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

Andrew M. Cuomo
Governor

James J. Wrynn
Superintendent

OGC Op. No. 11-01-05

The Office of General Counsel issued the following opinion on January 24, 2011 representing the position of the New York State Insurance Department

Re: Co-Payments that Exceed Reimbursement Amount

Question Presented:

What is the amount that a physical therapist should collect from a patient when a patient’s co-payment exceeds the amount that the insurance company will reimburse the provider for the particular service?

Conclusion:

Nothing in the Insurance Law or regulations promulgated thereunder specifically addresses the amount that a physical therapist must collect from a patient for a particular service when the patient’s co-payment exceeds the amount that an insurance company will reimburse the physical therapist for that particular treatment, pursuant to a contractual agreement between the provider and insurer. The physical therapist must look to the provider contract for guidance, and the insured’s contract with the insurer also should be considered.

Furthermore, the Superintendent of Insurance (“Superintendent”) may disapprove, pursuant to New York Insurance Law § 3201(c) (McKinney 2009 & Supp. 2010), any insurance contract to be delivered or issued in New York State that is unjust, unfair, inequitable, misleading, deceptive, or contrary to law or to the public policy of this state. A contract provision that requires an insured to pay an amount in excess of the cost for a particular treatment may be considered unjust, unfair, inequitable, misleading, deceptive, or contrary to law or to the public policy of this state. Additionally, a provider who collects a co-payment that exceeds the amount the provider agrees to accept from an insurer for a particular treatment may run afoul of Penal Law § 155.05 and/or Education Law § 6509.

Facts:

The inquiry is of a general nature, without reference to specific facts.

Analysis:

The New York Insurance Law and regulations promulgated thereunder do not specifically address whether a provider may collect a co-payment from a patient where that co-payment exceeds the amount that the provider agrees to accept from an insurer for a particular treatment. As such, a physical therapist that is a participating provider must look to the terms of the contract with the insurer for guidance, as well as the insured’s contract with the insurer. However, the Superintendent reviews insurance contracts and may disapprove any such contract that the Superintendent deems unfair or against public policy pursuant to Insurance Law § 3201(c). That provision reads, in pertinent part, as follows:

(c)(1) The superintendent may disapprove any policy form for delivery or issuance for delivery in this state if he finds that the same contains any provision or has any title, heading, backing or other indication of the contents of any or all of its provisions, which is likely to mislead the policyholder, contract holder or certificate holder.

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(3) The superintendent may disapprove any accident and health insurance policy form for delivery or issuance for delivery in this state if the benefits provided therein are unreasonable in relation to the premium charged or any such form contains provisions which encourage misrepresentation or are unjust, unfair, inequitable, misleading, deceptive, or contrary to law or to the public policy of this state.

An insurance contract that requires an insured to pay an amount in excess of the cost of a particular treatment may be considered unjust, unfair, inequitable, misleading, deceptive, or contrary to law or to the public policy of this state, and as such, may be disapproved pursuant to Insurance Law § 3201(c).

Additionally, a provider who collects from a patient a co-payment in connection with a particular treatment that is greater than the amount that the provider agrees to accept from the insurer for that treatment may be committing larceny under Penal Law § 155.05, and/or may be engaged in professional misconduct pursuant to Education Law § 6509. Penal Law § 155.05 reads in relevant part as follows:

1. A person steals property or commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, or withholds such property from the owner thereof.

Education Law § 6509 states in pertinent part as follows:

Each of the following is professional misconduct, and any licensee found guilty of such misconduct under the procedures prescribed in section sixty-five hundred ten shall be subject to the penalties prescribed in section sixty-five hundred eleven:

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(5)(a) Being convicted of committing an act constituting a crime under:

(i) New York State law. . .

Thus, although the Insurance Law is silent as to the amount that a physical therapist may collect from a patient where the co-payment exceeds the cost of treatment, the Superintendent may disprove any insurance contract that permits such a scenario, and the physical therapist who is engaging in such a practice may be violating the Penal and/or the Education Law.

For further information, you may contact Senior Attorney Camielle A. Barclay at the New York City office.