The Office of General Counsel issued the following opinion on May 12, 2006, representing the position of the New York State Insurance Department.
Re: No-Fault Assignment
May a health care provider who has accepted a No-Fault assignment of benefits from an eligible injured person (the patient) bill the person directly in the event that a claim for services rendered is denied by the insurer as medically unnecessary, if the assignment states that "in the event that the no-fault carrier fails or refuses to pay for the services provided then I, the patient, agree that I will be responsible for the value of services rendered by said Doctor"?
No, a health care provider who has accepted a no-fault assignment of benefits from a no-fault claimant may not pursue the patient directly for health services rendered that have been denied as medically unnecessary, notwithstanding the language of the assignment, which states "in the event that the no-fault carrier fails or refuses to pay for the services provided then I, the patient, agree that I will be responsible for the value of services rendered by said Doctor." The use of such language is prohibited under N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.11(b)(2) (2005) (Regulation 68-C).
No specific facts provided.
N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.11(b)(2) (2005) (Regulation 68-C) states:
(b) In order for a health care provider to receive direct payment from the insurer, the health care provider must submit to the insurer:
(2) a properly executed assignment on:
(i) the prescribed verification of treatment by attending physician or other provider of service form (NYS form NF-3); or
(iii) the prescribed no-fault assignment of benefits form (NYS form NF-AOB) contained in Appendix 13
The relevant language of NYS Form NF-3 concerning no-fault assignment is found in item 21 which states:
ASSIGNMENT OF BENEFITS
I HEREBY ASSIGN TO THE HEALTH CARE PROVIDER INDICATED BELOW ALL RIGHTS, PRIVILEGES AND REMEDIES TO PAYMENT FOR HEALTH CARE SERVICES PROVIDED BY THE ASSIGNEE TO WHICH I AM ENTITLED UNDER ARTICLE 51 (THE NO-FAULT STATUTE) OF THE INSURANCE LAW. THE ASSIGNEE HEREBY CERTIFIES THAT THEY HAVE NOT RECEIVED ANY PAYMENT FROM OR ON BEHALF OF THE ASSIGNOR AND SHALL NOT PURSUE PAYMENT DIRECTLY FROM THE ASSIGNOR FOR SERVICES PROVIDED BY SAID ASSIGNEE FOR INJURIES SUSTAINED DUE TO THE MOTOR VEHICLE ACCIDENT, NOTWITHSTANDING ANY PRIOR WRITTEN AGREEMENT TO THE CONTRARY. THIS AGREEMENT MAY BE REVOKED BY THE ASSIGNEE WHEN BENEFITS ARE NOT PAYABLE BASED UPON THE ASSIGNOR'S LACK OF COVERAGE AND/OR VIOLATION OF A POLICY CONDITION DUE TO THE ACTIONS OR CONDUCT OF THE ASSIGNOR.
The relevant language of NYS Form NF-AOB concerning assignment of No-Fault benefits to a health care provider contains the same language.
The assignment language found in Regulation 68-C, NYS Form NF-3 and NYS Form NF-AOB precludes the assignee from pursuing the assignor for medically unnecessary health services, unless the denial of benefits is based on a lack of coverage or violation of policy based on the conduct of the assignor. Statements within assignments such as "in the event that the no-fault carrier fails or refuses to pay for the services provided then I, the patient, agree that I will be responsible for the value of services rendered by said Doctor," are prohibited under the No-Fault regulation. Such language should be given no legal effect and the assignee may not pursue the assignor directly for unnecessary services.
For further discussion of this issue, see General Counsel Opinion Nos. 02-09-02 (September 4, 2002), 03-01-26 (January 13, 2003), and 03-04-36 (April 30, 2003).
For further information you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.