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

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion October 25, 2006, representing the position of the New York State Insurance Department.

Re: Health Maintenance Organizations, Electronic Retention of Records

Question Presented:

May a health maintenance organization (HMO) maintain required records in an electronic form?

Conclusion:

Yes, an HMO may maintain required records in an electronic form, provided that it complies with N.Y. Comp. Codes R. & Regs. tit. 11, Part 243 (2003) (Department Regulation 152).

Facts:

The inquirer's firm is counsel to a trade association of managed care organizations including HMOs holding a Certificate of Authority from the Commissioner of Health in accordance with the New York Public Health Law. Some members of the trade association desire to scan into an electronic form certain records that presently exist in paper form or may be created or received by the HMO in the future, including member applications, contracts, provider material, and correspondence. The relevant Plans propose to destroy the paper records after they are scanned. The inquirer stated that exact reproductions of the original records could reliably be accessed and retrieved as needed.

The inquirer sought confirmation that this practice is permissible under the N.Y. Pub. Health Law (McKinney 2002 and Supp. 2005), N. Y. Ins. Law (McKinney 2000 and Supp. 2006), or the regulations promulgated thereunder.

Analysis:

The regulation of HMOs is bifurcated between the Department of Health, which is responsible for quality of care, including the regulation of contracts between HMOs and providers, independent practice associations (IPAs), and managers, and the Insurance Department, which is responsible for the regulation of contracts entered into by HMOs with their subscribers. Pursuant to N.Y. Pub. Health Law § 4406(1) (McKinney 2002 and Supp. 2005), HMO/subscriber contracts are subject to the same requirements as subscriber contracts of not-for-profit health insurers. This opinion is limited to an interpretation of the Insurance Law and corresponding regulations. The inquirer was advised that the Department of Health will respond separately regarding the provisions of the Public Health Law and regulations promulgated thereunder.

N.Y. Comp. Codes R. & Regs. tit. 11, Part 243 (2003) (Regulation 152), establishes the minimum requirements for record retention by insurance companies. N.Y. Comp. Codes R. & Regs. tit. 11 § 243.3 (1996), which is specifically made applicable to HMOs by N.Y. Comp. Codes R. & Regs. tit. 11, § 243.1(a) (2003), provides, in pertinent part, as follows:

(a)(1) Records and indices of records required to be maintained under this Part may be maintained in any durable medium. . . . (3) Upon transfer of an original record to a durable medium, the insurer may destroy the original record after assuring that all information contained in the original record, including signatures, handwritten notations, or pictures, is contained in the durable medium. (4) If the insurer does not retain the original paper record, or if there was no original paper record, a duplicate or back-up system sufficient to permit reconstruction of the record shall be established at a separate location. The record may be retained in any form permitted by this Part

. . .

(d) Nothing in this Part shall be construed as requiring the utilization of any particular method of record retention by any insurer.1

In accordance with the above, Regulation 152 expressly permits the retention of records in electronic form. In addition, N.Y. State Tech. Law § 305(1) (McKinney Supp. 2006) authorizes governmental entities to accept electronic records from licensees, which, in accordance with Section 305(3) thereof, are given the same force and effect as records not produced by electronic means. The federal Electronic Signatures in Global and National Commerce Act (E-Sign), 15 U.S.C.A. 7001-7031 (2006), which applies to transactions in or affecting interstate or foreign commerce, including the business of insurance, provides that electronic records and signatures may not be denied legal effect, validity or enforceability solely because they are made electronically. See Section 7001(a) and (i).

Accordingly, provided that the HMO complies with the requirements set forth above, the proposal would be permissible.

Please note that this opinion is limited in scope to record retention requirements under the New York Insurance Law and corresponding regulations. No opinion is rendered on any other laws that may be applicable that are outside the jurisdiction of the New York State Insurance Department. In addition, nothing in this letter modifies requirements under other provisions of state or federal law that may apply to HMOs, including written consent requirements generally, or Medicaid laws and regulations. Such laws may specify the format in which electronic records should be retained, or require retention of the original records off-site even where records are otherwise being maintained electronically.

For further information you may contact Associate Attorney Pascale Jean-Baptiste at the New York City Office.


1 See also Office of General Counsel Opinion No. 06-04-02, dated April 3, 2006, which is currently available on the New York Insurance Department's web site located at http://www.ins.state.ny.us.