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

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

OGC Op. No. 08-07-07

The Office of General Counsel issued the following opinion on July 15, 2008 representing the position of the New York State Insurance Department.

Re: Emergency Treatment

Question Presented:

Where a person believes he is having a medical emergency, visits the Emergency Department of a hospital, and is subsequently admitted to the hospital as an in-patient what standard should the insurer utilize in determining its obligation to cover the emergency treatment and subsequent hospital admission?

Conclusion:

In determining whether to cover a visit to a hospital Emergency Department, the insurer, including a health maintenance organization (“HMO”), must utilize a “prudent lay person” standard. In determining whether to cover the in-patient admission and subsequent hospital stay, the insurer must utilize a “medical necessity” standard.

Facts:

In a prior opinion, dated October 5, 2006, the Insurance Department’s Office of General Counsel (OGC) addressed a general question concerning a visit to an Emergency Department and subsequent in-patient admission, and opined that any determination on whether the “prudent lay person” or “medical necessity” standard should apply would have to be made on a “case-by-case” basis. The inquirer asserts that the opinion would enable an insurer to pick and choose between the two standards, and requests clarification.

Analysis:

N.Y. Ins. Law § 3216(i)(9) (McKinney 2007) regulates individual policies of commercial health insurers. That statute reads as follows:

Every policy which provides coverage for inpatient hospital care shall also include coverage for services to treat an emergency condition in hospital facilities. An "emergency condition" means a medical or behavioral condition, the onset of which is sudden, that manifests itself by symptoms of sufficient severity, including severe pain, that a prudent layperson, possessing an average knowledge of medicine and health, could reasonably expect the absence of immediate medical attention to result in (A) placing the health of the person afflicted with such condition in serious jeopardy, or in the case of a behavioral condition placing the health of such person or others in serious jeopardy, or (B) serious impairment to such person's bodily functions; (C) serious dysfunction of any bodily organ or part of such person; or (D) serious disfigurement of such person. (emphasis added.)

Insurance Law § 3221(k)(4), which regulates group policies of commercial health insurers, except for policies covering employees in more than one state, sets forth a similar requirement. So, to, does Insurance Law § 4303(a)(2), which regulates contracts of not-for-profit health insurers and all HMOs.

Insurance Law § 4900(c) and Public Health Law § 4900(3), which regulate internal and external reviews for insurers and HMOs respectively, also establish similar definitions of “emergency condition.” Insurance Law § 4900(h) and Public Health Law § 4900(8) define “utilization review” as:

[T]he review to determine whether health care services that have been provided, are being provided or are proposed to be provided to a patient, whether undertaken prior to, concurrent with or subsequent to the delivery of such services are medically necessary. . . .

Further, Insurance Law § 4902(a)(8) and Public Health Law § 4902(1)(h) each provide:

Each utilization review agent shall adhere to utilization review program standards consistent with the provisions of this title which shall, at a minimum, include: . . . (8) Establishment of a requirement that emergency services rendered to an insured shall not be subject to prior authorization nor shall reimbursement for such services be denied on retrospective review; provided, however, that such services are medically necessary to stabilize or treat an emergency condition.

The American Heritage Dictionary on-line dictionary defines “prudent” as “careful in regard to one’s own interests.” Whether a person has been prudent in a particular circumstance depends upon an after the facts assessment of the facts. See Colon v. City of New York, 60 N.Y.2d 78, 468 N.Y.S.2d 453 (1983). Therefore, a determination as to whether a condition would actually qualify as an emergency under the factors set forth in Insurance Law §§ 3216(i)(9), 3221(k)(4), or 4303(a)(2), as well as the text of Insurance Law § 4900(c) and Public Health Law § 4900(3), and would lead a prudent layperson to seek turns on the circumstances of each individual situation.

As Insurance Law § 4902(a)(8) and Public Health Law § 4901(1)(h) make clear, any decision under the “prudent layperson standard” is a subset of a medical necessity determination. Further, the very fact of admission to the hospital from the Emergency Department creates a presumption that the symptoms that led the individual to visit the Emergency Department constituted an emergency condition within the meaning of Insurance Law §§ 3216, 3221, or 4303. However, because the “prudent person” standard is subjective, a failure to admit the individual to the hospital would not create a presumption that an emergency condition did not exist.

Once an individual is admitted to the hospital, a determination as to whether such admission was proper, or a determination (either prospective, concurrent, or retrospective) as to whether continued hospitalization is appropriate, requires the use of a “medical necessity” standard, subject to review under either Article 49 of the Insurance Law, or Article 40 of the Public Health Law. Any such subsequent determination does not affect the obligation of the insurer to cover the Emergency Department visit.

Neither the Insurance Law, nor the Public Health, nor the regulations promulgated under those statutes, defines “medical necessity”. Whether a particular treatment or subsequent hospitalization is a medical necessity, depends upon the facts of a particular situation.

Accordingly, while OGC’s October 5, 2006 opinion could have drawn a firmer distinction between emergency treatment and hospital admission, a proper reading of that opinion should not lead an insurer to conclude it may pick and choose between the two standards.

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