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. 09-02-07

The Office of General Counsel issued the following opinion on February 23, 2009, representing the position of the New York State Insurance Department.

Re: Application of Circular Letter No. 27 (2008) to Group Health Insurance Contracts Validly Issued by Out-of-State Insurer to Out-of-State Employer with New York Resident Employees

Question Presented:

Does CL No. 27, which advises that all licensees of, and insurers authorized by, the New York State Insurance Department must accord the same treatment to marriages between same-sex partners legally performed in other jurisdictions as accorded to marriages between opposite-sex partners, apply to a group health insurance policy issued out-of-state by a non-New York authorized out-of-state insurer to an out-of-state employer for coverage to its employees, including employees who reside in New York State?

Conclusion:

Where a group health insurance master policy conforming to N.Y. Ins. Law § 4235(c)(1)(A) (McKinney 2007) is issued out-of-state to an out-of-state employer by an out-of-state insurer, which is not licensed in New York, and where the policy covers all employees, including those who reside in New York State, the policy and certificates are exempt from the filing and approval requirements set forth in Insurance Law § 3201. In addition, under Insurance Law § 1101(b)(2)(B), an unauthorized insurer would not be deemed to be “doing an insurance business in this state” if, as here, the policy in question is a group health policy issued in conformance with Insurance Law § 4235(c)(1)(A). Consequently, CL No. 27 would not apply to that group health insurance policy or certificate.

However, to the extent that the Department’s position on marriages between same-sex partners is consistent with the law in the out-of-state region (an issue upon which the Department will not opine), the Department urges the insurer in question, as well as the employer, to provide same-sex married couples residing in New York with health care benefits to the same extent as opposite-sex married couples, in order to promote the public interest in protecting all persons, including same-sex spouses, from being discriminated against in the provision of benefits.

Facts:

The inquirer asks whether CL No. 27, which states that all New York Insurance Law licensees, including authorized insurers, must recognize the marriages of same-sex couples legally performed in other jurisdictions to the same extent as those of opposite-sex couples, applies to a group health insurance policy issued out-of-state by an out-of-state insurer, which is not licensed to do an insurance business in New York, to an out-of-state employer covering its employees, including those that reside in New York.

Analysis:

As a preliminary matter, this opinion assumes that the out-of-state insurer in question: only makes contact with New York resident employees by mail, consistent with the mail order exclusion in Insurance Law § 1101(b)(2)(B); is properly licensed or authorized to transact insurance business in the out-of-state region in question; and issued the group health insurance policy to the employer in accordance with the law in that state. The conclusions set forth herein would likely change if, for example, the out-of-state insurer were to make contact with the New York resident employees in question in a manner that constitutes the doing of an insurance business in New York pursuant to Insurance Law § 1101(b)(2), which would subject that insurer to, inter alia, the New York Insurance Law and the regulations promulgated thereunder, as well as the Department’s circular letters, including CL No. 27.

In general, unauthorized or unlicensed insurers may not transact insurance business in this state, by mail or otherwise, except as specifically permitted under Insurance Law § 1101(b)(2) (mail order exclusion), which reads in pertinent part as follows:

(2) …the following acts or transactions, if effected by mail from outside this state by an unauthorized foreign or alien insurer duly licensed to transact the business of insurance in and by the laws of its domicile, shall not constitute the doing of an insurance business in this state, but section one thousand two hundred thirteen of this chapter1 shall nevertheless be applicable to such insurers:

(B) transactions with respect to …group accident and health…insurance…:

(i) where such groups conform to the definitions of eligibility contained in;

(II) the following subparagraphs of paragraph (1) of subsection (c) of section four thousand two hundred thirty-five of this chapter:

(aa) subparagraph (A), (B), (C), or (D);

(ii) 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;….

In addition, Insurance Law § 3201(b)(1)(B), which sets forth the filing and approval requirements for policy forms delivered or issued for delivery in New York, provides, in pertinent part, as follows:

(b)(1) No policy form2 shall be delivered or issued for delivery in this state unless it has been filed with and approved by the superintendent as conforming to the requirements of this chapter and not inconsistent with law. A group life, group accident, group health, group accident and health or blanket accident and health insurance certificate evidencing insurance coverage on a resident of this state shall be deemed to have been delivered in this state, regardless of the place of actual delivery, unless the insured group is of the type described in: (A) section four thousand two hundred sixteen, except paragraph four where the group policy is issued to a trustee or trustees of a fund established or participated in by two or more employers not in the same industry with respect to an employer principally located within the state, paragraph twelve, thirteen or fourteen of subsection (b) thereof; (B) section four thousand two hundred thirty-five except subparagraph (D) where the group policy is issued to a trustee or trustees of a fund established or participated in by two or more employers not in the same industry with respect to an employer principally located within the state, subparagraph (K), (L) or (M) of paragraph one of subsection (c) thereof; or (C) section four thousand two hundred thirty-seven (except subparagraph (F) of paragraph three of subsection (a) thereof) of this chapter; and 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….

Insurance Law § 3201 thus exempts from filing and approval requirements certain policies lawfully issued outside of New York in a jurisdiction where the insurer is authorized to do an insurance business. Policies exempted include the type -- such as the one at issue here -- described in Insurance Law § 4235(c)(1)(A). That section provides, in pertinent part, as follows:

A policy issued to an employer…which employer…shall be deemed the policyholder, insuring with or without evidence of insurability satisfactory to the insurer, employees of such employer, and insuring, except as hereinafter provided, all of such employees or all of any class or classes thereof determined by conditions pertaining to the employment or a combination of such conditions pertaining to the family status of the employee, for insurance coverage on each person insured based upon some plan which will preclude individual selection….

Under the circumstances presented here, the certificates issued to the New York employees would not be deemed delivered in New York because, as allowed under Insurance Law §§ 1101 and 3201(b)(1), the insurer issued the master policy outside of New York, in a jurisdiction where the insurer is authorized to do an insurance business, to a policyholder employer that is eligible to purchase a group accident and health insurance policy pursuant to Insurance Law § 4235(c)(1)(A). In addition, the out-of-state insurer’s contacts with the New York resident employees appear to come within the mail order exclusion in Insurance Law § 1101(b)(2). Therefore, CL No. 27 would not apply here.

However, to the extent that the Department’s position on same-sex marriages, as expressed in CL No. 27, does not conflict with the out-of-state region’s law (an issue upon which the Department will not opine), the Department urges the insurer in question, as well as the employer, to provide same-sex married couples who reside in New York with the same health care benefits offered to opposite-sex married couples, in order to promote the public interest in protecting all persons, including same-sex spouses, from being discriminated against in the provision of benefits.

As a final matter, the inquirer asks whether CL No. 27 is as enforceable as a formally promulgated regulation. Although CL No. 27 is not enforceable as a regulation, it nonetheless provides clear guidance to Department licensees and authorized insurers as to how the Department interprets the New York Insurance Law and relevant judicial precedents. As CL No. 27 explains, failure of any licensee or authorized insurer to conform its conduct to the dictates of CL No. 27 could subject that licensee or authorized insurer to enforcement action by the Department.

For further information you may contact Supervising Attorney D. Monica Marsh at the New York City Office.

___________________________________________________________________________________________________________

1 Insurance Law § 1213 provides for service of process on the Superintendent of Insurance as attorney for unauthorized insurers.

2 Insurance Law § 3201(a) defines policy form as “any policy, contract, certificate, or evidence of insurance and any application therefor, or rider or endorsement thereto….”