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

Eliot Spitzer
Governor

Eric Dinallo
Superintendent

The Office of General Counsel issued the following opinion on July 18, 2007, representing the position of the New York State Insurance Department.

Re: Time Limit on Recouping Overpayments

Question Presented:

Does Insurance Law § 3224-b, which prohibits a health insurer from attempting to recoup overpayments to physicians made more than 24 months from the original payment, apply to a health insurer based in New Jersey, with respect to a New York certificate holder under the group policy?

Conclusion:

No. Insurance Law § 3224-b only applies to health insurers licensed or certified to do business in the state of New York. Since the New Jersey health insurer is not licensed or certified in New York, Insurance Law § 3224-b is inapplicable.

Facts:

The inquirer reports that a health insurer, which is licensed as an insurer in New Jersey only, is seeking to recoup physician payments more than 24 months after the payments, claiming that the New York Insurance Law is inapplicable under the circumstances. The situation involves a patient currently residing in New York, who is insured under a group health insurance plan written by the health insurer. The patient sought treatment with a New York physician. The patient’s physician submitted a claim to another health insurer, a New York health service corporation, for which the physician presumably is a participating provider. Both health insurers in question are members of a health maintenance organization plan. The New York health insurer processed the claim and then was reimbursed by the health insurer from New Jersey, in accordance with the contractual arrangement between members of the health maintenance organization. The New Jersey health insurer now seeks to recover alleged overpayments more than 24 months after payment by the New York insurer.

Analysis:

Insurance Law § 3224-b (McKinney 2006) is relevant to the inquiry. That statute provides in pertinent part as follows:

(a)(1) For purposes of this section, a "health plan" shall be defined as an insurer that is licensed to write accident and health insurance, or that is licensed pursuant to article forty-three of this chapter or is certified pursuant to article forty-four of the public health law...

(b) Overpayments to physicians: …. (2) A health plan shall not initiate overpayment recovery efforts more than twenty-four months after the original payment was received by a physician. Provided, however, that no such time limit shall apply to overpayment recovery efforts which are: (i) based on a reasonable belief of fraud or other intentional misconduct, or abusive billing, (ii) required by, or initiated at the request of, a self-insured plan, or (iii) required by a state or federal government program.

Although Insurance Law § 3224-b(b) provides that overpayments to physicians may not be recovered more than 24 months after the original payment was received, the language of Insurance Law § 3224-b(a)(1) plainly limits its application to insurers and health maintenance organizations licensed or certified in New York. These provisions thus have no application to an insurer unlicensed or uncertified to do business in New York.1

Accordingly, the provisions of § 3224-b are not applicable to the health insurer from New Jersey, because it is not a New York authorized insurer.

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

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1 For purposes of this letter, we note that the New Jersey health insurer, which is not an authorized insurer, may come within the specific exception delineated in Insurance Law § 1101(b)(2)(B) (McKinney 2006). That statute permits certain transactions effected by mail from outside this state by an authorized insurer. It provides with respect to group health insurance that “where the master policies or contracts were lawfully issued without this state in a jurisdiction where the insurer was authorized to do an insurance business,” certain transactions with respect to those groups specified in § 1101(b)(2)(B)(ii) shall not constitute doing an insurance business in New York.