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. 09-06-01

The Office of General Counsel issued the following opinion on June 3, 2009, representing the position of the New York State Insurance Department.

Re: Waiver of Psychiatric Office Visit Fees

Question Presented:

Would a university commit insurance fraud if it were to waive psychiatric office visit fees of more than twenty dollars for which its students are personally responsible, and notify its students’ insurers of the waivers?

Conclusion:

No. A university would not commit insurance fraud if it were to waive psychiatric office visit fees of more than twenty dollars for which its students are personally responsible, and notify its students’ insurers of the waivers.

Facts:

The inquirer reports that she represents a university in New York that runs a student health center for its students. The student health center offers, among other services, psychiatric counseling, and bills a student’s health insurer for these psychiatric office visits. However, a student may be personally responsible for certain out-of-pocket fees, depending upon his or her health plan. The inquirer states that to increase student access to psychiatric counseling, the university wishes to waive psychiatric office visit fees of more than twenty dollars (not to exceed $1,000 per student, per year) for which its students are personally responsible. The inquirer further states that the student health center will notify its students’ insurers of the waiver when the health center bills the insurers for the psychiatric services rendered.

The inquirer asks whether such a waiver would constitute insurance fraud.

Analysis:

N.Y. Penal Law § 176.05 (McKinney Supp. 2009) is germane to the inquiry. That statute defines “fraudulent health care insurance act,” and reads in relevant part as follows:

2. A fraudulent health care insurance act is committed by any person who, knowingly and with intent to defraud, presents, causes to be presented, or prepares with knowledge or belief that it will be presented to, or by, an insurer or purported insurer or self-insurer, or any agent thereof, any written statement or other physical evidence as part of, or in support of, an application for the issuance of a health insurance policy, or a policy or contract or other authorization that provides or allows coverage for, membership or enrollment in, or other services of a public or private health plan, or a claim for payment, services or other benefit pursuant to such policy, contract or plan, which he knows to:

(a) contain materially false information concerning any material fact thereto; or

(b) conceal, for the purpose of misleading, information concerning any fact material thereto….

Thus, a person may commit a fraudulent health care insurance act if the person knowingly, and with intent to defraud, presents to an insurer any claim for payment, services or other benefit that the person knows to set forth materially false information concerning any material fact, or conceals, for the purpose of misleading, information concerning any material fact. N.Y. Ins. Law § 403(c) (McKinney 2006) authorizes the Superintendent of Insurance to levy upon any person who commits a fraudulent insurance act a civil penalty not exceeding five thousand dollars, as well as the amount of the claim, for each violation.

As a general matter, if a health care provider intentionally waives any fees for which an insured is personally responsible, such as co-payments, then such conduct would trigger concerns about insurance fraud if the provider conceals information (namely, waiver of the fees) for the purpose of misleading the insurer. See OGC Opinion 08-07-30 (July 7, 2008); OGC Opinion 08-04-04 (Apr. 2, 2008); OGC Opinion 00-12-06 (Dec. 14, 2000). However, if a health care provider informs the insurer of the waiver, then the health care provider does not run afoul of Penal Law § 176.05, because in that circumstance, there is no concealment for the purpose of misleading. See OGC Opinion 08-04-04 (Apr. 2, 2008).

In the situation presented here, the inquirer states that the university wishes to waive psychiatric office visit fees of more than twenty dollars (not to exceed $1,000 per student, per year) for which its students are personally responsible, and that the student health center will notify its students’ insurers of the waivers when the health center bills the insurers for the psychiatric services rendered. Since the student health center intends to notify the students’ insurers of the waivers, the waivers would not constitute insurance fraud, because there would be no concealment for the purpose of misleading the insurer.

For further information, you may contact Senior Attorney Joana Lucashuk at the New York City office.