f) provides:

(1) Any policy of group accident, group health or group accident and health insurance may include provisions for the payment by the insurer of benefits for expenses incurred on account of hospital, medical or surgical care or physical and occupational therapy by licensed physical and occupational therapists upon the prescription or referral of a physician for the employee or other member of the insured group, his spouse, his child or children, or other persons chiefly dependent upon him for support and maintenance . . . . (emphasis added)

(2) Notwithstanding any rule, regulation or law to the contrary, any family coverage available under this article shall provide that coverage of newborn infants . . . shall be effective from the moment of birth for injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities including premature birth . . . . . . . (emphasis added)

(3) A policy under which coverage of a dependent spouse or named insured would terminate upon such spouse or named insured attaining the age prescribed in subchapter XVIII of the federal Social Security Act . . . (Medicare"), as the age of first eligibility for the benefits provided by such law shall not so terminate, if such dependent spouse is not then eligible for all of such benefits for as long as the policy remains in force and such dependent spouse remains ineligible to receive any of such "Medicare" benefits . . . .

(4) Notwithstanding any provisions of a policy of group accident, group health or group accident and health insurance, whenever such policy provides for reimbursement for (A) any physical and occupational therapy service which is within the lawful scope of practice of a licensed physical and occupational therapist, a subscriber to such policy shall be entitled to reimbursement for such service . . . . [also other "freedom of choice provisions.] (emphasis added)

In the 1939 recodification of the New York Insurance Law, 1939 N.Y. Laws 882, the issuance of group accident & health insurance was regularized. That chapter enacted New York Insurance Law § 221(5) (Baldwin 1939):

Any policy of group accident, group health or group accident & health insurance may include provisions for payment by the insurer of benefits for expenses incurred on account of hospitalization, medical or surgical aid for the employee or member of the insured group, his spouse, his child or children or other persons chiefly dependent upon him for support and maintenance … . (emphasis added)

New York Insurance Law § 221(5) was amended by 1977 N.Y. Laws 663 to add a new clause:

Notwithstanding any rule, regulation or law to the contrary, any family coverage available under this article shall provide that coverage of newborn infants shall be effective from the moment of birth for injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities including premature birth. (emphasis added) (McKinney 1977).

In its letter recommending approval of the 1977 amendment, the Insurance Department indicated that the change was necessary because many policies contained a coverage gap due to insurers’ commencing coverage of infants only after they were 14 days of age. In their letters recommending approval of the amendment, both the Division of the Budget and the Health Planning Commission indicated their belief that the modification would also provide coverage for injuries, presumably by accident, to newborn infants, a coverage encompassed within Accidental Death & Dismemberment Insurance.

In the 1984 recodification of the New York Insurance Law, 1984 N.Y. Laws 367, which did not effect any substantive change, the above quoted portions of New York Insurance Law § 221(5), as amended in manners not affecting this issue after 1977, became New York Insurance Law § 4235(f)(1) & (2) respectively (McKinney 1984. By 1992 N.Y Laws 454, New York Insurance Law § 4235(f)(2) was amended to include adopted infants within the protection of newborn coverage.

It is clear, both from the language of the statute and the legislative history, that the scope of New York Insurance Law § 4235(f)(2) is determined by reference to New York Insurance Law § 4235(f)(1), which antecedent provision encompasses Accident Death & Dismemberment Insurance within its purview.

Further, the scope of New York Insurance Law § 4235(f)(3) is also determined by reference to New York Insurance Law § 4235(f)(1), which encompasses Accident Death & Dismemberment Insurance within its requirements. While it would be unusual for Accidental Death & Dismemberment Insurance to be affected by freedom of choice provisions as set forth in New York Insurance Law § 4235(f)(4), again contrary to the presented contention, the Legislature clearly intended that provision to control Accidental Death & Dismemberment Insurance.

Accordingly, the interpretation of New York Insurance Law § 4235(f)(2) as enunciated by the Health Bureau is consistent with both the text and intent of the statute.

For further information you may contact Principal Attorney Alan Rachlin at the New York City office.