New York State Seal

STATE OF NEW YORK

INSURANCE DEPARTMENT

25 BEAVER STREET

NEW YORK, NEW YORK 10004

David A. Paterson

Governor

James J. Wrynn

Superintendent

OGC Op. No. 10-04-01

The Office of General Counsel issued the following opinion on April 21, 2010, representing the position of the New York State Insurance Department.

Re: Blanket Accident and Health Insurance Policy

Question Presented:

May the insurer of a blanket accident and health insurance policy remit benefit payments to a policyholder, or must it remit benefit payments directly to the persons insured under the policy?

Conclusion:

An insurer of a blanket accident and health insurance policy must remit benefit payments directly to the persons insured under the policy.

Facts:

A licensed insurance broker reported that his client, a fire district, “has an agreement with their career staff (fire fighters) that provides unlimited sick time. To provide that benefit when an employee is insured on the job they have the Accident and Sickness policy to reimburse them part of that expense.” He further reported that the insurer advised him that it cannot remit benefit payments to the fire district, “but must pay the injured firefighter directly.” The broker inquired as to whether benefit payments may be remitted to the fire district “to manage this otherwise insurable risk.”

Analysis:

The fire district’s policy that the inquirer described as an “Accident and Sickness” policy is defined as “blanket accident and health insurance” in New York Insurance Law § 4237(a)(3)(D) (McKinney Supp. 2009), which reads as follows:

(a)(1) Any policy or contract of insurance against death or injury resulting from accident which insures a group of persons conforming to the requirements of one of the subparagraphs (A) through (F) of paragraph three hereof shall be deemed a blanket accident policy.

(2) Any policy or contract which insures a group of persons conforming to the requirements of subparagraph (C), (E) or (F) of paragraph three hereof against total or partial disability, excluding such disability from accident, shall be deemed a blanket health insurance policy.

(3) Any policy or contract of insurance which combines the coverage of blanket accident insurance and of blanket health insurance on such a group of persons shall be deemed a blanket accident and health insurance policy:

* * *

(D) Under a policy or contract issued in the name of

(i) any county, city, town, village or fire district,

(ii) any duly organized fire department, or fire company, of any such municipal corporation or fire district, whether or not any such corporation has been incorporated under any general or special law,

(iii) any fire corporation incorporated under or subject to the provisions of section one thousand four hundred two of the not-for-profit corporation law, or any general or special law, if such corporation is by law under the general control of, or recognized as a fire corporation by, the governing board of a city, town, village or fire district, which municipal corporation, fire district, fire department, fire company or fire corporation, as the case may be, shall be deemed the policyholder, covering all, but not less than twenty-five, volunteer members of such department, company or corporation. A district corporation which has the general powers of and operates as a fire district shall be considered a fire district for the purposes of this paragraph. A volunteer fireman whose services are offered and accepted pursuant to the provisions of section two hundred nine-i of the general municipal law shall be deemed a volunteer member of any such fire department, fire company or fire corporation except for the purpose of determining the minimum number of twenty-five volunteer members for which any such policy or contract must provide coverage. Any such policy or contract issued to a municipal corporation or a fire district shall be subject to any limitations on the amount, coverage or benefits as are set forth in any applicable general, special or local law or city or village charter. (Emphasis added.)

A fire district is the policyholder of a blanket accident and health insurance policy that is issued in its name. Any benefits that are payable under the blanket accident and health insurance policy must be paid directly to the injured firefighter as the person insured under the policy (or to the firefighter’s beneficiary or estate), pursuant to Insurance Law § 4237(b), which reads as follows:

All benefits under any blanket accident, blanket health or blanket accident and health insurance policy shall be payable to the person insured, or to his designated beneficiary or beneficiaries, or to his estate, except that if the person insured be a minor, such benefits may be made payable to his parent, guardian, or other person actually supporting him, or to a person or persons chiefly dependent upon him for support and maintenance.

Because a fire district is the policyholder - but not an insured - of a blanket accident and health insurance policy that is issued to it, benefits payable under the policy may not be paid to the fire district, but must be paid directly to the insured (an injured firefighter) who has suffered the compensable loss (i.e., injury, disability, or death).

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.